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The UAE construction market continues to warm despite a rise in construction costs, according to Turner & Townsend’s latest market intelligence survey for 2025.
As many as 71 per cent of survey respondents reported a “warming” market and continued momentum across real estate, infrastructure, and tourism, a 2 per cent year-on-year increase.
The survey is based on the feedback from contractors, consultants and developers across the UAE.
The survey pointed to the UAE’s resilience and adaptability amid rising costs and talent shortages, with respondents identifying real estate, tourism, and infrastructure as the top-performing sectors.
The survey also found that residential, mixed-use, leisure and hospitality, and major public infrastructure developments are booming.
While 46 per cent of respondents noted a commitment to net zero on current projects, 56 per cent reported an increase in sustainable measures across the board. This trend is expected to accelerate as new government strategies, legislation, and investments are implemented, with the UAE Energy Strategy 2050 driving expansion in the utilities and energy sectors.
Construction cost sentiment remains cautious, Turner & Townsend said. The survey takers reported a 3-5 percent increase in costs across the mixed-use and residential markets over the past year.
Despite these challenges, the UAE market remains resilient with profit margins on mid- to large-scale projects holding strong. Contractors are making the most of reduced competition and leveraging specialist expertise to secure favourable terms.
While respondents acknowledged challenges such as talent shortages, rising costs and the capabilities and availability of contractors, the survey found strong optimism around delivery innovation.
The survey found the need for talent upskilling, improved procurement practices, and the adoption of modern construction methods such as building information modelling, as well as digital tools, to navigate the challenges of complex project delivery and accelerated construction timelines.
(Writing by P Deol; Editing by Anoop Menon)
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