Dubai developers bring construction in-house as demand surges
A growing number of major UAE developers are setting up in-house contracting firms, after long relying on third-party contractors.
The move is aimed at increasing control over construction timelines, costs and quality standards, and ultimately, securing a larger share of profits, though it could also carry risks.
In a previously unreported sign of the trend, Emaar Properties, which developed the Burj Khalifa, has established Rukn Mirage under its subsidiary Mirage, a spokesperson told Reuters.
maar joins developers such as Samana Developers, Ellington, and Azizi, all of which have launched in-house contracting units in the past two years.
Arada, the developer co-founded by Saudi Prince Khaled bin Alwaleed bin Talal Al Saud, also confirmed in a statement to Reuters that they acquired part of an Australian contractor this year and plan to integrate it into UAE operations by 2027.
The shift comes as Dubai's real estate surges, with prices up 70% over four years to December 2024 and a government plan to double the population to 7.8 million by 2040.
Property launches rose 83% in 2024, though completions fell 23%, industry data shows.
The boom has fuelled a new influx of workers, including migrant labourers mainly from South Asia, with high rates of turnover among expatriate staff.
It has also led to fears of a downturn in a sector that remains crucial to the UAE economy.
Developers have been struggling to attract bids from outside contractors, amid stiff competition.
Dubai's Emaar Properties reports 33% jump in first-half profit
Samana Developers had initially planned to allocate 20% of its projects to its new in-house arm, launched in September. Now 80-90% of its new projects are being handled internally, Chief Executive Imran Farooq told Reuters.
'We used to get 25 or 30 contractors bidding for a project. Today you get hardly two or three,' Farooq said. Emaar, meanwhile, is taking a hybrid approach.
While some projects — such as a recently announced residential development — will be executed by their in-house construction arm Rukn Mirage, they will continue to outsource others, founder and Managing Director Mohamed Alabbar said.
Developers are also tapping debt markets to fund land purchases and operations, as billions of dirhams in buyer payments remain in escrow until handover.
Funds are released only after final inspections, with a one-year delivery grace period before buyers can claim refunds.
Developers, whose ownership varies and includes founding families, public investors and Emirati sovereign wealth funds, want to complete projects on time to unlock cash needed for shareholder distributions and to pay for expansion in the UAE and beyond.
Developers also want to avoid penalties for delays, which are not disclosed publicly but occasionally reported by local media. In March, a Dubai court ordered a developer to repay 12.4 million dirhams ($3.38 million) plus interest over an undelivered floating villa, Al Khaleej reported, opens new tab.
Developers say owning the full pipeline — from land acquisition to handover — provides greater certainty in an unpredictable market and aligns with the UAE's push for self-reliance in strategic sectors.
But bringing construction in-house may also carry risks. 'When developers try to become builders, they start splitting focus — and that's when things can get muddy,' said Gordon Rodger, founder and managing partner at construction consultancy Stonehaven.
'They end up with teams stretched between land acquisition, sales, marketing, events, PR, funding… and now also procurement, site logistics, health and safety, and huge amounts of sub-contractor management.' Rodger also cautioned that developers could be left with idle construction capacity in a downturn.
'You've got a big factory, a pre-cast yard, a huge joinery division, in-house plant, in-house equipment all sitting idle and you've got no work because your master developer can't sell any real estate,' he said.
As a result of the shift, independent contractors may seek more work outside real estate in sectors such as in government infrastructure, manufacturing or oil and gas, industry sources said.
