How to Thrive in the UAE’s Construction Market: An Exclusive Interview with Vitaliy Chiryassov
The UAE’s construction sector is one of the most dynamic and rapidly evolving industries in the region. With massive infrastructure projects, sustainable development initiatives, and a booming real estate market, the opportunities are vast—but so are the challenges. To gain deeper insights into how businesses can succeed in this competitive landscape, we sat down with Vitaliy Chiryassov, CEO of UPPERCASE, an international consulting firm, and UPPERSETUP, a project dedicated to helping businesses establish and operate in the UAE.
In this interview, we discuss the state of the construction sector in the United Arab Emirates and how companies can compete in this market. Our expert is Vitaliy Chiryassov, CEO of UPPERCASE, an international consulting firm, and UPPERSETUP, an innovative project that helps businesses set up and operate in the UAE.
Q: Vitaliy Chiryassov , Let’s talk about the construction market in the UAE. What is it like today and what are the forecasts for the near future?
A: We’re seeing a construction boom that not only rivals but in some ways even surpasses the growth from the early 2000s. In the UAE, the value of construction contracts awarded in Q2 2024 accounted for over a third of total contracts in the GCC region, and the total value surpassed USD $16 billion.
The future looks bright. The UAE government’s push for economic diversification, especially through initiatives like UAE Vision 2030, is pouring major investment into infrastructure and real estate. There’s a big uptick in both residential and commercial projects, with a growing focus on sustainable and smart buildings.
Looking ahead, I expect this strong growth to continue. With preparations for COP28 and expanding tourism projects, the construction sector will remain busy. At the moment, the UAE has the second largest share of ongoing or planned projects in the GCC, with a total value of $856 billion. It’s a huge market and it’s growing fast.
Q: You’ll often hear that doing business in the UAE is different from other countries. What are the regional peculiarities to be aware of in the construction industry?
A: The UAE construction market is unique in several ways. First, the speed of project execution here is remarkable. What might take years in other countries often happens in months in the UAE. I’ve seen entire communities spring up in less than a year.
Another key aspect is the emphasis on cutting-edge technology and sustainability. The UAE is positioning itself as a global leader in green building practices. For instance, Dubai has mandated that all new buildings must meet the specific Dubai Green Building System standards. This push for innovation creates exciting opportunities but also demands that construction companies stay ahead of the curve.
The market is also characterized by its international nature. You’ll find global architectural firms, multinational construction companies, and a diverse workforce all collaborating on projects. This melting pot of expertise drives innovation but also means competition is fierce. To succeed, companies need to bring something unique to the table, whether that’s specialized skills, innovative technologies, or exceptional project management capabilities.
Q: Vitaliy Chiryassov , What are the main niches in the UAE construction sector?
A: Of course, traditional construction is at the center of the market, but most projects require many specialized services.As a result, specialized niches are forming around them, making it easier for many newcomers to enter the market. For example, fit-out and MEP (mechanical, electrical and plumbing) services. This includes the installation of building systems, including HVAC, electrical, plumbing, facade, interior finishes and site improvements.
Also in high demand are architectural design and BIM (Building Information Modeling), building materials manufacturing and distribution, heavy equipment leasing, and construction consulting. There is also growing demand for sustainable building practices and smart home technologies.
Q: How does one enter the UAE construction market? What should you do first?
A: Let’s break it down into concrete steps. First, you need to set up a legal entity. For construction, you’ll want to open either a mainland company or a free zone company, depending on where you want to operate. Next, you’ll need a contractor’s license from the municipality where you want to work. In Dubai, that’s the Dubai Municipality, and you’ll need to submit a package of documents that includes your company’s financial statements, your employees’ qualifications, and sometimes even equipment lists.
The UAE classifies contractors according to the size and type of projects they can undertake. For example, you start at G+1 (ground plus one floor) and move up to unlimited as you prove your capabilities.
Also, you’ll have to choose where to incorporate the company: in the free zone or in the mainland. For most construction companies, mainland registration is the clear choice. It gives you the ability to build anywhere in the UAE and compete in tenders, which is crucial in this market. Free zone registration is very limiting for construction, because you can’t undertake projects outside of the free zone where your company is registered.
I suggest considering free zone registration only if you have very specific contractors in mind within that free zone and can secure orders that justify it. For instance, if you’re specializing in airport construction with a guaranteed long-term contract at Dubai South Free Zone.
For mainland setup, you’d typically get a Commercial License with construction activities from the Department of Economic Development. In free zones, it would be an Industrial License. If you do go the free zone route, industrial zones like Dubai Industrial City, Khalifa Industrial Zone Abu Dhabi (KEZAD), or Ras Al Khaimah Economic Zone (RAKEZ) make the most sense for construction companies. They offer larger plots and are geared towards heavy industries and manufacturing.
