PMI at Four-Year Low. EGA Smelter Down. Civil Code Rewritten. Permits Still Rising.

UAE non-oil PMI falls to 53.2 — four-year low — as new orders and business confidence weaken under sustained conflict pressure1

S&P Global's March 2026 UAE PMI: 53.2, down from 54.8 in February. Still in expansion territory, but the rate of growth is the slowest since mid-2022. New orders sub-index fell sharply. Business confidence dropped to its lowest reading since the survey began.2 The construction and real estate sub-sectors were the primary drag. Services held up better, suggesting the divergence between built environment and broader economy is widening.

Emirates Global Aluminium: Al Taweelah smelter "significantly damaged" — up to one year to repair. LME aluminium at $3,424/tonne, up 4.7%3

Iranian strikes on 29 March hit EGA's Al Taweelah site (1.6 million tonnes/yr capacity) and Alba in Bahrain. EGA confirmed "significant damage" — repair timeline up to 12 months. Gulf region accounts for ~9% of global aluminium production.4 Goldman Sachs raised its Q2 LME forecast from $3,200 to $3,450/tonne.5 Wood Mackenzie projects $3,500–$3,800/tonne in the short term. This is no longer a logistics story — it is a production story.

Drewry WCI stable at $2,287/FEU — fifth consecutive week at or above $2,200. Trump revises Section 232 tariffs: 50% on raw metals maintained, derivative products cut to 15%6

WCI has plateaued after five weeks of gains — capacity glut on non-Gulf routes offsetting Hormuz pressure. The $2,287 level is now the established baseline, not a peak.7 On tariffs: US maintains 50% duty on primary steel and aluminium imports but cuts tariffs on derivative products (MEP equipment, grid components, prefabricated systems) from 50% to 15% until 2027. For UAE contractors procuring specialist systems from the US, this is a modest cost relief on equipment — but raw material pricing remains elevated.8

UAE replaces its 40-year-old Civil Code — every construction contract signed after 1 June 2026 operates under a new legal framework9

Federal Decree-Law No. 25 of 2025 takes effect 1 June 2026. Key changes for construction: muqawala (construction contract) articles move from Arts. 872–896 to Arts. 812–839; contractors gain a new entitlement to additional payment where scope changes are the employer's fault; clearer termination for convenience provisions; new notice requirements. Pre-contractual good faith obligations are now mandatory — bad faith in negotiations creates liability. Latent defect limitation period extended from 6 months to 1 year.10 Standard FIDIC adaptations and template agreements need review before June.

Abu Dhabi issues new real estate governance decisions — escrow rules tightened, developer disclosure requirements strengthened11

Abu Dhabi's Department of Municipalities and Transport issued a package of real estate governance decisions targeting escrow account management, developer disclosure obligations, and project registration requirements. Timed against the conflict backdrop — the signal is that Abu Dhabi is reinforcing institutional confidence in the market rather than waiting for conditions to normalise. Developers with active Abu Dhabi off-plan launches should review compliance with the updated escrow and disclosure requirements.

Dubai Crown Prince approves AED 1 billion economic stimulus. Aldar to award AED 30 billion in project contracts and deliver 3,500+ units in 202612

Dubai's AED 1B package focuses on fee deferrals and incentives for hospitality, tourism, and retail — not construction directly, but a signal that the government is actively managing sentiment.13 Aldar separately confirmed it will award AED 30 billion in construction contracts across its portfolio in 2026 and deliver over 3,500 residential units — the largest single-year contract award programme in the company's history.14 For contractors and consultants, Aldar's procurement pipeline is the most visible active opportunity in the market right now.

Government Counter-Signal

Dubai issued 10,776 building permits in Q1 2026 — up 12% year-on-year. Permitted built-up area 3.9 million m², up 48%. 10,855 structural inspections conducted. 824,381 m³ of concrete supplied to sites.15 The institutional pipeline is not pausing. The market is bifurcating: new launches are on hold; existing pipeline is accelerating.

Aluminium specifications need repricing — now

EGA's Al Taweelah is down for up to 12 months. Any project with aluminium-intensive specifications — curtain wall, cladding, MEP containment, structural glazing — is exposed to sustained price elevation and potential supply rationing. Goldman Sachs has already raised its Q2 forecast to $3,450/tonne. Recheck your BQ rates and procurement strategy before the next tender submission.

Civil Code transition: contracts signed before 1 June are grandfathered

Contracts concluded before 1 June 2026 remain under the 1985 Civil Code. Contracts signed on or after 1 June operate under the new framework. If you have a contract close to execution, the timing matters. The new muqawala provisions are broadly more contractor-friendly — but only if your contract template reflects them. Review your standard forms with legal counsel before June.

Aldar's AED 30B procurement window is open

Aldar's 2026 contract award programme is the most active procurement pipeline in the UAE market. If you are a contractor, subcontractor, or specialist consultant not already engaged with Aldar's procurement team, this is the week to make contact. The window between now and Q3 is where the bulk of awards will be made.

PMI at 53.2 — still expansion, but the direction matters

A PMI above 50 means growth. But three consecutive months of decline in the construction sub-index is a leading indicator for reduced new instruction volumes in Q2. If your pipeline is dependent on new project starts rather than existing pipeline, expect a quieter Q2 than Q1.

Do

Use the Civil Code transition window as a commercial differentiator. Most firms will treat 1 June as a compliance deadline. Treat it as a contract renegotiation opportunity. The new muqawala provisions give contractors clearer grounds for additional payment on employer-driven scope changes. If you are mid-negotiation on a contract, understand which framework benefits you more — and time accordingly.

Avoid

Locking in aluminium-intensive specifications at current prices without a price adjustment mechanism. EGA's repair timeline is up to 12 months. Goldman Sachs has already revised its forecast upward. Any fixed-price contract signed now without a materials escalation clause on aluminium is carrying a risk that is visible and quantifiable. Do not absorb it silently.

Watch

The embodied carbon conversation. Cundall published this week on embodied carbon as MENA's net zero blind spot. The EU's CSRD is already forcing global developers to account for Scope 3 emissions — including embodied carbon across asset portfolios. International lenders are requesting whole life carbon data in project due diligence. The UAE is not there yet — but the developers building this capability now will not be scrambling when it arrives. This is a six-to-twelve month lead time issue.