The UAE is the fourth-largest economy in the Middle East and North Africa (MENA), with a Gross Domestic Product (GDP) of USD 415 billion as of 2023. The country is renowned for its booming industries and sectors that have driven economic growth for decades. So what are the top industries in UAE?
From the robust oil and gas sector, a key player in the global energy market, to the dynamic construction industry with its iconic skyscrapers, the advanced healthcare sector offering state-of-the-art medical services, and the vibrant retail industry, famed for its luxurious shopping experiences, the UAE has firmly established itself as a premier destination for businesses looking to expand their presence in this strategically important part of the world.
Let’s take a closer look at some of these top industries in the UAE that are helping shape its economy today.
Source: Unsplash
UAE Oil and Gas Industry
The UAE’s oil and gas sector is its most important industry, accounting for 30% of its total GDP and drives growth in various other sectors through revenue generation. According to the International Trade Administration, the UAE produces around 3.2 million barrels per day of crude oil, making it one of the top 10 producers worldwide.
Several factors have contributed to the growth of oil and gas investments in the UAE, such as low taxes on corporate profits, no currency restrictions, a highly developed infrastructure, and access to advanced technology.
As such, multinational oil companies have been investing heavily in this sector over the past few years. The government has also invested significantly in research and development (R&D) to ensure the industry’s continued growth.
While the oil and gas sectors have continued to dominate the UAE’s economy, the country has also become the first Arab state to set a net-zero emission target by 2050.
Abu Dhabi National Oil Company (ADNOC): Market Leader
ADNOC is a prominent player in the worldwide oil and gas sector, operating in all aspects of the industry. The company aims to achieve a maximum sustainable production capacity of 5 million barrels per day by 2030.
In addition to its commitment to the country’s oil and gas sector, ADNOC also focuses on diversifying its energy portfolio through renewable energy sources. ADNOC has partnered with Abu Dhabi National Energy Company and Mubadala Investment Company to facilitate investment in clean energies. The joint venture known as Abu Dhabi Future Energy Company aims to produce 100 gigawatts of electricity by 2030.
ADNOC is committed to reducing the intensity of its operational Greenhouse Gas (GHG) emissions by 25% by 2030, aligning with the UAE’s goal of achieving net-zero emissions by 2050.
ADNOC’s commitment to reducing carbon intensity plays a pivotal role in enhancing the environmental sustainability of the UAE’s oil industry, aligning with global climate change efforts. This initiative not only bolsters ADNOC’s market competitiveness in an increasingly eco-conscious global market but also propels technological innovation in sustainable oil production. Additionally, it prepares the industry for potential future environmental regulations, ensuring long-term viability in a world shifting towards cleaner energy sources.
Apart from ADNOC, several other international oil and gas companies have invested in the UAE’s energy sector, such as Shell, BP, ExxonMobil, Total SA, Schlumberger, and Halliburton.
UAE Construction Industry
The UAE construction industry is one of the most lucrative in the MENA region and plays a significant role in driving economic growth. The sector has been growing steadily over the past few years, and the market size is now $38.99 billion in 2023. Analysts have forecasted that the UAE construction industry will observe a CAGR (Compound annual growth rate) of 4.85% increase to reach 49.40 billion by 2028.
The UAE’s construction boom is largely fueled by its ambitious development projects, such as Dubai’s megaprojects like Burj Khalifa, Palm Jumeirah, Dubai Marina, Abu Dhabi International Airport and other iconic landmarks throughout the country. This industry also includes residential housing projects that are helping meet demand from local and international investors looking to buy property in this part of the world.
Some of the factors that supported the growth of the construction industry include a strong government push for infrastructure development and the availability of a large pool of skilled labour. On the other hand, rising labour costs, supply chain disruptions, and shortage of raw materials have been some of the challenges this industry faces.
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The construction industry of the UAE comprises several individual sectors:
- Residential construction
- Commercial construction
- Industrial construction
- Infrastructure construction
- Energy and utilities construction
- Institutional construction
There are several large-scale contractors in the industry, including:
- Investment Corporation of Dubai
- Royal BAM Group NV
- National Petroleum Construction Co.
