UAE Construction Costs Climb On Infrastructure Boom And Supply Pressures
Construction costs in the UAE continue to rise as demand for skilled labour and building materials intensifies amid a surge in infrastructure and real estate projects, according to construction consultancy services provider Currie & Brown.
The firm noted in its latest ‘UAE Market Overview’ that average costs are tracking closely with a projected annual construction inflation rate of 3-4 percent, with quarterly increases of 1-2 percent in line with earlier forecasts. Tender price inflation for 2025 is projected at 2-5 percent, driven mainly by material and labour pressures.
According to the report, residential build costs in the UAE currently range from AED 3,830 per square metre (sqm) for low-rise properties to as high as AED 16,300 per sqm for luxury branded villas.
While rising costs are putting pressure on project margins, strong demand for infrastructure, housing and tourism is keeping the market active.
High project activity
Project activity is led by rising government and private sector investment with emphasis on infrastructure, especially transport and urban development, the report noted.
Abu Dhabi’s Department of Municipalities and Transport has committed 75 billion UAE dirhams to transform the capital’s urban environment, while Dubai’s Roads and Transport Authority is advancing its 2030 plan, which includes 39 major road projects and the AED 18 billion Metro Blue Line. At the national level, Etihad Rail continues to expand its network, linking 11 cities across the emirates and already carrying up to 22,000 tonnes of freight daily.
These developments are reshaping connectivity and stimulating wider growth in real estate, logistics, and tourism, Currie & Brown said. Residential demand is also expanding beyond traditional hotspots, with Ajman, Sharjah, and Ras Al Khaimah gaining momentum.
On the macro front, resilient domestic conditions are underpinning growth, with GDP forecast to expand 4.6 percent in 2025—well above the global average of 2.3 percent—while inflation is expected to hold steady at around 2 percent.
Planning better
At the same time, the report noted, UAE’s growing project pipeline is driving up demand for skilled talent and quality materials. With added competition from Saudi Arabia’s giga-projects, escalating geopolitical tensions, and shifting U.S. tariffs pushing up costs for steel and aluminium, the risks of inflation, shortages, and delays are mounting.
“Construction projects need to plan for this uncertainty, in both timelines and costs,” the report said.
It said clients are turning to value engineering, new procurement approaches, and better cost and risk management to ease the pressure. Both the government and the private sector are working on ways to bring in more skilled labour and strengthen local supply chains. Additionally, many stakeholders are securing key materials early and reviewing contracts for escalation clauses or diversifying their supply chains. By combining local sourcing with imports, they’re reducing risks from tariffs, shortages, and future price swings.
“The UAE’s scale of investment is transforming demand across the Emirates,” commented Doug McGillivray, Regional Managing Director, Southern Gulf at Currie & Brown. “We’re seeing that those who act early and decisively to broaden supply chains, secure skilled labour and plan with realistic timelines, are able to deliver with certainty. Those who hesitate face rising costs and delays.”
