The annual total value of construction contract awards for real estate projects in the UAE is on course to breach the $30bn level for the first time since the 2008 global financial crisis.

According to data from regional projects tracker MEED Projects, the total value of contract awards in 2023 has already surpassed the full-year total achieved in 2022.

There have been $17.5bn of construction contract awards so far this year across real estate asset classes, including residential, commercial, hospitality and retail. For the whole of 2022, there were $13bn of contract awards.

The highest annual total since 2008 was recorded in 2017, when there were $29bn of contract awards, and the average total for the past decade is $19bn. The worst performing years were in 2020 and 2021, when less than $10bn of contracts were awarded. The only other time the value dipped below $10bn was in 2011.

The collapse in activity in 2020 and 2021 was primarily due to the economic disruption caused by the Covid-19 pandemic. However, it should be noted that the annual total value of contracts awarded had fallen sharply in 2019 – the year before the pandemic.

The prospects for the rest of this year are promising. Nearly $8bn of contracts are already at the bid evaluation stage, and another $2bn is at the main contract bid and prequalification stage.

Sustained growth

Longer term, there will be inevitable questions about how long the strong performance can be sustained. The record highs achieved in 2007 and 2008 ultimately came to an abrupt halt in 2009, and fears of a similar collapse have haunted the market ever since.

The latest reports from property consultants say that the market continues to perform strongly, adding that some segments have shown signs of moderation during the first half of this year.

According to CBRE, these include Dubai’s secondary residential market and the industrial and logistics sectors.

For Dubai’s secondary residential market, a slight drop-off of 0.5 per cent in sales was observed over the past year.

Overall there was an increase of 18.8 per cent in total residential transactions registered in June 2023, coupled with a surge of 44.9 per cent in off-plan market sales, bolstering the health of the residential market as a whole.