Arabtec predicts 'substantial fall' in Dubai property market growth
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Arabtec predicts 'substantial fall' in Dubai property market growth

Arabtec predicts 'substantial fall' in Dubai property market growth

Dubai-listed Arabtec, the UAE's largest construction firm, has said that its forward order book will help the company to 'cushion' the regional effects of the real estate slowdown, but also predicts that the real estate industry will see a substantial downturn.

    In an interview with Bloomberg, Arabtec's CFO Ziad Makhzoumi said that: 'The growth rate in Dubai will fall substantially in 2009, although it will not be negative.'

    Makhzoumi added that Abu Dhabi and Qatar, whose liquidity is backed by large oil and gas reserves, would see much greater growth.

    Arabtec, whose projects include the Burj Dubai, has an estimated $11.5bn (Dhs43bn) of upcoming projects on its books, with Dubai-based developments currently making up half of the orders.

    The continued growth is illustrated in part by the company's October signing of a Dhs550m deal with Dubai Properties for the latter's Mudon apartments project.

    In order to protect itself against possible slumps the company is also looking at expanding its international operations. Arabtec last month announced that it had won contracts valued at Dhs272m in Abu Dhabi and Doha, and expects to win another large contract in Qatar in addition to the Al Waab City development.

    International markets

    Despite the continued growth within the GCC, Arabtec may feel the effects of the global credit crisis in some of its other international projects.

    Its contract to build Russian energy giant Gazprom's St Petersburg headquarters has been cut back due to the country's economic slow down, further exacerbated by the collapse in the price of crude oil, from July highs of $147 to under $50 per barrel.

    The contract, which was awarded earlier this year, is to be cut from an original valuation of Dhs10bn down to Dhs8bn, with the final figure to be agreed by year end, according to UAE daily The National.

    The company is also looking at expanding its operations in Saudi Arabia, and is seeking partners in the kingdom: 'While we are fairly busy with our current backlog, we cannot stay stagnant so are looking for growth, and we see this happening in Saudi Arabia and Qatar' said CEO Riad Kamal.

    'The work is there and, for a company like Arabtec, it's not going to be difficult to pick up work because of our strong presence, reputation and the resources we have.'

    Unlike Dubai's developers and real estate companies, Arabtec is also not looking to cut its workforce, although it admits that changes may be necessary. ' planning for a slow down to make sure that we are not caught unprepared if there are major changes in the market,' said Makhzoumi.

    Dubai Properties announced this week that it would be cutting 200 employees, following announcements by Nakheel that 500 staff would lose their jobs and by Damac that 200 workers would be made redundant, as the industry struggles to adapt to the current shift in the sector.

    See also:
    Dubai property prices to fall in Q4 2008
    Dubai developers feel the effects of price uncertainty
    Dubai's off plan projects 'on hold' through lack of financing
    AMEinfo Staff

    AMEinfo staff members report business news and views from across the Middle East and North Africa region, and analyse global events impacting the region today.

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