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.
Let’s take a closer look at some of these top industries in the UAE that are helping shape its economy today.
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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 also drives growth in various other sectors through revenue generation. According to the International Trade Administration, the UAE produces around 3.2 million barrels of crude oil daily, 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 daily 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 bolsters ADNOC’s market competitiveness in an increasingly eco-conscious global market and propels technological innovation in sustainable oil production. Additionally, it prepares the industry for potential environmental regulations, ensuring long-term viability in a world shifting towards cleaner energy sources.
Apart from ADNOC, several other international oil and gas companies, such as Shell, BP, ExxonMobil, Total SA, Schlumberger, and Halliburton, have invested in the UAE’s energy sector.
UAE Construction Industry
The UAE construction industry is one of the most lucrative in the MENA region and significantly drives 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 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 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.
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
Source: Unsplash
UAE Real Estate Industry
The real estate industry in the 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
In 2023, Dubai’s residential real estate market kept growing strongly. Even though there was a big increase in new apartments in late 2022, the market hit some big milestones in 2023. However, there was a bit of a slowdown in October 2023, with only 6,407 homes sold, which is 23.6% less than the same time last year. But despite this drop, the market still did well overall. In fact, it saw a huge 37% increase in sales in the third quarter of 2023, showing that the market can be unpredictable but still performs well overall.
Additionally, over the 12 months leading up to August 2023, Dubai’s real estate market experienced significant expansion, with average property prices soaring by an impressive 19.6%. This growth reflects the sector’s resilience and attractiveness to investors.
In the rental market, Dubai has seen a remarkable convergence in performance. In the first half of 2023, average rental growth in Dubai reached 38.0%, a notable shift from the 51.5% year-on-year growth rate in 2022. This indicates a robust and growing demand in the rental sector, complementing the sales market.
Developers in Dubai continue to have a promising outlook, with a pipeline of 27,000 units set to be delivered in the coming years. This ongoing development, coupled with the market’s demonstrated growth and resilience, solidifies Dubai’s position as a leading player in the global real estate market.
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 remains a premier tourist destination, renowned for its beautiful beaches, luxury hotels and resorts, exciting theme parks, and rich cultural offerings. The country’s tourism sector has experienced significant growth, with 12.82 million visitors travelling to Dubai and other Emirates from January to November 2022, marking a considerable increase from the 7.28 million international visitors in 2021.
In 2023, the UAE’s tourism sector reached new heights, maintaining its appeal as a preferred destination for travel, residency, and business. The first half of 2023 saw the sector boost to record levels, aligned with the UAE Tourism Strategy 2031 objectives. This upward trend was further evidenced by the UAE and Saudi Arabia leading the Middle East tourism boom, with the region expecting about 33 million leisure travellers annually.
Dubai, in particular, demonstrated strong growth in its tourism sector in 2023. The year’s Arabian Travel Market drew over 2,000 exhibitors and 34,000 attendees from more than 150 countries, indicating robust global interest in Dubai as a travel and investment hub.
Furthermore, Dubai witnessed a 17% increase in tourist numbers in the first quarter of 2023.
In 2022, the emirate’s tourism sector significantly contributed $29.4 billion to its economy, which indicates a large increase in tourism’s contribution to the economy for 2023.
The continued growth in tourism is also a result of substantial investments in infrastructure, including airports and transportation systems. The sector supports over 400 airlines, connecting the UAE with various global destinations. Numerous Dubai-based tour operators continue offering diverse tours within the UAE and to other countries.
UAE Tourism Strategy 2031
Under the UAE Tourism Strategy 2031, part of the “Projects of the 50,” the UAE government is committed to enhancing the tourism sector and reinforcing its status as a leading travel destination. The strategy aims to elevate tourism’s contribution to the GDP to AED 450 billion, with an annual increase of AED 27 billion. It also seeks to attract AED 100 billion in additional tourism investments to host 40 million hotel guests.
This strategy comprises 25 initiatives and policies, focusing on strengthening the national tourism identity, diversifying specialized tourism products, building tourism capabilities, and increasing investments. This comprehensive approach fosters a sustainable and competitive environment for the UAE tourism sector, ensuring its continued prominence in the global landscape for years.
UAE Logistics and Transportation Industry
The logistics and transportation industry in the UAE, comprising various businesses such as cargo shipping, air freight companies, port operators, and ground transportation providers, has been experiencing significant growth in recent years. This growth is propelled by increased demand for international trade and the movement of goods within the region. Contrary to earlier estimates, the UAE logistics market is expected to surpass $31 billion by 2026, reflecting a substantial increase in the sector’s economic impact.
This industry’s expansion is largely attributed to strong government support for infrastructure development, technological advancement, and international trade activities. The UAE, particularly Dubai, has established itself as a key hub for global shipping operations, acting as a crucial trans-shipment point between Europe and Asia. Dubai’s logistics sector has demonstrated remarkable resilience and innovation in the face of global economic uncertainties, further cementing its position as a global centre for trade and commerce.
Technological advancements are pivotal in this growth, with logistic service providers increasingly relying on AI, IoT, blockchain, and automated material handling equipment to enhance their services. The surge in e-commerce has expedited the need for stable and time-sensitive deliveries, prompting innovations in last-mile delivery and same or next-day services. Investments in sustainable technologies are also revolutionizing operations, as seen in the Jebel Ali Free Zone (Jafza), which has been instrumental in boosting Dubai’s trade and leveraging technology for increased efficiency.
The prominent UAE logistics and transportation industry companies, including DP World, Emirates Integrated Telecommunications Company (Du), Abu Dhabi Ports, Aramex, and Emirates SkyCargo, play a vital role.
Notably, Emirates was recognized as the Transport & Logistics Company of the Year at the Gulf Business Awards 2023, highlighting its excellence in the industry.
