Construction & Real Estate

Bahrain: Building momentum

Increased state investments in housing and infrastructure projects, combined with accelerated spending by private companies, are expected to see the Bahraini construction industry build momentum throughout 2010. The local construction sector will be buoyed by a US$2.6 billion scheme to redevelop an area of downtown Manama, aimed at creating a city within a city and revitalizing the old central market district. At the core of the project are four 28-storey office and shopping towers, residential blocks, a redeveloped central market, hotels, parks and recreation space. The company awarded the contract for the project - Tashgeel for Commercial Buildings Management - is drafting a five-phase strategy on how to carry through the scheme from beginning to end. Another long-term project that will bolster the sector's returns is the plan to significantly expand Bahrain International Airport, announced in October 2009. The first stage of the US$4.8 billion development, a new terminal capable of handling 5 million passengers a year, is scheduled to be opened in 2012, with work set to begin shortly. (Source: OBG)

Egypt's OCI, Morgan Stanley form infrastructure JV

Egypt's Orascom Construction Industries (OCI) has formed a 50/50 joint venture with Morgan Stanley to develop and invest in infrastructure in the Middle East and Africa, the companies said this month. Governments across the region, particularly of oil-rich Gulf states, are pouring billions into infrastructure to battle the global downturn. OCI has focused on projects such as transport and water treatment since Egypt unveiled its stimulus packages. The firms have put up hundreds of millions of dollars for the venture, and plan to boost that to billions through debt and taking other partners, OCI Chief Executive Nassef Sawiris told reporters, declining to give specifics because of legal regulations.

Iraq to finance infrastructure projects in Basra

Iraq will soon be responsible for financing infrastructure projects in Basra, the head of the U.S. Reconstruction Team in the province said in mid-January, adding that the team will focus on training Iraqi personnel in the coming period. “In 2011, we will begin work on new projects that will focus on providing training and technical advice to state department personnel,” the team’s head said during a joint press conference with the governor of Basra and the head of its provincial council. “The Iraqi government will be responsible for financing infrastructure projects,” he noted. He added that the projects that his team is currently working on, whose total cost exceed US$120 million, are financed by the United States in an attempt to raise the standards of living in Basra. The Shiite province of Basra lies 590 km south of the Iraqi capital Baghdad.

Qatari Diar completes Syria project

Qatari Diar Real Estate Investment Company announced that it has handed over a luxurious residential complex (also called fishing village) in Ibn Hani Bay near Lattakia, an initiative seen as part of the company’s desire to contribute to the development and support of all local communities by implementing real estate projects. Qatari Diar had earlier announced the launch of a beach resort project to be set up in the coastal town of Lattakia with an investment of US$350 million. The project stretches over 244,000sqm on the Ibn Hani coast near Syria’s main seaport, Lattakia. The resort is aimed at becoming a tourist destination in Syria. In a ceremony attended by Syrian Tourism Minister Saadallah Agha Al Qalaa, Qatari Diar officials announced the completion and delivery of the complex, which is dedicated to house fishermen and their families in the Ibn Hani Bay.

Abu Dhabi rents softening

Apartment rents in Abu Dhabi saw marginal falls in the last three months of 2009, as increased residential supply came on stream, softening prices in the capital, according to Asteco, the largest property services company in the United Arab Emirates “Given the slight increase in vacancy levels and the additional supply of residential property in Abu Dhabi, the rental market has shown signs of softening, striking more of a balance between the negotiating power of tenants and landlords,” said Elaine Jones, CEO of Asteco. Jones was commenting on the latest Asteco quarterly report on the Abu Dhabi property market for Q4 2009. “The growing availability of units and a revival in market activity after a traditionally slow summer period have resulted in a minor downward fluctuation in the cost of renting in Abu Dhabi,” she added. Though rents in Dubai have on average remained stable over the last quarter, apartments which offer superior amenities such as access to a gym, swimming pool and free parking are still in the region of over 20 per cent cheaper than in Abu Dhabi, according to Asteco.

Masdar and Bayer MaterialScience sign co-operation on sustainable construction

Masdar, a wholly-owned subsidiary of the Mubadala Development Company focused on developing sustainable and renewable energy solutions and Bayer MaterialScience, a division of Bayer AG and a global provider of materials used in the building industry, have signed a strategic partnership agreement in sustainable construction. The agreement focuses on developing Bayer MaterialScience EcoCommercial Building (ECB) Program through the proposed construction of an EcoCommercial Building prototype in Masdar City, Abu Dhabi. The Masdar City ECB prototype will be a model for energy efficient and economic construction, incorporating state-of-the art design for a subtropical climate. On completion, the Masdar City ECB prototype is intended to house the Middle East EcoCommercial Building Program organization from Bayer MaterialScience, and will serve as an interactive communication, exhibition and training platform for a broad range of stakeholders with an interest in eco-commercial construction. Masdar City is a clean-technology cluster located in a sustainable city powered by renewable energy. It seeks to become a global centre for innovation, research, product development and light manufacturing in the fields of renewable energy and sustainable technologies. The International Renewable Energy Agency (IRENA) will also base its headquarters in the city.

Union Properties cut at Credit Suisse on debt level

Union Properties PJSC, Dubai’s second biggest developer by assets, had its share price estimate cut to almost zero by Credit Suisse Group AG, which said the company’s debt wipes out its value. Analyst Ahmed Badr reduced his price estimate to three fils from 80 fils and reiterated his “underperform” rating on the stock. The company’s debt of 6.8 billion dirhams (US$1.85 billion) is three times its current market value. Even if Union Properties could collect outstanding payments due on delivery of properties, sell off real estate assets and keep up existing rental income, there wouldn’t be equity value left after meeting all debt obligations, Badr said in an e- mailed report. Developers in Dubai, the world’s worst property market, are struggling to collect payments from customers as demand falls and tenants businesses are hurt by the financial crisis. Billions of dollars worth of projects were cancelled or delayed after a glut of homes caused property prices to drop 50 per cent.

New company formed by a Kuwait Investment Company to invest in US real estate

A Kuwait-based public company sponsored by one of the largest merchant families in the Middle East, with annual sales in excess of US$5 billion, in partnership with several global investment professionals, has announced the formation of Eastbridge Al Mal Holdings Ltd. With offices in New York City, Dubai and Kuwait, Eastbridge Al Mal's real estate activities will principally be focused on opportunistic investments in high quality, income producing commercial real estate assets in major US cities with local operating partners who require additional equity capital for direct real estate investments, debt and securities. Rick H. Singer, a 25-year veteran of the real estate industry and a founding partner of Eastbridge Al Mal, will serve as chief executive officer of all real estate-related entities. Throughout his distinguished career, Singer has served in senior leadership positions at several investment firms, including 10 years as the head of global real estate at Salomon Brothers Inc.