Hashtags
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
Business Recorder
2 hours ago
- Business Recorder
FTSE 100 steady after intraday record high; focus on Putin-Trump talks
Britain's FTSE 100 was flat on Friday, despite momentarily scaling to an all-time intraday high, as defence stocks weighed ahead of crucial U.S-Russia talks regarding a potential resolution to the conflict in Ukraine. The blue-chip index was steady as of 1000 GMT, yet appears poised to end the week with gains. The week's advances were fueled by growing optimism surrounding potential US interest rate cuts, better-than-expected UK Gross Domestic Product data and a series of largely positive corporate earnings reports. The aerospace and defence sector emerged as Friday's underperformer, declining 1.8%, ahead of the scheduled high-stakes meeting between US President Donald Trump and Russian President Vladimir Putin in Alaska later in the day. Investors will be watching the summit closely for any signs of a credible peace deal, with any substantive outcomes likely setting the market tone for the coming week. Energy sector, up 0.2%, was also in focus as a potential ceasefire could result in the easing of sanctions on Russian oil exports, potentially placing downward pressure on global crude prices. Supporting the gains on London's benchmark, industrial metal miners strengthened 2%, as weak economic data from key commodities consumer China fueled hopes that it would spur Beijing to unleash more stimulus measures. The midcap index gained 0.3% in the day, though it remains on track to close the week with losses. Bytes Technology was the top performer on the index, rising 7.4% as the IT firm announced a 25 million pounds ($33.89 million) share repurchase program. Reuters
Business Recorder
5 hours ago
- Business Recorder
Euro zone bonds steady as traders mull hot US inflation, await Alaska summit
LONDON: Euro zone bonds held steady as markets continue to digest Thursday's hot US inflation print while awaiting the outcome of the Alaska summit between US President Donald Trump and Russian President Vladimir Putin later on Friday. German 10-year yields traded flat around 2.7097%, while the rate-sensitive 2-year yields were also steady at 1.9441%. On Thursday, US producer price data came in hotter than expected, renewing inflation concerns and prompting traders to scale back Fed rate cut bets. Ahead of Friday's summit in Alaska, Trump said he believes his Russian counterpart is ready to end the war in Ukraine, but that peace would likely require at least a second meeting involving Ukraine's leader. Reuters
Business Recorder
7 hours ago
- Business Recorder
China's July factory output, retail sales growth slump in blow to economic momentum
BEIJING: China's factory output growth slumped to an eight month low in July, while retail sales also slowed sharply, reinforcing the challenge confronting policymakers as they strive to shore up an economy in the face of soft demand at home and external risks. The underwhelming data, released by the National Bureau of Statistics (NBS) on Friday, come as Chinese policymakers navigate pressure on multiple fronts ranging from US President Donald Trump's trade policies to insufficient demand and excessive competition in domestic market. Industrial output grew 5.7% year-on-year in July, the lowest reading since November 2024, and compared with a 6.8% rise in June. It missed forecasts for a 5.9% increase in a Reuters poll. A temporary trade truce reached between China and the United States in mid-May, which was extended by another 90-days this week, has prevented US tariff rates on Chinese goods from reaching triple-digit levels. However, Chinese manufacturers' profits continue to take a hit from subdued demand and factory-gate deflation at home. Data released earlier this month by the NBS showed that the producer price index fell 3.6% year-on-year in July, matching the near two-year low recorded in June. Beijing has recently stepped up policy measures and made pledges to prop up domestic consumption and curb excessive price competition, as authorities strive to lift economic growth towards the government's 2025 target of around 5%. Retail sales, a gauge of consumption, expanded 3.7% in July, the slowest reading since December 2024, slowing from a 4.8% rise in the previous month and missing forecasts of a 4.6% gain. Fixed asset investment grew 1.6% in the first seven months of the year from the same period last year, compared with an expected 2.7% rise. It had expanded 2.8% in the first half. The world's second-largest economy has so far avoided a sharp slowdown in part due to policy support and as factories took advantage of the US-China trade truce to front-load shipments, but analysts say weak demand at home and global risks will drag on growth in coming quarters. Economic activity has also been impacted by extreme weather, from record-breaking heat to storms and floods across the country, disrupting factory production and day-to-day business operations. The latest Reuters poll projected China's GDP growth to slow to 4.5% in the third quarter and 4.0% in the fourth, suggesting that Beijing has its work cut out in getting households to spend more at a time of uncertainty over job security and mounting headwinds from Trump's global trade war. China's 2025 GDP growth is forecast to cool to 4.6% - falling short of the official goal - from last year's 5.0% and ease even further to 4.2% in 2026, according to the poll. Reuters
