Market Assessment of Aggregate / Construction Materials Market in UAE

• The construction material market suffered less damage (a 39% drop) than the overall construction market, which shrank by more than 75% during the 2018-2020 downturn. The market is expected to maintain healthy growth rate mainly due to strong demand in infrastructure and building construction segments.
• Aggregates (3/4 and 3/8) account for more than 60% of construction materials demand in the UAE. Demand for armor rocks is expected to grow in the coming years, aided by the various luxury island projects (Dubai Island, Jubail Island, Saadiyat Island, YAS island, etc.) announced in the country
• Government’s focus on sustainable development will drive the construction segment growth in next 25 years. The construction industry rebounded in 2022 and has since grown at a compound annual growth rate of 27.3% during the period of 2020-22. Government is also pushing towards various sustainable initiatives such as the Dubai 2040 urban development plan, Energy Strategy 2050, the Sheikh Zayed Housing Programme and the Dubai Tourism Strategy
• Demand for armor rocks is expected to grow in the coming years, aided by the various luxury island projects announced in the country. Domestic aggregates consumption within UAE is expected to be driven by road and rail construction projects. Aggregate Sand accounts for ~27% of the total construction materials and is demanded by all construction activities. Others include wet material, road base, sub base, coarse materials, etc.; 17.8 Mn tons of the others category products were manufactured in 2022
• Currently, more than 88% of construction material are sold directly to customers. Steven Rock direct sale to customer is highest (98%), other quarry units’ sale 70%-80% via direct customer sale route. Direct customers include large construction contracting companies, RMC (Ready Mix concrete) companies and export companies

Table of Content:

Macro Overview of UAE

• UAE GDP and Growth rate
  • GDP breakdown by sector
  • Share of construction sector over the years
• Trade, fiscal balance position and forecast
• Key economic growth drivers and challenges

UAE Construction Sector Overview

• Construction market size (2019-22) and forecast (2023-26)
• UAE construction contractor awards 2019-2022
• Key drivers positively impacting the growth of the sector
• Major UAE construction projects in pipeline (name of projects, current state and contractors)
• Potential challenges and restraints e.g., Contractor challenges: cashflow / liquidity, sub-contractor staff availability, rising input costs, etc.

UAE construction material market

• Historical and forecast market size (2018-2022) and forecast (2023-26)
  • By value (AED)
    By volume (tons)
• Market size (2022) by product segments: Crushed Stone, Sand, Gravel, Gabbro, other aggregates
• Market size (2022) by application segments: Commercial, Residential, Industrial, Infrastructure
• Key drivers impacting the future industry growth

Regulatory framework:

• License requirement pertaining to quarrying / mining, approvals required,
• Key government bodies involved for set-up and their roles: e.g., Ministry of environment & water
• Key regulatory requirement / guidelines pertaining to: Blasting, drilling, Material handling, hailing of sites, crushers, environmental control & monitoring, waste management, transportation of quarry products, safety and emergency, etc.

Segmental Analysis:

• Brief market profile for each of the key product segments (Gabbro, sand, gravel, crushed stones / rocks)
  • Current and forecast market size (2022-26)
  • Key application segments and grades / sizes
  • Pricing overview (current and outlook for 1 year)
  • Segment specific drivers and challenges from quarrying perspective

• UAE Construction Material Industry: Competition Overview
  • List of 5-7 major players and estimated market share (value / volume terms)
    • SBD crushers
    • Stevin Rock
    • KPD Metacore, etc.
  • Company profiles of leading 3-4 players operating in the country
    • Group overview / history
    • Product portfolio
    • Key target segments, Sample clientele list
    • # of quarries, locations and capacity
    • Financial profile (revenue / growth, gross / operating margin)
    • Key strategies / USP of the firm
    • Order analysis: Avg number of orders per month / year
  • Competition Intensity: Qualitative assessment of competition factors:
    • Price
    • Location and proximity
    • Range of products
    • Brand / Quality / Reputation

• Distribution & Sales Value Chain
  • Value Chain assessment: Role of key players
    • Quarry / producers
    • Stockists / warehousing
    • Distribution / traders
    • Sales Agents
    • Customers
  • Price / margin movement across the value chain
  • Type of distribution channels observed in the industry and average commission / margins:
    • Retailers / Wholesalers
    • Appointed distributors
    • 3P Agents
  • Sales commercials prevalent in the industry
    • Credit period
    • Typical discount (if any) by credit period: Cash credits
    • Typical bad debt ratio

• Quarry Locations – Client
  • Location map across UAE with client’s quarry sites
  • Production capacity, product portfolio, capacity utilization across each site

• Client’s Investment Plan
  • Capacity expansion across current locations
  • New quarry sites locally in UAE / MENA
  • Product portfolio expansion
  • Diversification plan (if any)

• Supplier and creditor analysis
  • Supplier concentration: Share of major suppliers towards total revenue
  • Major supplier contracts: dependencies and contingency plan
  • Key risks envisaged if any towards supplier management
  • Credit analysis
    • Receivable days
    • Bad debt
    • Cash flow standing

• Purchasing function assessment