UAE Construction Sector Set For 22% Growth, Reaching $130 Billion By 2029

The UAE's construction industry is poised for significant expansion, with output expected to surge by 22 per cent to $130.8 billion by 2029, according to a new report on Monday.

The 2025 UAE Construction Landscape Review from global property consultancy Knight Frank highlights that construction output across the Emirates has been on a steady upward trajectory since the start of the decade, hitting a record $107.2 billion in 2024. The sector is forecast to maintain annual growth of 4 per cent through 2029, driven by ambitious government initiatives and a robust pipeline of projects.

Construction projects account for 62 per cent of all future developments planned in the UAE, far outpacing sectors such as transport (12 per cent), power (7 per cent), and water (5 per cent). Within the construction pipeline, mixed-use developments make up 42 per cent, followed by residential real estate (28 per cent), data centres (9 per cent), and hospitality projects (4 per cent).

Residential construction costs in the second quarter of 2025 ranged from Dh4,200 per square metre for standard villas to Dh11,000 for high-end villas, while apartment construction costs varied between Dh4,300 and Dh9,500 per square metre. Commercial building costs ranged from Dh5,500 to Dh7,300 per square metre.

Faisal Durrani, Partner and Head of Research, MENA at Knight Frank, said the sector's growth is being fuelled by economic diversification, tourism, and strategic infrastructure investments, particularly in housing, transport, and smart cities.“The sector is a key pillar in the 'We the UAE' 2031 vision, the D33 Economic Agenda, Dubai's 2040 Urban Masterplan, and Abu Dhabi's Vision 2030,” Durrani said.

Abu Dhabi and Dubai continue to dominate the market, accounting for 85 per cent of the total value of contracts awarded between 2020 and August 2025-$151 billion in Abu Dhabi and $129.9 billion in Dubai. In Dubai, construction makes up 75 per cent of project activity, while in Abu Dhabi, oil and gas projects lead with 40 per cent of contract awards.

Dubai has also maintained its position as the world's top recipient of foreign direct investment (FDI) into greenfield projects for three consecutive years, while the UAE as a whole remains the leading recipient of FDI relative to the size of its economy.

Major upcoming projects in Dubai include Palm Jebel Ali, The Oasis by Emaar, Marsa Al Arab, Therme Dubai, Naia Island, Venice at DAMAC Lagoons, and new developments in Dubai Hills Estate. The city is also expanding its Metro system by 15km with the construction of the Blue Line.

Moataz Mosallam, Partner – Project & Development Services, MENA at Knight Frank, noted that Dubai's population is expected to grow from 3.4 million in 2020 to 5.8 million by 2040, underpinning the expansion of the residential sector. Around 8.2 million square feet of office space is currently under construction and due for delivery by 2028, but demand is expected to outpace supply.

As part of the Dubai Economic Agenda D33, the city aims to become one of the world's top four global financial centres by 2033 and double the size of its economy within a decade. The emirate's property market has seen strong growth, with office rents rising and residential prices now 22 per cent above their 2014 peak. Dubai has also retained its title as the world's busiest market for $10 million homes since late 2022, and hotel occupancy rates averaged 81.4 per cent in the first half of the year.

In Abu Dhabi, major infrastructure projects include a new 150km high-speed rail link with Dubai, expected to be operational by 2030, and the planned 131km Abu Dhabi Metro. The capital delivered 890 residential units in the first half of 2025, with over 33,000 more under construction and scheduled for delivery by 2029. Apartments are expected to comprise 71 per cent of this future supply.

Knight Frank also forecasts a surge in Abu Dhabi's office stock in 2027, with nearly 175,000 square metres of new space set to be delivered, following more moderate additions in 2025 and 2026.

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