Construction Enters Strong Growth Period

BMI View: The UAE's construction industry will perform strongly in 2014, following an impressive return to growth in 2013 and streams of news buoying confidence in the sector. The recovery in the residential and non-residential sector has been particularly strong with numerous major projects moving forward as Abu Dhabi follows Dubai in its recovery and investors try to capitalise on the World Expo 2020 in Dubai. The main downside risk to our forecast is growing concerns over another property bubble, although this is being mitigated by government and developer action to limit speculative property sales.

Provisional data published by the National Bureau of Statistics show real growth in the construction industry stood at 3.8% year-on-year (y-o-y) in 2013. While this figure is slightly below our estimates of 4.6%, we note that official historical data has been heavily revised for 2011 and 2012, which now show contractions of 1.8% and 6.7% respectively. Considering this big turnaround in the industry over 2013 and the positive momentum we have seen over 2014, we are increasing our positive growth forecasts outlook for 2014 and beyond. We now forecast real growth of 5.5% in 2014 and 5.8% in 2015. Average growth between 2014 and 2019 now stands at 6.2%, after which we forecast a slowdown to 2.4% between 2020 and 2023 on account of the World Expo no longer being a catalyst for growth.

Property Market Returns To Form

Bullish Outlook
Construction Industry Value LHS And Real Growth RHS (2012-2023)

or Register now for free to read the full article

This article is tagged to:
Related sectors of this article: Infrastructure, Transport Infrastructure, Utilities - Infrastructure, Construction
Geography: United Arab Emirates

Access all of our latest analysis, data and forecasts - request a trial