- Daewoo Shipbuilding & Marine Engineering Co. Ltd
- M.A. Kharafi & Sons
UAE Real Estate Industry
The real estate industry in UAE is one of the most dynamic sectors, and it has witnessed remarkable growth over the last few years. The country’s government has implemented various initiatives to promote investments in this sector, making it an attractive option for foreign investors.
Due to high demand from buyers and investors alike, property prices have increased across major cities such as Dubai and Abu Dhabi. Real estate projects such as malls, residences, offices, commercial complexes and hotels contribute significantly to economic activity in the UAE.
Dubai Residential and Commercial Real Estate Market
The Dubai residential real estate market saw a surge in apartment deliveries in Q3 2022, with over 6,000 units handed over. Villa supplies also rose, with 2,800 properties added in H1 2022 and new deliveries focused in areas like DAMAC Hills and Dubai South.
Average rents for apartments and villas continue to increase, with quarterly increases of 4% and 5%, respectively. Annual villa rent growth saw a substantial 22% increase, while apartment rents rose by 15%.
Dubai’s real estate market, particularly its residential sector, is thriving despite global challenges and uncertainty. This can be attributed to its reputation as a safe haven and competitive pricing compared to other major cities worldwide. Developers have a promising future with 27,000 units in the pipeline, set to be delivered in the coming years.
Abu Dhabi Residential and Commercial Real Estate Market
The growing real estate market is one of the primary reasons for entrepreneurs to open a business in Abu Dhabi.
The Abu Dhabi real estate market saw over 1,000 apartments delivered in Q3 2022 across Al Raha Beach, Reem Island, Yas Island, and Saadiyat Island. The demand for villas and townhouses remains strong, with a two per cent increase in average villa rental rates and a four per cent rise in prime villa community rents.
The residential sales market is also experiencing high demand for both new off-plan villa projects and completed projects, with most villa communities seeing a notable increase in demand in recent months.
Emaar Properties and ALDAR Properties are two of the biggest UAE companies operating in the real estate sector, with an estimated market value of $15.5 billion and $11 billion, respectively.
Source: Unsplash
UAE Tourism Industry
The UAE is a major tourist destination, thanks to its stunning beaches, luxurious hotels and resorts, thrilling theme parks and cultural attractions. The country has seen an influx of tourists over the past few years. 12.82 million visitors travelled to Dubai and other Emirates of the UAE from January to November 2022, a substantial rise from 7.28 million international visitors in 2021.
This growth has been driven by increased investment in tourism-related infrastructure, such as airports and transportation systems. The sector also supports more than 400 airlines operating to various destinations around the world. In addition, numerous Dubai-based tour operators offer tours across the UAE and other countries in the region.
UAE Tourism Strategy 2031
The UAE Tourism Strategy 2031, part of the “Projects of the 50”, is a major government initiative aimed at boosting the country’s tourism sector and solidifying its position as a top travel destination.
The strategy sets out to increase the contribution of tourism to the GDP to AED 450 billion, with an annual increase of AED 27 billion, and attract AED 100 billion in additional tourism investments. With the goal of welcoming 40 million hotel guests, the strategy is poised to drive substantial growth in the industry.
To achieve its goals, the UAE Tourism Strategy 2031 outlines 25 initiatives and policies. The strategy focuses on four key areas:
- strengthening the national tourism identity
- diversifying specialised tourism products
- building tourism capabilities, and
- increasing investments.
This holistic approach to developing the industry is designed to create a sustainable and competitive environment for the UAE tourism sector, helping it to remain at the forefront of the industry for years to come.
UAE Logistics and Transportation Industry
The logistics and transportation industry consists of several businesses, from cargo shipping and air freight companies to port operators and ground transportation providers. The sector has experienced significant growth in recent years due to increased demand for international trade and goods movement within the region. The UAE logistics market is estimated to exceed $16 billion by 2026.
The UAE logistics and transportation industry is increasing due to the strong government support for infrastructure development, technological advancement and international trade activities. With ports being developed as trans-shipment hubs between Europe and Asia, the country has become a key hub for global shipping operations.
Logistic service providers increasingly rely on technology such as AI, IoT, blockchain and automated material handling equipment to improve their services. GPS-enabled devices further enhance user convenience, while drones and driverless vehicles promise greater time efficiency shortly.
