After the contraction of 10.4 percent in the year 2020, the UAE construction output is estimated to rebound more than 9 percent in 2021. However, the industrial property market is still struggling with overcapacity and it would remain unstable for a few as estimated by a few of the studies. Before the outbreak of coronavirus, the industry was already performing poorly. Modest economic growth over the past few years is said to be the main reason not to spend higher on building projects. This is what increases the cash difficulties and it results in tight margins in construction businesses especially for smaller companies. Swipe down to know more about the industrial property in the USA for 2021.

Building & Commodities Price Fluctuations:

The gross margin is under pressure just because of the high prices of buildings and commodities. In a fiercely competitive environment, the ability to pass them on the customer end is limited. Because of the pandemic situation, there is a huge shortage of construction workers in 2021 from the countries such as India & Pakistan. But it goes in the favor of laborers because it helped them a lot to make an increase in the labor costs. On the other hand, with the shortage of construction workers in 2021 many projects are delayed.

Financing Issues:

When it comes to financing, then we will see that for the United Arab Emirates the business financing is still an issue. This is because project funding for both gearing and dependence is high and banks are not able to provide loans to the construction worker over the past few years. In the construction industry payments takes about 180 days on average. The number of protracted payments are higher in the past few years because of strong competition, low margins, and lack of bank loans. While the number of non-payment notifications is estimated to increase in up comping few months.
In the March of 2021, the biggest contractor of Dubai “Arabtec” filed a bankruptcy case. However, insolvency proceedings are very common in  UAE. In the industrial property industry, there have been a few sizeable runaway cases in which bank loans & unpaid creditors are included. Most of the cases can't be excluded in the short and mid-term.

Market Overview:

The United Arab Emirates construction market's value is $101.45 billion in the year 2020 and it is predicted that it will reach $133.53 billion in the year 2026. From 2021 to 2026, CAGR will be registered at 4.69 percent from 2021 to 2026. Dubai’s construction market crisis has been impacted because of covid-19 and it leads to half of construction. These circumstances result in a reduction in net profits in the industrial sector.
Dubai's government is focusing on smart cities and they are planning to digitize up to 1000 government services and going to install 2000 wifi hotspots in the country also. Moreover, the trading policies are also welcoming the foreigners to invest money and that forces progress in the industrial sector in UAE. This sector is considered the essence of the UAE economy and it is so encouraging to see that the industry is making rapid growth in the country in upcoming years. The industrial sector is very important for any country as it plays a vital role in the economic uplift and development of the country.

Key Market Trends:

It is estimated that the UAE’s industrial sector is going to grow at a brisk rate in the coming years. For instance: Dubai’s expo 2020, which is first scheduled from 20th October 2020 t0 10th April 2021. However, because of the pandemic situation, the expo got delayed and the latest dates are 1 October 2021 to 31 March 2022 and which increases the inclination of the government to boost tourism in the country.
The experts are hoping that the construction demand in  UAE will go strong in the run-up of Dubai expo 2020, which is supported by the tourism & hospitality projects along with the public spending on infrastructure. But the rising material costs and funding are pressurizing the profit margins. Saudia Arabia and the United Arab Emirates are the countries that are pipelined the construction projects in the industrial segment. Saudia Arabia is working on 186 projects along with 66, 866 rooms, and the United Arab Emirates with 161 projects with 45, 753 rooms.