Denis O'Connor, General Manager at Abu Dhabi Commercial Properties, said his company is building mixed use properties on green and brownfield sites in Abu Dhabi, but not creating new cities, and with 260 projects on the go, managing small contractors.
'So our biggest risk is the success of our small contractors. What we're trying to do is work in partnership with them so that they're aware of the realities of the market [in terms of getting materials and not impacting price or delivery time].'
Currently ADCP has some Dhs2bn of projects underway or planned, but this is likely to rise to Dhs20bn over the coming years. 'Literally we are building the new housing stock for Abu Dhabi.'
Al Qudra Real Estate is looking to diversify its risk by moving outside of the UAE. Victor Orth, its CEO and Managing Director, said 'Risk diversification is based upon product differentiation and geography.
'You follow the cycle of each particular country or city. You find out where your product fits in a particular city on that cycle in that country and you see where you might need to put something else in another country. Therefore when one economy starts going up and the other down you are always in balance in your portfolio.'
It has projects in Morroco and Algeria, with plans to move into Egypt, Tunisia and Syria. The company is also looking at projects in Turkey, Vietnam, Malaysia and the Maldives. 'So we're spreading out fairly fast.'
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Builders diversify to spread risk
- United Arab Emirates: Thursday, January 24 - 2008 at 20:52
Construction companies are increasingly having to build contracts to better manage risk as inflation pushes up the price of raw materials. With companies having increasingly large portfolios, and often selling property off plan before building begins, some are finding they must soak up additional costs once construction begins.
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Rob Jones, Editorial DirectorThursday, January 24 - 2008 at 20:52 UAE local time (GMT+4)
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