UAE Developers Increasingly Turn To In-House Contracting

UAE Developers Increasingly Turn To In-House Contracting

UAE: Developers in the United Arab Emirates are increasingly establishing in-house contracting firms to gain greater control over construction timelines, costs, and quality while maximising profits. Companies such as Emaar, Samana Developers, Ellington, and Azizi have launched their own construction arms in the past two years, while Arada acquired part of an Australian contractor with plans to integrate it into UAE operations by 2027. The trend reflects Dubai’s real estate surge, with property prices rising 70 per cent over four years to December 2024 and property launches up 83 per cent in 2024, although completions fell 23 per cent. Developers cite difficulties in attracting sufficient bids from external contractors, with competition reducing the pool of bidders from dozens to only a few.

Emaar is adopting a hybrid approach, undertaking some projects through its new in-house arm, Rukn Mirage, while outsourcing others. Samana Developers has shifted most of its new projects internally, citing greater efficiency and predictability in cash flow. Developers are also tapping debt markets to fund land and operations as buyer payments remain locked in escrow until project completion. However, analysts caution that this move could expose developers to risks in the event of a downturn, as idle in-house capacity could raise costs and reduce flexibility. Independent contractors, facing reduced opportunities in real estate, may seek work in other industries such as infrastructure, manufacturing, and oil and gas.

Source: Reuters