Prominent companies in the UAE logistics and transportation industry include DP World, Emirates Integrated Telecommunications Company (Du), Abu Dhabi Ports, Aramex, and Emirates SkyCargo.
UAE Financial Services Industry
Driven by increasing foreign and domestic investments, the UAE’s financial services industry has experienced rapid growth over the past few years. The banking sector is one of the essential components of this industry, with more than 50 banks offering various products and services to local and international customers.
The country is also home to numerous insurance companies, which provide coverage for everything from health to life. Top UAE insurance companies include:
- Metlife-UAE
- Arabia Insurance
- Adamjee Insurance
- Oman Insurance Company
- Orient Insurance
- Emirates Insurance
Furthermore, investment funds are becoming increasingly popular in the UAE as investors look for reliable ways to diversify their portfolios and protect their wealth. This has led to an influx of private equity firms, venture capital companies, and investment banks in the country. Now you will find support for diversified business ideas for your Dubai business.
The following UAE businesses are leading the private equity market:
- Mubadala Capital
- Amanat Holdings
- NBK Capital Partners
- SOKOTRA Capital
- Vis Mundi
- Fajr Capital
- Levant Capital Ltd.
- TVM Capital Healthcare
UAE Healthcare Industry
With a growing influx of foreign visitors and expatriates, the healthcare sector in UAE is home to some of the most advanced medical facilities in the region, and its hospitals are equipped with state-of-the-art technology and services.
The government’s commitment to healthcare reform initiatives has increased investments, leading to a significant rise in private hospital beds across different emirates.
Source: Unsplash
Furthermore, several large international companies have set up operations in Dubai Healthcare City – a free zone dedicated solely to promoting healthcare development – driving innovation and providing quality treatments for all residents. Currently, Dubai Healthcare City hosts 10 hospitals and 168 clinical facilities.
Healthcare Industry Growth Outlook
The UAE is forging ahead with a rapidly developing healthcare industry. According to the World Bank, expenditures for 2018 reached $18.2 billion, and it is expected to rise further at an impressive rate of 4.6% of GDP by 2026. This growth can be attributed partly to population growth and the country’s ageing demographic profile, which will necessitate more medical care services over time.
The UAE has been proactive in meeting these challenges head-on by innovating and investing heavily in new technologies such as telemedicine, AI-driven diagnostics and robots for surgery, among others that are helping make healthcare more cost-effective and accessible.
The UAE also has a well-developed public health system, with the government investing in research projects to address significant health issues like diabetes and respiratory diseases. This forward-thinking approach is helping to ensure that the country’s citizens have access to quality healthcare services for years to come.
UAE Retail Industry
The UAE retail industry has seen steady growth in the past year. Consumers have shifted their focus from price to product quality and lifestyle, raising their spending levels substantially.
In addition, consumer spending rose by 14% during the first quarter of 2022, indicating the probability of sustained growth. The country is also home to some of the most iconic shopping malls, such as the Dubai Mall, one of the largest malls in the world.
UAE eCommerce Sector
The UAE eCommerce market is projected to experience significant growth in the coming years, with revenue expected to reach $13.78 billion by 2023 and a CAGR of 9.53% over the next four years, leading to a market volume of $19.83 billion by 2027.
Increased smartphone penetration and rising consumer demand for convenience when shopping online have fueled eCommerce growth. In 2022, the eCommerce sector contributed 45% of the UAE’s total retail sales, a significant rise from about 5% in 2015.
Wrap-Up: Top Industries in UAE
The UAE is home to some of the MENA region’s most vibrant and dynamic industries. From oil and gas to construction, tourism, real estate, logistics and transportation, financial services, healthcare, and retail – all these sectors play an essential role in the country’s economy. Together they create a thriving business environment that attracts investors from all over the world.
Currently, the UAE is one of the most aspiring locations for those who want to open a business or expand their presence in the Middle East. It offers some of the most attractive investment opportunities and versatile business ideas.
Virtuzone has all the necessary expertise to help you establish a business in the UAE. For more information about setting up a business in the UAE and a comprehensive range of support, get in touch with us today.
