UAE: Infrastructure investment supported by the construction sector

By Jeanne Walters

The third note in our current series on infrastructure investment spending considers the case of the UAE. Our first note highlighted that at a global level the need for investment is being driven by the clean energy transition, increased regionalisation and digitisation. While the second suggested that infrastructure spending, in the case of Saudi Arabia, was overwhelmingly related to the need to diversify away from hydrocarbons.
At a macro-level, infrastructure projects are likely to have supported UAE GDP growth in recent years. The value of contracts awarded rose sharply in 2023, reaching a series peak at a total value of just over USD 90bn. MEED data suggests that, across all years of award, there is currently USD 177bn worth of projects in execution in the UAE.
Spending is heavily concentrated in the two largest emirates, Abu Dhabi and Dubai, with USD 89bn and USD 64bn worth of spending on projects currently in execution, respectively. Infrastructure investment is also heavily focused on the construction sector, with these contracts accounting for 48% of the total value of projects in execution. This compares to just over 30% in KSA.
In addition to the value of projects that have been awarded and are currently in execution, there is a sizeable pipeline of planned projects in the UAE. Adding together projects in planning phases, with budgeted but as-yet unallocated projects, leaves a potential UAE project pipeline of almost USD 670bn. The construction sector once again features heavily in this pipeline of projects.
The top ten largest construction projects currently in either a planning or budgeted but unallocated phase, by value, include the development of the Palm Jebel Ali, several Emaar residential property developments, Dubailand and Masdar City.
Outside of construction, the transport, power and water sectors are also a significant source of planned infrastructure spending across the UAE in coming years. In Abu Dhabi, large transport projects include the Etihad rail network project, KIZAD port, and Abu Dhabi metro, while the development of Al Maktoum airport and the metro blue line are material transport sector projects taking place in Dubai.
Given the mix of projects, it would appear that the global trends of decarbonization, regionalisation and digitisation, are not the necessarily the primary drivers of infrastructure spending in the UAE at present. That said, there are several transition or clean energy projects planned for the UAE, including four more reactors under the Barakah One nuclear power plant development, a number of solar parks, as well as a variety of green or low-carbon hydrogen plants.
Furthermore, increasing digitization also looks to be a potential source of infrastructure spending in years to come, with the UAE signaling its intention to develop its IA capabilities, as evidenced by Microsoft’s recent USD1.5bn investment into G42, which could lead to greater investment in digital infrastructure in future.