The combined value of construction project pipelines in the MENA region reached $3 trillion in the first half of 2023, with Egypt, Saudi Arabia, and the UAE representing over 60 per cent of this figure.
This is according to global real estate market intelligence firm JLL’s latest Construction Market Intelligence report, based on insights gathered from relevant sources and industry experts.
In Saudi Arabia, ongoing construction projects are estimated to be worth $1.3 trillion. Egypt and the UAE's construction project pipeline is each valued at $500 billion.
“While global interest rate hikes, high levels of inflation, and a sluggish trade recovery continued to impact the construction industry globally, the (MENA) region stood out as an anomaly showcasing a sustained growth trajectory,” said Laura Morgan, Market Intelligence Lead MEA at JLL.
“With an impressive project pipeline surpassing $3 trillion, led predominantly by nations like the UAE, Saudi Arabia, and Egypt, the construction sector promises more than just stability in the forthcoming period. It is slated to exhibit enduring growth, remaining the cornerstone of economic development and diversification in the MENA region.”
In the first half of 2023, Mena’s residential market marked an upward trajectory on the back of a notable increase in year-to-year sales prices, the JLL report stated. Egypt saw the biggest price jump at 38 percent, followed by Dubai at 17 percent.
The price jump is mainly driven by mounting supply chain challenges and the ensuing rise in construction input prices, as well as rising inflationary pressures.
Given that, rental prices also had an upturn, with Dubai experiencing the largest year-on-year surge of 23 per cent. Cairo was a close second at 18 per cent while Abu Dhabi saw a modest 1 per cent increase.
The value of projects awarded in MENA countries was $101 billion, with Saudi Arabia having the highest proportion of projects worth $44 billion; the UAE ranked second with $23 billion worth of projects awarded. Both countries account for 67 percent of the total value of projects.
Both markets recorded a substantial increase in the value of projects awarded relative to the same period last year, the JLL report elucidated. It says that the residential sector has been top-performing in the UAE, with over $9 billion worth of awarded projects. Dubai picked up the lion's share of that figure with the combined value of the city’s awarded residential projects reaching $5 billion.
Despite experiencing an overall uplift in the value of its construction project pipeline, Egypt saw a contraction in the value of awarded projects in H1 2023 compared to the same period last year.
The North African country also saw the launch of $771 million worth of residential real estate projects in the first half of the year.
The JLL report predicts a 9 percent annual average growth rate in Egypt’s construction market size between 2024 and 2027 on the back of the continuation of its ambitious transport construction projects, the development of renewable energy projects, and growth in its residential construction market.
Saudi Arabia’s construction market is expected to grow by 4 percent between 2024 and 2027 as the country continues to embrace modernization and economic diversification through its 2030 Vision.
The UAE’s construction market size is expected to grow by over 3 per cent (AAGR) during the same years, the report stated.