UAE Quarterly Review April 2021

The UAE’s PMI continued to rebound during Q1 2021 which reached the 52.6 marker; the strongest reading since July 2019. The rebound represented significant improvement to general business conditions and a positive response for non-oil activity and new business which is a likely cause from the roll out of the coronavirus vaccine throughout Q1. Trading Economics reports employment levels declined within the month of March, whilst efforts to recommence construction work showed a key indicator for the economic growth.

2021 GDP growth projections were announced for the UAE by the IMF and Emirates NBD at contradictory levels of 3.1 percent and 1.4 per cent respectively. During the month of March the OPEC basket price reached $68/Bl, rising to a pre- pandemic high. OPEC also revised the forecasted oil demand for 2021 showing recovery Y-o-Y compared to their initial forecast for 2021.

MEED reported a decline for the UAE’s construction project market value which is consistent across the overall GCC since April 2020. UAE awards in Q1 as tracked by MEED included a deal between Abu Dhabi Ports and Arabian Chemical Terminals bulk liquid storage terminal; two residential sector awards, firstly for Majid al-Futtaim and the main contract for Elan townhouses within the Tilal al-Ghaf (Dubai) development; and the design and build contract by Emaar Properties for their Vida Residences Creek Beach at Dubai Creek Harbour.

The UAE are advancing with new working environments adapted from the coronavirus pandemic and are leading the way with digital transformation including the Government proceeding with their digital and more recently artificial intelligence (AI) agenda. According to the MEED digital transformation index the UAE are a top scorer followed by Qatar and Saudi Arabia which factors digital infrastructure, human capital, government policy regulation and the developmental progress made so far in the digital economies.

Dubai also announced Vision 2040 during Q1 focused on enhancing key, already developed areas within the Emirate with a focus on hi-tech industries. The Urban Master Plan consists of a roadmap for sustainable urban development which aims to attract investors, visitors and potential residents whilst meeting the needs of citizens, residents and visitors over the next 20 years. The vision of the 2040 Master Plan will further secure Dubai’s reputation as a palpable place to live and work for foreign nationals.

The UAE Tender Price Index is AECOM’s assessment of construction tender prices in the UAE. It is compiled by AECOM’s Middle East Business Intelligence team based on actual returns of projects. It is based on new build and refurbishment projects across a variety of construction sectors and covers all emirates of the UAE.

The Index is therefore a measure of average price increases across differing project types and locations. It should be regarded as a guide only when looking at any specific project, as the pricing of individual projects will vary depending on such factors as their complexity, location, timescale, etc.

The relative cost of construction in the Middle East is based on typical build costs in USD. High and low cost factors for each building type have been calculated relative to the UAE (Dubai), where average costs equal 100. The relative cost bars plotted in the chart represent the average high and low cost factor for each location, based on the costs of the buildings included in the sample (excluding commercial fit-outs).