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UAE construction faces delivery pressures

8 October 2025

 

Traffic backs up most mornings on the road into Abu Dhabi’s Mussafah Industrial Area, as trucks return after making early-morning deliveries to construction sites in Abu Dhabi and Dubai.

The traffic reflects the record levels of construction activity currently underway in the UAE. It also points to the pressures involved when delivering projects in a market that is starting to overheat.

Record awards 

According to regional projects tracker MEED Projects, $53bn-worth of construction contracts were awarded across the UAE in 2024 – up 27% from the $45bn awarded in 2023, which itself broke the long-standing $32bn record set in 2008.

The majority of the awarded work consists of building projects across subsectors such as residential, retail, commercial, hospitality, healthcare and education. Other recorded contracts include earthmoving, dredging and reclamation works.

In terms of regional distribution, Dubai led with $35bn in contract awards in 2024.

Abu Dhabi was the second most active market with $9bn, followed by Ajman with $3.2bn, Sharjah with $2.7bn and Ras Al-Khaimah with $2.2bn. The other emirates, Fujairah and Umm Al-Quwain, did not cross the $1bn mark. 

As of 7 October 2025, total awards stood at $24bn, suggesting that the record highs of 2024 are unlikely to be repeated this year.

Once again, Dubai remains the most active market with $18bn in awards, followed by Sharjah with $2.5bn, Abu Dhabi with $1.8bn and Ras Al-Khaimah with $1.7bn. The remaining three emirates, Ajman, Fujairah and Umm Al-Quwain, had not awarded more than $1bn in construction contracts.

Activity surge

The anticipated decline in contract awards in 2025 places the UAE in an interesting position.

Although fewer new contracts are being awarded, construction activity across the federation continues to ramp up as contracts from 2023 and 2024 approach peak execution. It is this surge in activity that contributes to the traffic congestion in Mussafah and other industrial areas each morning.

The heightened level of construction activity is having other effects. Developers are now increasingly concerned that there are not enough contractors to deliver their projects. This problem is particularly acute in the tier-one space, where leading international contractors – as well as some prominent local players – have exited the market.

At the same time, developer ambition has grown. In the early stages of the post-Covid recovery, the market was focused almost exclusively on villa projects. Now, buoyed by sustained growth in property prices, heightened competition and a desire to stand out, developers are launching increasingly complex projects. These include tall towers and buildings with non-standard architectural forms that demand high levels of technical expertise to deliver.

Even longstanding developers are feeling the strain. Emaar chairman Mohammed Alabbar was the first to raise the issue publicly, stating in late 2023: “We have problems in Dubai now with execution because the market is going 30% up every year in volume, which we have to handle.”

Delivery solutions

Various solutions are being explored to address this delivery challenge. Some developers are forming framework agreements with a pool of trusted contractors, while others are turning to direct negotiations or issuing limited tenders to only two or three firms.

Some developers have taken matters into their own hands by delivering projects in-house, using their own contracting arms and suppliers. As market pressures intensify, more developers are following suit, setting up their own construction divisions to secure project delivery.

Future outlook

Based on the total value of contract awards so far this year, the market may soon get some respite. Further relief is expected in 2026 as projects awarded in 2023 near completion, followed by the wrap-up of 2024 awards.

If the market cools, some of the delivery challenges experienced over the past two years should ease. While this would bring relief to many, there is lingering concern in the construction sector that Dubai’s market has shown a tendency over the past two decades to swing dramatically from boom to bust. If that pattern repeats, the consequences for the industry could be profound.

Alternatively, 2025 may simply be a pause before activity returns to record levels in 2026. Although some reports have warned of a possible correction in the property market, rising prices continue to support project launches and contract awards.

Should that trend continue, the delivery challenges of 2025 may well become the new normal.

MEED's November 2025 special report on the UAE also includes:

> GOVERNMENT: Public spending ties the UAE closer together
> ECONOMY: UAE growth expansion beats expectations

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Colin Foreman

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