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Profit margins for companies moved into positive territory for the first time since third quarter 2018, supported by strong growth across the UAE construction industry, the Royal Institution of Chartered Surveyors (RICS) said in its UAE Construction Monitor Q4 2022 report.
The current profit margins are tilting positive at 6 percent from -19% and -40% in third and fourth quarters of 2022, respectively.
Moreover, the 12-month expectations for profit margins are “strongly positive”, with a net balance of 46 percent, up from 23 percent in the last quarter.
According to RICS, the UAE’s construction activity rose to 49 percent from 37 percent in the third quarter, signaling further increases in the region’s activity.
The growth was driven by a consistent rise in reported workloads across the three subsectors, with reading at 54 percent for private residential, 32 percent for private non-residential and 48 percent for infrastructure/public works.
Among the factors affecting activity and growth, cost of materials remained the highest reported factor at 69 percent of total respondents, but down from 80 percent in third quarter of 2022.
Nearly 63 percent of respondents voted financial constraints as another key concern, which is the lowest reading since the monitor began in third quarter of 2018.
Many factors, such as material costs, chime with the global construction landscape. That said, the core strengths of the UAE’s construction sector are shrugging off these negative pressures, RICS said.
The report also found that 12-month workload expectations remained positive across the board, with all three sectors firmly in positive territory. Private non-residential projects lead the growth with a 16-point increase to 60 percent.
“Overall, while the UAE’s construction sector is challenged by many of the same conditions impacting other construction sectors across the globe, the country remains one of the leading lights for growth, and this is set to continue for the foreseeable future,” RICS stated.
(Writing by P Deol; Editing by Anoop Menon)
