Dubai, UAE — Despite global economic uncertainties, the construction industry in the Middle East and North Africa (MENA) awarded a staggering $101 billion worth of projects in the first half of 2023, a report by JLL’s Construction Market Intelligence said, based on insights gathered from industry experts and sources.
The lion’s share of these projects, approximately 67 percent, hailed from Saudi Arabia, contributing $44 billion, and the United Arab Emirates (UAE), accounting for $23 billion.
Both of these markets reported increased activity compared to the same period last year. Despite a dip in the value of projects awarded in Egypt during the first half of this year, the country maintains a promising pipeline of upcoming projects.
In the UAE, the residential sector emerged as a standout performer, with over $9 billion worth of projects awarded, and Dubai alone accounting for approximately 75 percent of the total value.
Saudi Arabia and Egypt also contributed significantly to this sector, with awarded projects worth $5 billion and $771 million, respectively. In addition to residential projects, the hospitality and mixed-use segments also exhibited remarkable growth, with leisure projects in Saudi Arabia contributing $2 billion.
The collective estimated value of the project pipeline in the MENA region surpassed $3 trillion, with Egypt, Saudi Arabia, and the UAE owning more than 60 percent of it. Saudi Arabia led the way with an estimated value of $1.3 trillion, making up about 35 percent of the total, while Egypt and the UAE both held an estimated value of $500 billion each.
Laura Morgan, Market Intelligence Lead MEA at JLL, said that while global interest rate hikes, high levels of inflation, and a sluggish trade recovery continued to impact the construction industry globally, the region stood out as an anomaly showcasing a sustained growth trajectory.
Looking to the future, GlobalData predicts a bright outlook for Egypt, with a projected 9 percent annualized average growth rate (AAGR) between 2024 and 2027, driven by the transportation, renewable energy, and residential sectors. While Egypt’s residential sector was the strongest in 2022, it now holds the second-highest value of construction project awards as of H1 2023.
Saudi Arabia’s construction market is poised for 4 percent growth (AAGR) between 2024 and 2027, fueled by ongoing economic diversification efforts outlined in the Saudi Vision 2030.
Notable projects, such as ROSHN’s SEDRA, Jeddah Central, Diriyah Gate Development Authority’s Diriyah, and initiatives by the Public Investment Fund, continue to progress swiftly. The building and construction sector now contributes 6 percent to the country’s GDP, making it the second-largest non-oil sector.
In the UAE, the construction market size is expected to grow by over 3 percent (AAGR) between 2024 and 2027, primarily driven by increased investment in infrastructure and real estate sectors, including residential, hospitality, mixed-use, and commercial real estate. Dubai’s construction index, as reported by Emirates NBD research, strengthened to 55.1 in June 2023, marking the highest reading in four years.