Precast Market Landscape:
The precast market in the UAE is fragmented and highly unstructured with the presence of more than 30 players offering similar kinds of products. Precast products are generally classified into three main categories namely structural precast products, architectural precast products and miscellaneous precast products. In 2020, the structural products such as beams, slabs, beams, staircase is expected to accounts ~50% the overall precast market value followed by architectural products (30%) such as GRC panels, exterior/interior walls etc. and miscellaneous products (20%) such as troughs, culverts, trenches, manholes etc. The said market in UAE, which is proportionate to the construction spend in the country and is forecasted to reach USD 0.94 billion in 2024, on the back of growing demand of precast elements owing to its superior quality, durability, ability to compress project schedules, reduced site disruption, reduced safety concerns and sustainability.
Precast market in UAE is expected to grow at a rate of 4.4% between 2018 and 2024, with structural products accounting for ~50% of the overall market value in 2020.
Precast industry is a highly customized and specification-driven industry. Every client/ project has different specifications according to the project requirement. Specification of the products are generally decided by the main/ lead contractor as per the needs. Government agencies such as DEWA, SEWA, ADVEA, ADNOC and etc. have their own pre-defined specifications for various products. These entities examine the quality and specifications of the product thoroughly throughout the procurement process (moulds and final product) multiple times. Timely approval of the moulds from these government agencies is one of the major bottlenecks for majority of the precast manufacturer in the UAE. Currently the process is time consuming as every mould needs to be approved by the agency before production and the specification keep on changing as per the project requirement.
Government entities and private contractors generally inquire about precast manufacturers by the means of tender process. Precast manufacturers are selected on the basis of their relevant experience, ability to deliver within the stipulated timelines and quality of the products. Design engineer plays an important role in the success of the company as he is responsible for overall design, material selection and quality of the final product. During the drawing approval phase, in case of government projects, moulds are initially send for approval and after getting the necessary approval, production is started. During this phase, companies are subjected to multiple inspections from the client.
Precast companies in the UAE typically enjoy a margin of 15-20%.
Majority of the cost involved in the production of the precast products can be attributed to raw materials, which accounts for approximately 60% of the overall value of the finished product followed by labor cost which accounts for another 20%. Precast companies in UAE typically enjoys a healthy margin of 15-20%. However, the final price realized by the end-user is arrived by adding additional costs of transportation, taxes and installation charges. Final price of precast products is calculated on the cubic meter basis. Typical price of precast products in the UAE ranges from AED 900 to 2,000 per cubic meter which is based on various factors such as type of material/concrete used, location of delivery, volume of the order, timelines and complexity of the structure.
Precast products are generally expensive as compared to the in-cast concrete, however, with economies of scale these costs can be brought down to the traditional methods of construction. For example, the cost of a typical villa made with precast concrete is 25% higher as compared to in-cast concrete, but with higher volumes (500-1000), these costs can be reduced to in-cast concrete value.
Precast Concrete Market Key Drivers:
Government Adoption – To support the sustainable infrastructure development and to ensure completion of the national housing programs such as Shiekh Zayed Housing Programme the government of UAE is adopting the use of precast products. Moreover, industries such as oil & gas are also using precast elements to boost speed of projects and have durable solution, supporting the growth of precast products in the UAE.
Rapid Urbanization – Growth in urbanization will drive demand for precast products in the UAE. Construction companies are adopting precast solutions which offers durable solution and shorter project schedules as most of the urbanizing projects have shorter construction timelines and rise of population in urban area requires housing at reduced cost.
Focus on Sustainability – The construction industry being one of the major contributors of pollution owing to production of construction waste is focusing more on environmental sustainability. Precast products is a significant contributor to positive environmental and economic impacts. Thus, focus on environmental sustainability will drive the demand for precast products in the UAE.
Demand for Durable Solutions – Precast concrete offers durable solution; they are optimally suited for the construction of basic and easily detachable structures, warehouse and porter cabins (military). The need for affordable housing and warehouses with higher durability is expected to drive the growth of precast in UAE.
Damage during the transit: It is important for manufactures to deliver the product without any damage during the process of transition and installation as precast products are manufactured away from the site. Precast products are prone to damages during the transit and hence pose a threat.
Sourcing raw materials: Scarcity of quality raw materials and price fluctuations can result in alarming situation for the precast companies. The manufacturers are extensively dependent on the suppliers for quality materials at affordable cost.
Lack of Skilled Labor: Manufacturers require specialized engineers for the delivering quality assured precast products and the limitation of qualified workforce is one of the challenges.
Rapid urbanization and need for affordable housing are creating demand for precast products in the UAE, as precast build villa and residential projects are durable, sustainable and faster to build as compared to traditional in-cast concrete method. UAE’s precast market is fragmented with only 8-9 players being approved by the government agencies. It creates an opportunity for new entrant to enter the market with a quality product and get affiliated by government and non-government agencies for their various products.