These developments showcase the sector’s adaptability, innovation, and growing significance in the global supply chain, affirming the UAE’s position as a leader in logistics and transportation.
UAE Financial Services Industry
The UAE’s financial services industry, boosted by rising investments, has grown significantly in recent years. In 2023, it saw a 30% growth in Q2 and is expected to grow by 13% annually. With over 50 banks, the banking sector remains robust, offering diverse services to customers worldwide. Despite global economic challenges, UAE banks maintain a stable outlook for 2023, following a substantial increase in net profits and assets in 2022
The country’s insurance sector includes key players like Metlife-UAE, Arabia Insurance, Adamjee Insurance, Oman Insurance Company, Orient Insurance, and Emirates Insurance. Investment funds are increasingly popular, leading to more private equity firms, venture capital companies, and investment banks.
Leading the private equity market in the UAE are firms like Mubadala Capital, Amanat Holdings, NBK Capital Partners, SOKOTRA Capital, Vis Mundi, Fajr Capital, Levant Capital Ltd., and TVM Capital Healthcare.
The sector is also embracing digital transformation, with the UAE Central Bank enhancing banking digitalization, which is expected to drive payments industry revenue to $18.7 billion by 2031. The strategic partnership between Pluto and Mastercard is notable, innovating B2B payment solutions across the GCC.
These trends highlight the UAE’s financial services industry’s dynamism, growth potential, and embrace of digital advancements.
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UAE Healthcare Industry
The UAE Healthcare Industry, renowned for its advanced medical facilities and state-of-the-art services, continues to grow, particularly with the influx of foreign visitors and expatriates. The government’s investment in healthcare reform has notably increased, with the 2023 federal budget allocating AED4.8 billion for healthcare and community protection services. This investment has led to a significant rise in private hospital beds across different emirates.
Dubai Healthcare City, a free zone dedicated to healthcare development, hosts 10 hospitals and 168 clinical facilities, reflecting the sector’s focus on innovation and quality treatment.
Healthcare Industry Growth Outlook
The UAE healthcare market is expected to reach $10.7 billion by 2025, growing at a 7.5% year-on-year rate. Healthcare spending is projected to rise to 4.6% of GDP by 2026 and 5.1% by 2029, driven by population growth and an ageing demographic.
Embracing technological advancements, the UAE invests in telemedicine, AI-driven diagnostics, and robotic surgery, making healthcare more cost-effective and accessible. The public health system is robust, with significant investments in addressing key health issues like diabetes and respiratory diseases. These efforts underscore the UAE’s commitment to providing top-notch healthcare services and maintaining its position as a leader in the global healthcare sector.
Source: Unsplash
UAE Retail Industry
The UAE retail industry has continued to experience robust growth, with consumer preferences shifting towards product quality and lifestyle, significantly increasing spending levels. In 2022, the sector witnessed a remarkable 19% rise in consumer spending compared to the previous year, indicating sustained growth.
The industry’s expansion is further bolstered by the influx of tourists, with Dubai alone welcoming over 14.5 million visitors in 2023. This tourism surge has created a vibrant atmosphere and contributed to substantial employment opportunities within the retail sector
In terms of market value, the UAE retail industry is currently worth $55 billion and is forecasted to steadily rise to $63.8 billion by 2023, demonstrating the sector’s significant potential for growth. By the end of 2027, the market is expected to soar to an impressive USD 70.5 billion.
The UAE’s strategic growth in retail is driven by government initiatives such as the Dh50 billion three-year economic stimulus package and the easing of visa restrictions, which have significantly contributed to the sector’s expansion. Additionally, the UAE is ranked among the top ten retail destinations globally, with tourist spending particularly high in Dubai, highlighting the sector’s strong appeal to international visitors.
Despite these positive trends, the retail industry faces challenges like an oversupply of commercial space and the rising influence of e-commerce, which necessitates adaptive strategies from retailers. The country’s iconic shopping malls, including the world-renowned Dubai Mall, remain central to the retail experience, reflecting the UAE’s status as a premier shopping destination.
UAE eCommerce Sector
The UAE eCommerce sector is poised for remarkable growth, with projections indicating that the market will reach $13.78 billion by 2023 and continue to expand at a CAGR of 9.53% over the next four years, culminating in a market volume of $19.83 billion by 2027. This growth trajectory is further supported by recent forecasts predicting that the B2C eCommerce market in the UAE will grow by 14.80% annually to reach US$30.7 billion in 2023, and the overall market size is expected to reach $17 billion by 2025.
A key driver of this growth has been the increased smartphone penetration and the rising consumer demand for convenience in online shopping. In 2022, the eCommerce sector accounted for 45% of the UAE’s total retail sales, a substantial increase from about 5% in 2015. The sector’s share of total retail sales is projected to reach 12.6% by 2025, reflecting the growing prominence of online shopping in the UAE’s retail landscape.
Additionally, the UAE e-commerce market is growing at a robust CAGR of 11.52% over the next five years, contributing significantly to the global growth rate of e-commerce. This impressive growth is facilitated by key players in the market, including international and local companies like Apple Inc., Amazon.com Inc., Noon AD Holdings Ltd, Sharaf DG LLC, and LetsTango.Com.
These developments underscore the UAE eCommerce sector’s dynamic expansion, fueled by technological advancements, a high internet penetration rate, and evolving consumer shopping habits. The sector’s significant contribution to the UAE’s total retail sales highlights its increasing importance in the overall retail economy.
Wrap-Up: Top Industries in UAE
The UAE is home to some of the MENA region’s most vibrant and dynamic industries. All these sectors play an essential role in the country’s economy, from oil and gas to construction, tourism, real estate, logistics and transportation, financial services, healthcare, and retail. 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, contact us today.
