UAE Construction Shifts to Local Materials, AI as Cost Pressures Mount

Materials account for nearly 70 percent of project costs in UAE construction, making the sector’s current pivot toward local sourcing and artificial intelligence a matter of hard economics, not ideology.

That financial logic drove the conversation at a closed-door forum convened by the Indian Business & Professional Council’s Real Asset & Built Environment Focus Group and co-hosted by ESPA Group. Senior executives from construction, real estate, engineering, manufacturing, banking and technology gathered to assess the structural shifts redefining how projects are financed, built and delivered across the Emirates.

Additional reference context is available at https://www.tradingview.com/news/reuters.com,2026-07-14:newsml_Zaw29Z1ZJ:0-zawya-make-it-in-the-emirates-ai-and-modular-construction-to-drive-the-next-decade-of-uae-infrastructure/.

The immediate economic catalyst is supply chain risk. Rising shipping costs and geopolitical volatility have made international sourcing more expensive and less predictable, creating direct financial incentives for developers to procure domestically. That incentive is reinforced by the UAE’s Comprehensive Economic Partnership Agreements with 28 countries, which extend preferential market access to locally manufactured goods, improving the commercial case for onshore production.

AbdelRhman Obaid, Group CEO of MAHY Khoory Group, pointed to the growing export value of domestic output. “Made in the UAE now stands for quality. Manufacturing across infrastructure, technology, furniture and consumer products will continue to accelerate,” he said. Kommineni Mahender, Executive Director of BILT (ABM Group), connected market disruption directly to investor confidence. “Projects don’t move because of the market; they move because of people. The UAE market remains fundamentally strong, and recent challenges have strengthened confidence in local manufacturing,” he stated.

Meanwhile, artificial intelligence is emerging as the sector’s most consequential cost-optimization lever. Given that materials represent close to 70 percent of project expenditure, AI-powered procurement systems offer measurable margin improvement at scale. Wael Mansour, CEO of Royal Advance Electromechanical and Trojan Construction Group, confirmed that Building Information Modelling, digital twins and modular construction methods are already operational rather than aspirational. “The future of MEP has already started. Buildings are becoming smarter during construction, and modular systems will redefine how we deliver projects,” he said. Mansour also cited the UAE’s development of one of the region’s largest 5-gigawatt data centres as a concrete signal of the country’s technology investment trajectory.

Subraya Kalkura, Managing Director of John R. Harris and Partners, identified data centres and digitally enabled infrastructure as the fastest-growing demand segment. AI simulation and BIM are also enabling building designs aligned with the UAE’s Net Zero 2050 targets, which increasingly shape procurement and project approval decisions. “Technology allows us to simulate how buildings will perform before they are built. AI will become one of our strongest tools for delivering more sustainable infrastructure,” Kalkura said.

The forum’s framing of resilience as a return-generating strategy, rather than a defensive cost, reflects how investor thinking in the sector has shifted. Dr. Rajeev Neelivethil, Convener of the RABE Focus Group and Managing Director (MENA and APAC) for ESPA Group, put it directly: “Resilience is no longer a response; it is a strategy. The UAE sits at the centre of global trade and innovation, and the future of construction will be built through collaboration, digital transformation and sustainable leadership.”

Supply chain redundancy and technology integration, once treated as optional enhancements, are now priced into competitive project delivery. The forum also surfaced calls from industry leaders for stronger governance frameworks, standardized contract terms and improved payment practices, operational reforms that would reduce counterparty risk and improve cash flow predictability across the construction ecosystem. Full coverage of those discussions is available at tradingview.com/news/reuters.com,2026-07-14:newsml_Zaw29Z1ZJ:0-zawya-make-it-in-the-emirates-ai-and-modular-construction-to-drive-the-next-decade-of-uae-infrastructure.

Panel participants expressed confidence in the UAE’s long-term capital allocation outlook, pointing to political stability, continued government investment in major projects and digital transformation capacity as the foundations underpinning sustained sector growth. The open question is whether governance and payment reform will move fast enough to match the pace of technological change already under way on project sites.