Dubai construction prepares for shift in 2024

10 November 2023

 

Register for MEED's guest programme 

Dubai’s construction market is preparing to make a pivotal shift next year as the emirate’s focus switches from real estate to public infrastructure projects such as Dubai Metro’s Blue Line, which is expected to be tendered and move into construction next year.

The Dubai government budget statement for 2024, released on 6 November, highlighted the anticipated shift.

In the statement, Abdulrahman Saleh al-Saleh, director general of the Department of Finance (DoF) for the Government of Dubai, said: “Despite the completion of many strategic projects, the activation of the public-private partnership law, and the development of project financing through long-term financing means the government has allocated 8 per cent of total expenditures to construction projects.

“This sends a strong signal to the private sector about Dubai’s determination to continue developing its infrastructure and delivering more strategic development projects.”

Overall spending for Dubai government entities in 2024 has been set at AED79.1bn ($21.6bn), which means AED6.328bn will be spent on construction. This is a 34 per cent increase on the spending planned for 2023, when 7 per cent of AED67.5bn was allocated to construction.

 

While there has been a significant increase in construction spending planned for 2024, the total still falls short of the budgeted spending set before the pandemic. In 2020, there was AED7.698bn of spending planned; in 2019, there was AED9.2bn.

Over the past two years, the Dubai government and its government-related entities (GREs), including property developers Emaar Properties and Nakheel, have focused on the real estate sector and, more specifically, residential projects funded by off-plan sales.

According to regional projects tracker MEED Projects, the Dubai government and its GREs have awarded $9.8bn of construction and transport contracts since the start of 2021, with $6.8bn or 69 per cent of those for the construction of buildings sold off-plan.

 

The resurgent property market with booming off-plan sales has enabled Dubai’s construction sector to have its best year in 2023 since 2017. It is on course to nearly double the total value of contract awards recorded in 2022.

The strength of the off-plan market was best demonstrated in late September, when hundreds of home buyers queued overnight to buy villas on Palm Jebel Ali, which had been on hold since 2009.

The strong market demand meant that by early November, there had been $17.8bn of construction and transport awards in the emirate. This put it on course to surpass the $18.1bn of awards in 2018, although still lower than 2017's $23.5bn of awards in the midst of an infrastructure spending spree ahead of Expo 2020.

Market correction

The prospect of more government infrastructure spending in 2024 comes as questions arise over whether Dubai’s real estate boom can be sustained.

While real estate prices keep going up, data has been released in the fourth quarter of this year that suggests growth may be slowing.

CBRE’s latest report says that in October 2023, the number of transactions in Dubai’s residential market totalled 6,407, a drop of 23.6 per cent compared to the previous year.

Most importantly for the construction sector, which relies on building new projects, the report also said that off-plan sales fell by 57.2 per cent over the same period. Secondary market transactions grew by 29.5 per cent.

Previous cycles have shown that a correction can either be fast or slow. In 2008, induced by the global financial crisis, there was a sudden price collapse. In 2016, following the late 2014 drop in oil prices, there was a steady decline in prices that lasted several years.

 

Although concerns may remain over the property market, residential real estate still accounts for over half of the construction and transport projects planned in Dubai.

According to regional projects tracker MEED Projects, there are $74bn of projects at the pre-execution phase, which includes study, design, main contract bid and main contract prequalification. Of that $74bn total, 57 per cent are residential projects, while another 24 per cent are mixed-use real estate projects, typically including a significant amount of residential real estate.

The mix is unlikely to change unless the project pipeline changes and other major infrastructure projects are launched.

Of the pre-execution construction and transport projects that are not residential or mixed-use, only Dubai Metro’s Blue Line project is valued at over $500m, with an estimated cost of $2.5bn.


MEED’s November 2023 special report on the UAE includes: 

> COMMENT: UAE eyes global leadership role
> POLITICS: Abu Dhabi networks on the global stage
>
ECONOMY: UAE economy maintains robust growth
> BANKING: UAE banks enjoy the good times
> UPSTREAM: Hail and Ghasha galvanises UAE upstream market
> DOWNSTREAM: Adnoc spurs downstream gas expansions
> POWER: UAE closes ranks ahead of Cop28

> WATER: UAE ramps up decarbonisation of water sector
> PROJECTS: Top 10 UAE clean energy projects

> CONSTRUCTION: UAE construction sector returns to form
> TRANSPORT: UAE aviation returns to growth

 

https://image.digitalinsightresearch.in/uploads/NewsArticle/11289897/main.gif
Colin Foreman
Related Articles
  • Engie completes refinancing of Oman power plants

    5 November 2026

    French developer Engie has announced that it has reached financial close on the refinancing of the Sohar 2 and Barka 3 independent power projects (IPPs) in Oman.

