UAE Construction Output to Grow 4% Annually, Reaching $131 Billion by 2029

Dubai, UAE - September 22, 2025 -The UAE’s construction sector is set for steady and sustained growth, with output projected to expand by 4 percent annually and reach $131 billion by 2029, according to Knight Frank’s 2025 UAE Construction Landscape Review. This marks a significant rise from $107 billion recorded in 2024, underscoring the sector’s pivotal role in driving the UAE’s economic development and diversification goals.

Construction Leads National Development Agenda

Construction remains the dominant sector in the UAE’s future development pipeline, accounting for 62 percent of all planned projects. This far exceeds other key sectors, including transport (12 percent), power (7 percent), and water (5 percent). The data highlights how real estate and infrastructure development continue to be central pillars of the country’s growth strategy, particularly in rapidly expanding cities like Dubai and Abu Dhabi.

Within the construction pipeline, mixed-use developments are the largest contributor, representing 42 percent of total projects. Residential real estate follows at 28 percent, while data centers, a rapidly growing segment driven by the UAE’s digital economy, make up 9 percent, and hospitality projects account for 4 percent.

Residential and Commercial Construction Costs

Knight Frank’s report provides detailed insights into construction costs across the UAE.

As of Q2 2025:

• Residential villas: Costs range from $1,143 (AED 4,200) per square meter for standard villas to $3,000 (AED 11,000) per square meter for high-end villas.
• Apartments: Costs start at $1,171 (AED 4,300) per square meter, rising to $2,585 (AED 9,500) per square meter for premium units.
• Commercial buildings: Construction costs are between $1,500–$1,986 (AED 5,500–7,300) per square meter by the end of H1 2025.

These figures reflect the UAE’s diverse real estate market, which caters to a wide range of segments — from affordable housing and mid-market developments to ultra-luxury projects.

Dubai vs Abu Dhabi: Project Activity

The report also highlights notable differences between the two largest emirates.

In Dubai, project activity is heavily concentrated in the construction sector, representing 75 percent of all projects. This dominance is driven by Dubai’s ongoing focus on residential, mixed-use, and tourism-led developments. Conversely, in Abu Dhabi, construction projects make up only 23 percent of activity, with the oil and gas sector leading at 40 percent, reflecting the capital’s continued reliance on energy-driven initiatives.

Interestingly, oil and gas projects represent just 3 percent of contracts awarded in Dubai, showcasing the emirate’s diversified economic base.

Office Space Pipeline Surge

The report anticipates a substantial increase in office stock starting in 2027. Nearly 175,000 square meters of new office space is scheduled for delivery in Abu Dhabi alone, following more modest additions of 51,000 square meters in 2025 and 43,000 square meters in 2026.

This surge is expected to support growing demand from multinational corporations, startups, and government entities as the UAE positions itself as a global business hub.

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A Robust Growth Trajectory

The UAE construction market continues to demonstrate resilience and adaptability amid global economic uncertainties. With a balanced mix of residential, commercial, and mixed-use developments, coupled with strong government support and foreign investment, the sector is well-positioned to sustain its growth trajectory.

The projected growth to $131 billion by 2029 highlights the UAE’s long-term vision for urban expansion, infrastructure modernization, and diversified economic development — reinforcing its position as one of the most dynamic construction markets in the world.