Dubai developers bring construction in-house as demand surges

Highlights: 

• Developers hope to increase control, profits
• Firms also seek to avoid penalties for project delays
• Shift could leave developers exposed in a downturn
• Dubai looking to double the city's population by 2040

In a city famed for transforming desert into skyline, developers are taking the building process into their own hands as they seek to turbo-charge a property boom and maximise cash flow.

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. Emaar 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.

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 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.

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.