    The transaction follows 15-year extensions to the plants’ power purchase agreements (PPAs) in March, securing their long-term operations through to 2043.

    As previously reported by MEED, the new agreements for the 750MW Sohar 2 and 750MW Barka 3 IPPs will take effect on 1 April 2028. 

    The refinancing aligns the projects’ debt profiles with the extended PPA terms and establishes a long-term financing framework to support future capital expenditure. This includes refurbishment works aimed at improving the reliability and long-term performance of both assets.

    Al-Batinah Power Company and Al-Suwadi Power Company operate the Sohar 2 and Barka 3 power plants, respectively.

    According to regional projects tracker MEED Projects, Nama PWP signed the original PPA for the Barka 3 project in 2010 with a consortium led by Gaz de France (GDF) Suez under a special purpose vehicle called Al-Suwadi Power Company.

    The shareholders comprised GDF Suez (46%), Bahwan Engineering Company (22%), Shikoku Electric Power Corporation (11%), Sojitz Corporation (11%)  and the Public Authority for Social Insurance (10%).

    In 2015, GDF Suez was rebranded as Engie following a strategic shift towards low-carbon energy and utilities.

    https://image.digitalinsightresearch.in/uploads/NewsArticle/21170932/main.jpg
    Mark Dowdall
  • Aramco seeks to expand East-West crude pipeline

    5 November 2026

    Saudi Aramco is planning to expand its East-West oil pipeline network, aiming to strengthen the kingdom’s ability to transport crude oil while bypassing the Strait of Hormuz.

    Aramco operates the 1,200-kilometre East-West pipeline from Abqaiq in the Eastern Province to Yanbu on the Red Sea coast. The pipeline currently has an oil transportation capacity of 7 million barrels a day (b/d).

    The pipeline was targeted by Houthi missiles in September and by Iran in April. Aramco resumed crude oil exports through the pipeline at the start of October.

    “With regard to the expansion to our East-West pipeline and the additional networks that we are building, this work has already started,” Amin Nasser, Aramco’s president and CEO, told analysts on a call following the company’s announcement of its Q3 2026 financial results on 3 November.

    Nasser had previously said in an interview with Al Arabiya Business that Aramco had begun engineering work on the East-West pipeline expansion project during the early stages of the US-Iran conflict.

    In October, Saudi Energy Minister Prince Abdulaziz Bin Salman said that the kingdom was looking to expand its crude oil export capacity by pipeline to as much as 10 million b/d. The plans would involve repurposing a domestic gas pipeline and investing in the existing East-West pipeline network.

    Aramco uses three main routes to export crude oil: the Gulf, via the Strait of Hormuz; the Red Sea, via the Bab El-Mandeb strait; and the Mediterranean, via Sidi Kerir in Egypt. The company also uses overseas oil-storage facilities in South Korea, Japan, the Netherlands and Sidi Kerir, and is working with partners to expand storage capacity, particularly in Asia.

    Aramco is also undertaking engineering work on additional export routes, Nasser said.

    He added that the company would not disclose details of the proposed routes until it made final investment decisions.

    https://image.digitalinsightresearch.in/uploads/NewsArticle/21156806/main0615.jpg
    Indrajit Sen
  • SAR tenders railway track design framework

    5 November 2026

     

    Register for MEED’s 14-day trial access 

    Saudi Arabia Railways (SAR) has invited consultants to bid by 14 December for a framework agreement covering railway track design services.

    The state-owned operator is seeking to accelerate the delivery of smaller projects across its network.

    SAR has scheduled a pre-tender meeting for 12 November.

    Under the framework, SAR will appoint a panel of specialist consultants to carry out design work through work orders or task orders issued as required. This will remove the need for SAR to launch a separate tender for each project.

    SAR said a long-term contract with several specialist service providers would benefit all parties, particularly for smaller projects.

    SAR will detail the required works and communicate them to the selected consultants through each work order or task order.

    The scope covers engineering studies, as well as concept, preliminary and detailed design for railway infrastructure. Services will include surveys, alignment design, geotechnical assessments, cost estimation and construction support.

    Consultants will be expected to produce drawings, reports, risk registers, bills of quantities and other design documentation. All deliverables must comply with SAR standards for UIC 60 track systems and associated infrastructure.

    SAR said it is seeking partnerships with competent consultants to supply track and track infrastructure design services under the terms of the tender document.

    https://image.digitalinsightresearch.in/uploads/NewsArticle/21168500/main.jpg
    Yasir Iqbal
  • Aramco commissions Zuluf field oil increment project

    5 November 2026

    Saudi Aramco has announced the start of oil production at the Zuluf oil increment project in Saudi Arabia, on which it is estimated to have spent about $7bn in 2022.

