Real Estate

Apartments in UAE among cheapest to build in the world

October 8, 2024, 3:58 AM

Workers stand on a scaffold in Dubai. Building a high rise in the UAE can be as much as two thirds cheaper than in other major cities

Labour costs five times lower
$1m buys three times as much space
Market worth $100bn

Building a standard residential high-rise in Dubai or Abu Dhabi is up to two-thirds cheaper than in other major global cities, thanks to land, labour and raw materials all costing much less.

Land is up to three times cheaper in the UAE compared with the prices paid in New York, London, Hong Kong and Singapore for both commercial and residential developments, a report from the project management company Currie & Brown reveals.

“These cities are highly built up, meaning acquiring land for new developments is very costly,” said Doug McGillivray, the regional managing director, UAE and Oman at Currie & Brown in Dubai.

In addition, labour costs can be as much as five times lower than New York, London and Sydney, McGillivray said, as a result of labour shortages, high living costs and stronger regulation around wages in those markets.

The UAE relies heavily on the labour markets of South Asia, from countries such as India, Bangladesh, Pakistan and Sri Lanka.

Matt Myers assistant professor of real estate in the urban studies programme at Heriot-Watt University in Dubai, said: “We don't have the unions here, so it's very efficient. We’re getting all that cheap labour out of Asia, and it's actually pretty good skilled labour, which makes a difference.”

Rising prices risk making Dubai homes ‘unattainable’

It was estimated by Statista in 2021 that there were almost 1.6 million workers employed in the construction sector in the UAE.

Along with land price and labour, the cost of raw materials for building is also cheaper in the UAE, the Currie & Brown research found.

building cheaper UAE — Apartment buyers in Dubai get three times more floorspace for $1m than buyers in Singapore

Commodities such as concrete, steel reinforcement, cement and diesel were all less costly then the prices charged in other global cities.

Myers said: "There's a lot of local competition to keep those prices down, but logistically it's much more efficient to bring it to Dubai from, say, Asia to Europe. It's only half the distance, so you don't have that issue of great distance to travel.”

The UAE construction market was worth $100 billion in 2023, and the sector will see an average annual growth rate of more than 3 percent during 2025-2028, said a report by GlobalData, a data analytics and consulting company based in London.

The consultancy company JLL said Dubai was due to deliver 35,000 residential units this year. Abu Dhabi will add another 7,600 homes, it said.