At 80% Plus of Population, Expats Drive UAE's Construction Growth

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Written by Richard Finlayson, Senior International Editor for Industrial Info Resources (Sugar Land, Texas)--After going through a slowdown during the global financial crisis in 2008, and with the current economic recovery in Gulf Cooperation Council (GCC) countries, the United Arab Emirates (UAE) construction industry is projected to see sustainable growth prospects in the next few years, according to a recent study by the Dubai Chamber of Commerce and Industry.

Construction as a percentage of gross domestic product (GDP) in the UAE reached 10.6% in 2008 and 10.3% in 2011. For 2015 and 2021, the sector's contribution as a percentage of GDP is projected to reach 11.1% and 11.5%, respectively.

The population of the UAE is expected to reach 6 million by 2015 from 5.4 million in 2010, according to the International Monetary Fund (IMF). The increase in expatriate population in the UAE, which accounts for more than 80% of the country's population, constitutes the main growth driver for the increasing demand for residential and commercial property units in the country.

According to the Chamber study, growth in real GDP is projected by the IMF to reach 4.4% in 2015 from 3.3% in 2011, signifying a revival of the overall economy, which augurs well for the construction industry.

The UAE's construction sector contribution was followed by Saudi Arabia at $218.9 billion. Qatar accounted for 8.9% of the total construction project value, followed by Oman and Kuwait, which accounted for 3.2% and 1.8% of the top 100 projects, respectively, in infrastructure, residential and non-residential segments.

In a drive to become an international investment hub, the UAE has pushed major construction projects in infrastructure, residential and non-residential segments. Extraordinary growth in transportation infrastructure has been observed, especially in such projects as the $7.8 billion expansion of Dubai's international airport and the $6.9 billion re-development project at Abu Dhabi's international airport.

The majority of projects in the UAE's construction industry involve 38% of the total projects in energy and utilities, 31% in construction, 29% in transport and 2% in social infrastructure, according to Business Monitor International.

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