Overall, the UAE construction market has seen a noticeable technological upturn, which may tell us that the difficulties are not serious. However, despite modern solutions, sometimes difficulties can arise outside technological progress.

In this article we shed light on what is worrying the UAE construction industry and our forecasting for 2024.

Green Construction

Here, we provide the most common challenges.

The UAE construction market is characterized by intense competition among local companies and international players as well. Most likely, the number of players will continue to grow, and according to Mordor Intelligence, the industry is expected to remain strong in 2023 and 2024, with growth of 3.3% in real terms projected for 2023 and 3.9% for 2024.^[?]

The competitiveness is also supported by government initiatives and the implementation of advanced projects such as smart cities, 3D printing in construction and other.^[?][?]
However, according to Mordor Intelligence, with a few players holding a significant share, the market has an observable level of consolidation.^[?]

Possible solution:

Deliver high-quality projects

High competition in the industry and a shortage of skilled candidates in various specializations create an untenable situation in the Middle East's construction industry. This situation arises from several factors, including an aging workforce, insufficient investment in apprenticeship programs, and competition from other sectors.

The demand for skills such as budget control/commercial management, tech proficiency, project management, and relationship building is particularly pronounced.

Possible solution:

Promote construction-related education

Various factors contribute to project delays, including:

Unexpected site conditions

The complexity of regulatory processes and the intricate nature of construction projects in the region can result in prolonged timelines.

These delays have severe consequences for contractors in the UAE. They may be compelled to allocate additional resources, incurring extra costs for labor and materials. Furthermore, failing to meet project deadlines can lead to penalties and contractual consequences.

Possible solution:

Conduct thorough project planning and risk assessment

The UAE has a complex regulatory framework governing construction projects, with numerous laws and regulations at both federal and emirate levels. Several key challenges include:

Possible solution:

Meet all the UAE legal regulations with FirstBit ERP approved by FTA

Balancing environmental goals with economic viability poses a significant hurdle.
The need for more sustainable materials and technologies, along with shifting traditional practices, demands industry-wide adaptation. Additionally, the integration of green building principles is hindered by the existing infrastructure and regulatory frameworks.

Possible solution:

Cultural differences significantly affect communication in the UAE construction industry. The UAE's construction industry has a highly diverse cultural and ethnic mix in its workforce, with nearly 90% of the construction labor workforce consisting of non-UAE foreign nationals made up of 202 nationalities.^[?] The high diversity of the workforce, with a mix of nationalities involved, can lead to conflicts in interpersonal communication, limiting the ability of construction organizations to cooperate effectively. This can result in serious problems, including decreased productivity and project failure if not managed properly.

Possible solution:

Poor procurement strategy causes complex challenges in planning, risk management, monitoring supplies and as a result projects can face delays, work disruptions, overcost and other. The issue is global among countries, and the UAE is also among them.

Possible solution:

First Bit provides ERP software which will help you streamline your processes, enhance efficiency, and ensure success in every phase of your construction endeavors. With this solution you can clarify your objectives, set the strategy and monitor all the processes info in-one-click.

Enhance your procurement strategy with FirstBit ERP solution

Despite the considerable number of challenges, new trends continue to gain momentum in the UAE. Here, we will emphasize the most important ones.

The UAE continues to be an attractive destination for foreign direct investment (FDI) in the construction sector. In 2022, the country achieved its highest FDI inflows in history, reaching AED 84 billion, representing a 10% growth from 2021.^[?] The UAE's construction equipment market is also expected to grow at a CAGR of 6.20% from 2022-2029, indicating sustained investment in the construction industry.^[?] The government's investment in public infrastructure further underscores the country's commitment to developing its construction sector and attracting foreign investment. These trends suggest a positive outlook for foreign investments in the UAE's construction industry in 2024.

The tourism trends in the UAE for 2024 are expected to encompass a variety of aspects, including:

Rise in sleep tourism, and a focus on culinary tourism

Furthermore, UAE residents are placing emphasis on sustainability, with a significant percentage willing to pay more for environmentally friendly travel options. The year 2024 is also anticipated to see a focus on trips centered around film and television, concerts, and restaurant tourism, reflecting a shift in travel patterns towards more specific and experiential offerings.

The UAE's vibrant hospitality sector is preparing for this anticipated rise in tourism, with plans to attract 40 million visitors by 2030 and an expansion of hotel rooms to 250,000.^[?]

The green building tendency in the UAE is on the rise, driven by various factors and initiatives. The country has seen a significant increase in sustainable structures, with notable green projects in cities like Abu Dhabi and Dubai.

The UAE has implemented mandatory efficiency standards for new buildings, such as the Estidama rating in Abu Dhabi and green-building regulations in Dubai. In addition, the country has approved National Building Regulations and Standards aimed at reducing energy consumption in buildings by up to 25%.^[?]

The UAE is home to 869 green-rated buildings, ranking 14th globally for the highest concentration of sustainable buildings.^[?] Its commitment to green building is also reflected in the popularity of programs such as LEED for Homes and BREEAM in the country.^[?][?]

The UAE is at the forefront of embracing digitalization, automation, and innovative technologies in the construction industry. The country is leveraging robotics, automation, and artificial intelligence (AI) to revolutionize construction processes, enhance efficiency, and ensure worker safety. Key trends in this domain include:

The use of drones for site surveying

The integration of AI to streamline construction processes

The UAE's construction sector is also experiencing a digital revolution, with a focus on automation, intelligent designs, and green technology solutions, presenting new business opportunities for investors.^[?] These trends are not only set to redefine the industry's landscape but also unlock new opportunities for growth and sustainability, ultimately playing a pivotal role in the nation's economic growth and urban development.

Challenges in the construction business are constant and there are no tools that can help you get rid of them permanently, but digital tools such as FirstBit ERP software will allow you mitigate risks, optimize workflows, and set the competitive mood for your project.

Project costing feature will simplify your data access, providing an organized list of project’s info. Here, you can manage your tasks and monitor complexion rate.

Besides, the software allows you to:

FirstBit ERP software allows you to monitor real-time project cash flow, analyzing project P&L, cost, and revenue structures.

Also, the program helps you compare current cash flow with a planned one.

In addition, with FirstBit ERP software you can:

Generate procurement requisitions directly from sites. View consolidated information on orders, transitions, and receipts in one screen.

Under the requisition tab, you can:

By integrating these FirstBit ERP features, construction companies can effectively address challenges, enhance competitiveness, manage labor shortages, control project costs, ensure regulations compliance, and streamline working processes all in one click.