Demand For Building Materials Expected To Rise Amid UAE Construction Boom

Demand For Building Materials Expected To Rise Amid UAE Construction Boom

Does the growth of the construction of the UAE increase the demand for building materials? Many believe it. You can see the increase in construction projects. It is the main reason for the large increase in demand for building materials. 

From growing airports to the launch of new residential and industrial developments, working activities are always high in the UAE construction industry.

In this article, you’ll learn why demand is growing, how business is improving, and how neighborhood companies are gearing up for this trend. You can also look into the area of government tasks and the effect on the local economy.

Demand For Building Materials Expected To Rise Amid UAE Construction Boom

Dubai is expanding its infrastructure with several large-scale projects. One of the most notable is the new terminal at Al Maktoum Airport. This project, which has a total investment of Dh128 billion ($34.8 billion), aims to expand the airport’s capacity to 260 million passengers.

Developers are also planning new projects near the airport, anticipating higher demand from property buyers. These projects include residential, commercial, and mixed-use developments, all of which require substantial building materials.

Other parts of the UAE are also seeing new developments. For instance, in Abu Dhabi, numerous ongoing projects are boosting the demand for construction supplies. As property prices continue to rise, more developers are launching new projects to meet the growing demand for housing and commercial spaces.

Demand For Building Materials Expected To Rise Amid UAE Construction Boom

Growth In The Building Materials Market

One of the key players in the UAE’s building materials market is a company that reported selling Dh1 billion worth of materials last year. They expect sales to grow by 5% to 10% in 2024 due to the ongoing construction boom. 

This company produces essential construction materials like steel, cement, concrete blocks, and PVC pipes.

The merger of two major companies in 2021 formed this large entity, which has since become the biggest public steel and building materials business in the UAE.

Also Read: Dubai Real Estate: Massive 5-Bedroom Townhouse Sets Annual Rental Record Of AED 3.7m

 

Financial Performance

Last year, the company recorded a net profit of Dh601.9 million and revenue of Dh8.9 billion. The building materials division alone brought in Dh871 million in revenue, with a profit of Dh145 million. This strong performance indicates a healthy market for construction materials, driven by the UAE’s robust construction sector.

Exports And Local Production

Apart from serving the local market, the company also exports building materials to countries like Bangladesh and Sri Lanka. It owns the largest cement factory in the UAE, located in Al Ain, which has a capacity of 4.6 million tonnes.

Additionally, it operates plants in Abu Dhabi that manufacture pipes and concrete blocks. This wide range of products and production capabilities positions the company well to meet both local and international demand.

Government Initiatives And Local Sourcing

The UAE government has launched several initiatives to boost the industrial sector. One such initiative is “Operation 300bn,” which aims to increase the industrial sector’s contribution to the GDP to Dh300 billion by 2031. The industrial sector’s contribution reached about Dh197 billion last year, achieving 30% of the target so far.

A significant aspect of this growth strategy is local sourcing. The major building materials company spent Dh2.4 billion on local procurement last year, a 34% increase from the previous year.

By sourcing raw materials like scrap metal and limestone locally, the company not only supports the local economy but also reduces transportation-related emissions, contributing to its decarbonization efforts.

Industrial Zones And Investments

Dubai Industrial City, a key industrial zone, attracted investments worth Dh2.8 billion in the last 18 months. This zone focuses on sectors like food and beverages, building materials, and transport machinery. Its strategic location near Jebel Ali Port and Al Maktoum Airport provides excellent connectivity for exporting goods.

The UAE has also signed Comprehensive Economic Partnership Agreements (Cepas) with several countries, including India, Turkey, and Indonesia. These agreements help companies export “Made in UAE” products to various markets at competitive prices, further boosting the demand for building materials.

Expansion Of Industrial Zones

Due to high demand, Dubai Industrial City recently acquired 13.9 million square feet of new land for Dh410 million. This expansion aims to accommodate more industrial companies looking to grow within Dubai.

Currently, there are over 300 operational factories in the industrial zone, with more than 1,000 business partners using its facilities.

Demand For Building Materials Expected To Rise Amid UAE Construction Boom

Arshad Darbar’s Perspective On The Construction Boom

Arshad Darbar, a seasoned real estate expert with several years in the market, views the construction boom in the UAE as a pivotal moment for the industry. He notes that the increase in demand for building materials is a natural outcome of the rapid development projects across the country.

Darbar emphasizes that this trend is not just beneficial for property developers but also suppliers and manufacturers of construction materials. 

According to him, large-scale projects, such as the new terminal at Al Maktoum Airport and various developments in Abu Dhabi, are set to transform the real estate landscape. Darbar believes that this growth will lead to increased opportunities for investment and innovation in the sector.

He also highlights the importance of local sourcing and government initiatives in supporting sustainable development and economic stability in the UAE.

Conclusion

The construction boom in the UAE is driving a significant increase in the demand for building materials. Major projects like the new terminal at Al Maktoum Airport and various developments across the country are fueling this demand.

Local companies are stepping up to meet the challenge, increasing their production capacities and focusing on local sourcing to support the economy and reduce emissions.

With government initiatives like Operation 300bn and new economic partnership agreements, the UAE is positioning itself as a major industrial hub. This growth is not only boosting the demand for building materials but also contributing to the overall economic development of the country.

As construction projects continue to rise, the demand for building materials is expected to keep growing, making it a promising sector for investment and development in the coming years.

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