Q: Let’s talk about specific licenses for construction. How do you choose the right one?
A: If you’re involved in general building construction, you’ll want a General Construction License, which covers most projects. However, if you’re looking to specialize in more complex projects like airports, pipelines, or power substations, you’ll need a Construction of special purpose facilities license.
If your work focuses on foundation and concrete tasks, you’ll need a Foundation and Concrete license. For assembling metal frameworks, you would require a Construction of Metal Structures license. Similarly, if your expertise is in finishing work, you’d need a license for Facade and Finishing Works.
Q: Vitaliy Chiryassov Do construction companies have to pay taxes in the UAE? Tell us more about it.
A: As of June 1, 2023, the UAE introduced a federal Corporate Tax at a standard rate of 9% for taxable income exceeding AED 375,000 (about $102,000). This applies to most businesses, including construction companies. However, there are some nuances. For instance, companies in free zones can still benefit from 0% tax rates if they comply with certain conditions, like not doing business with mainland UAE.
It’s worth noting that there’s no personal income tax, and the VAT rate remains at 5%. For construction companies, managing VAT can be tricky due to the long-term nature of projects and milestone-based payments. Despite these new taxes, the UAE still offers one of the most competitive tax environments globally.
Q: Vitaliy Chiryassov , Which authorities regulate the construction sector in the UAE?
Both federal and emirate authorities are involved. At the federal level, it’s the Ministry of Energy and Infrastructure. They set the overall policy, but the day-to-day regulation happens at the emirate level.
In Dubai, the main authority is the Dubai Municipality. They handle everything from initial approvals to final inspections. In some free zones, the Dubai Development Authority oversees construction. In Abu Dhabi, the Department of Municipality and Transport plays a similar role.
If you’re working on green buildings, you’ll be dealing with the Emirates Green Building Council. For safety, there’s the UAE Fire and Life Safety Code of Practice. In Dubai, if you’re involved in residential or commercial projects, you have to register with the Real Estate Regulatory Agency (RERA). They manage project funds.
Q: Are there many tenders in the UAE? If so, what types of tenders are there and what do you have to do to enter and win a tender?
There are public tenders from government agencies, semi-public tenders from companies like Emaar and Nakheel, and private tenders from companies and individuals. They fall into several groups: design-build, construction-only, and even PPP (public-private partnership) tenders for large infrastructure projects.
Like I said earlier, your company needs to be incorporated in the mainland. Then, to participate in a tender, you’ll need to register with the tendering authority, often the Ministry of Finance’s e-procurement system for government tenders.
Bidders will be judged on their technical skills, experience and overall approach. In the UAE, there’s a chance to win by presenting a creative solution, even if you’re competing against big players. For example, there isn’t a big company behind the Dubai Sphere, but it’s a remarkable project.
Q: Vitaliy Chiryassov , How do banks support the construction industry? Are there banking services for construction companies?
A: For sure, there are multiple support programs. Project financing is a major one, helping companies manage large-scale projects. There’s also equipment leasing, which helps acquire expensive machinery without the upfront capital. Some banks, like Emirates NBD and Abu Dhabi Commercial Bank, also have dedicated construction sector teams that understand the industry’s specific needs. Islamic finance options are available too, with products like Istisna’a contracts well-suited for construction projects. These can be particularly useful for government-related projects.
Q: Vitaliy Chiryassov , Last but not least – the big question. How to be successful in the construction business in the UAE?
A: Doing business in the UAE is unlike anywhere else in the world. Relationships are more important here than in many Western countries. Sometimes deals are made over a casual cup of coffee that would take months of formal meetings elsewhere. This means a greater emphasis on networking than some Western entrepreneurs are used to, and that without the right connections, some doors may stay closed no matter what you do. Building these connections takes years, and it’s not a process you can shortcut.
For companies who want to maximize their chances of success and minimize time and money spent on setup, a good approach is to consider partnering with a business consultant. These professionals know the regulations inside out, already have local connections, and can provide specific strategic advice tailored to your company’s objectives and situation.
Closing Thoughts
The UAE’s construction market is a land of opportunity, but navigating it requires a deep understanding of local regulations, market dynamics, and cultural nuances. As Vitaliy Chiryassov highlighted, success in this sector hinges on innovation, adaptability, and building strong relationships. Whether you’re a seasoned player or a newcomer, the UAE offers a fertile ground for growth—if you’re willing to play by its rules.