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Dubai budgets to increase construction spending by 18%

30 October 2024

Dubai has announced its budget for 2025 with a 9% increase in government spending, which includes an extra $1.6bn allocated for construction and infrastructure compared to the approved budget for 2024.

Of the AED86.26bn ($23.5bn) of planned spending, 46%, or AED39bn ($10.6bn), will be allocated for construction and infrastructure schemes.

“These projects encompass roads, tunnels, bridges, transportation systems, sewage stations, parks, renewable energy facilities and the rainwater drainage network development plan. This also includes the recently announced Al-Maktoum airport development project and other initiatives supporting quality of life and promoting smart and sustainable transportation strategies in Dubai,” the emirate’s finance department said in a statement.

The spending on construction and infrastructure planned for 2025 is 18% more than the AED33.2bn allocated for 2024.

Increasing construction spending will help the emirate overcome some of its most pressing infrastructure challenges. Traffic has become a major issue for many residents and businesses in Dubai. Over the past year, the emirate’s Roads & Transport Authority (RTA) has pressed ahead with a series of road projects aimed at alleviating congestion. The most recent road project to be announced is the AED696m upgrade to the Trade Centre roundabout in Dubai.

Metro plans

A new metro line is also planned. In October, contracting consortiums submitted bids for the contract to complete a new Blue Line that will form part of the Dubai Metro network. The lowest-priced base offer received for the contract was valued at AED22.3bn. The project was given a budget of AED18bn when approved by the government in late 2023.

Another infrastructure concern is maintaining Dubai’s status as a leading global aviation hub. Dubai International airport is operating at close to capacity. With no room to add to its two existing runways, a major new airport project is planned at Al-Maktoum International airport. Designs for that project, valued at $35bn, were approved by the government in April and all operations at Dubai International airport are scheduled to move there within 10 years. Tendering for major construction contracts is expected to start in 2025.

Another pressing infrastructure concern is drainage. Widespread flooding in April this year exposed many shortcomings of the emirate’s infrastructure. In June, the government approved a AED30bn project known as Tasreef, which will enhance the capacity of Dubai’s rainwater drainage system by 700%, covering all areas of the emirate.

The emirate’s sewage system will also be upgraded with the $22bn Dubai Strategic Sewerage Tunnels (DSST) project. This project will be delivered as a public-private partnership. Potential investors submitted their statements of qualifications (SoQs) in late October.

Spending approval

The 2025 budget was approved by Sheikh Mohammed Bin Rashid Al-Maktoum, Vice President, Prime Minister and Ruler of Dubai, on 29 October.

The estimated expenditure for 2025 is a 9% increase on the AED79.1bn of spending that was budgeted for 2024 in November 2023. As well as expenditure of AED86.26bn for 2025, revenues are projected to be AED97.66bn. The budget also includes a general reserve of AED5bn.

The 2025 budget also allocated 30% of government expenditures to the social development sector. This encompasses health, education, scientific research, housing, and support for needy families, women and children. It also includes investments in youth and sports, and care for the elderly, retirees and people of determination.

The security, justice and safety sectors will receive 18% of total expenditures. The emirate has also allocated 6% of spending to support the public services sector, government excellence, creativity, innovation and scientific research.

The 2025 budget is part of the three-year budget cycle for 2025-27, which Sheikh Mohammed also approved. It has a total expenditure of AED272bn and a total revenue of AED302bn, making it the largest in the emirate’s history.

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Colin Foreman

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