Revealed: Built assets add $351bn to UAE economy – report

Revenue from buildings, infrastructure set to rise further in MENA over next decade, says Arcadis
Revealed: Built assets add $351bn to UAE economy – report
Dubai, real estate, skyline, property
By Sarah Townsend
Wed 30 Nov 2016 08:31 AM

The economic return generated by buildings and infrastructure in the UAE has risen by 16 percent since 2014, according to new research.

Design consultancy Arcadis estimates that by the end of 2016, revenue from built assets will deliver $351 billion to the UAE economy and account for 50 percent of the UAE’s total GDP.

On a per-capita basis, the UAE secures a return of almost $38,000 from its built assets, indicating that investment in buildings and infrastructure will play a major role in supporting the country’s economic diversification agenda, according to Arcadis’ 2016 Global Built Asset Performance Index.

By 2026, the report said, the UAE’s total return from built assets is projected to rise by 33 percent to $468 billion.

The growth is partly due to the impact of a lower oil price, which has seen the percentage of revenue that comes from exporting natural resources decrease, Arcadis said. However, it also reflects progress made in recent years in diversifying into different industry sectors, the report noted.

The index, developed in collaboration with the Centre for Economics and Business Research (CEBR), estimates the revenue generated by buildings, infrastructure and other fixed assets including homes, schools, roads, airports, power plants, malls, railways and ports) in 36 countries around the world, which collectively represent 78 percent of global GDP.

Elsewhere in the Middle East and North Africa (MENA), income from built assets has also risen in the past two years. Saudi Arabia saw the largest percentage rise, the index showed, with total income from built assets estimated to stand at $364 billion – an increase of 47 percent since 2014.

Derek Sprackett, head of business advisory at Arcadis Middle East, said this is due to a surge in new projects as the kingdom’s economy suffers from low oil prices.

Over the past two years, Saudi Arabia is starting to see the impact of major investment particularly in areas such as rail, water, airports and roads as well as in new cities like King Abduallah Economic City.

“Saudi Arabia has invested heavily and strategically in its real estate and infrastructure, both before and since the launch of the National Vision 2030, as it seeks to grow and diversify its economy away from a traditional reliance on natural resources,” Sprackett said.

“Our research shows this strategy is already paying financial dividends, as well as creating cities and communities where people want to live and work.”

The Arcadis index also examined the projected return from built assets over the next decade. The contribution from built assets in the UAE is expected to increase by 33 percent to $468 billion by 2026, it said, while for the Qatar the total revenue is projected to rise 20 percent to $183 billion.

In Egypt, total revenue from built assets is expected to rise a substantial 62 percent to $579 billion as the North African country gradually implements diversification plans.

 

Economic return generated from built assets in countries in MENA region

Country

Total income from built assets in 2016 (USD)

% change since 2014

% of total GDP from built assets in 2016

% change since 2014

UAE

$351bn

16%

50%

4%

Qatar

$152bn

11%

44%

2%

Saudi Arabia

$364bn

47%

27%

8%

Iran

$660bn

13%

45%

4%

Egypt

$357bn

12%

45%

2%

 

Projected economic return that built assets will generate by 2026 for MENA countries

Country

Projected income from built assets in 2026 (USD)

% change since 2016

UAE

$468bn

33%

Qatar

$183bn

20%

Saudi Arabia

$419bn

15%

Iran

$951bn

44%

Egypt

$579bn

62%

 

 

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