    The Saudi energy company made the announcement as part of its third-quarter 2026 financial results, in which it reported adjusted net income of $31.2bn, up 9% year on year.

    The Zuluf oil increment project involved substantial onshore and offshore work at the field, located in the Gulf about 40 kilometres off Saudi Arabia’s northeastern coast.

    The engineering, procurement and construction (EPC) scope was divided into two onshore packages and five offshore packages.

    Aramco selected Japan’s JGC Holdings Corporation in May 2022 for the two main onshore packages of the Zuluf field development. Together, the packages were estimated to be worth up to $3.5bn.

    Package 1 was estimated to be the larger of the two onshore packages, with a contract value of about $2bn-$2.5bn. It covered EPC work to build hydrocarbon-processing facilities for the Zuluf development, principally an onshore gas-oil separation plant.

    Package 2 covered utilities and water-injection facilities and was estimated to be worth about $1bn.

    Before awarding the onshore contracts, Aramco had awarded more than $4bn of contracts across five main offshore engineering, procurement, construction and installation packages. The awards went to US-headquartered McDermott International; a consortium of India’s Larsen & Toubro Hydrocarbon Engineering and UK-headquartered Subsea7; and Abu Dhabi’s NMDC Energy, then known as National Petroleum Construction Company.

    Since the 2022 EPC awards, Aramco has invested further in maintaining and upgrading infrastructure at the Zuluf field. The work supports the company’s objective of maintaining its maximum sustained crude oil production capacity at 12 million barrels a day (b/d).

    Other upstream projects

    In its Q3 2026 results statement, Aramco also announced EPC progress on other key upstream oil and gas projects, including:

    Jafurah phase two – Aramco awarded 16 contracts, worth a combined total of about $12.4bn, on 30 June 2024 for the second expansion phase of the Jafurah unconventional gas development programme in the Eastern Province.

    The second phase aims to raise the field’s processing potential to up to 2 billion cubic feet a day (cf/d) of raw gas. The EPC scope of work includes constructing gas compression facilities and associated pipelines, and expanding the Jafurah gas plant, including the construction of gas processing trains, utilities, sulphur and export facilities, Aramco said in a statement.

    Fadhili gas plant expansion – Through the estimated $7.7bn project, Aramco aims to increase the Fadhili gas plant’s processing capacity from 2.5 billion cf/d to up to 4 billion cf/d. The expansion includes three new processing trains, each with a capacity of 500 million cf/d.

    Aramco awarded contracts for four main EPC packages of the Fadhili gas plant expansion project in April 2024 to South Korean contractors Samsung E&A and GS Engineering & Construction and Saudi contractor Nesma & Partners.

    Dammam development project – The project represents the second development phase of the Dammam field. Its objective is to install infrastructure, including pipelines, trunklines and pumps, to increase the field’s crude oil production capacity by 25,000 b/d and 50,000 b/d in separate phases.

    Al-Khobar-based Denys Arabia won the main EPC contract for the Dammam second field development phase in July 2024. The contract was estimated to be worth more than $500m.

    https://image.digitalinsightresearch.in/uploads/NewsArticle/21156386/main4222.jpeg
    Indrajit Sen
  • BP and PetroChina cut budgets for Iraq oil projects

    5 November 2026

     

    London-headquartered BP and PetroChina have agreed with Turkish contractor Tekfen to reduce the monthly allocated budgets for two upstream oil projects at the Rumaila field, according to industry sources.

    Rumaila Operating Organisation (ROO) operates the Rumaila field.

    ROO is a joint venture formed by state-owned Basra Oil Company; Iraq’s State Oil Marketing Organisation (Somo); and Basra Energy Company, a joint venture owned by UK-based oil company BP and PetroChina.

    PetroChina is the listed arm of state-owned China National Petroleum Corporation.

    As part of the agreement between ROO and Tekfen, progress on the projects will continue at a slower pace.

    The two projects are both also suffering from delays due to problems importing equipment through the Strait of Hormuz, sources said.

    One source said: “These projects are really barely alive. They are progressing very slowly after the monthly budgets were cut by the client. The project is still continuing, but at a slow pace. The budgets are very limited.”

    Sources said that although the monthly budget payments were reduced, they were still being made on time.

    Most of the problems that the projects at the oil field are facing are connected to the regional war, which started on 28 February when the US and Israel attacked Iran.

    One source said: “The budget issues and financial problems are significant. There are also security concerns connected to reported US plans for a potential strategic nuclear strike on Iran and how that might impact operations at the Rumaila field, which is only around 60 kilometres from the Iranian border.”

    The two projects have a combined value of less than $100m, and the project scopes include developing new facilities as well as upgrading and repairing existing upstream infrastructure.

    https://image.digitalinsightresearch.in/uploads/NewsArticle/21153848/main.jpg
    Wil Crisp