Construction & Real Estate

Dubai World backs out of Malaysia property

The property arm of the embattled state conglomerate Dubai World is selling off its stake in a luxury property partnership in Malaysia, according to press reports. In a bid to shore up its finances, the cash-strapped company is backing out of a partnership to development housing on waterfront land with Bandar Raya Developments of Malaysia. Dubai World is struggling to pay back US$23.5 billion in debt. The company has invited its creditors to a meeting on July 22, where, sources told The Financial Times, it will attempt to build consensus for its multibillion restructuring proposal.

GCC infrastructure projects now worth US$119bn

The GCC countries will invest over US$119.6 billion in infrastructure projects over the next ten years, of which rail projects account for over 90 per cent of the investment, according to an industry analyst. "Regional government policy and spending over the next ten years will define the region's transport infrastructure. The amount allocated for investment in rail projects clearly demonstrates the region's strategy for mass transit," said Richard Pavitt, exhibition director of the Roadex-Railex exhibition, who cited a recent study by research company Business Monitor International (BMI). The biennial Roadex-Railex event, the largest exhibition for the road, rail and public transport sectors in the Middle East, takes place in Abu Dhabi this year. Transport infrastructure specialists from all over the world will converge on the Abu Dhabi National Exhibition Centre (Adnec) from November 28 to 30, to participate in the event, which focuses this year on road and rail infrastructure, public transport and parking. Leading the Gulf in terms of investment, Saudi Arabia is spending US$25 billion on its rail network adding 3,900 kilometers of track through three major projects. The first of which is the Saudi Landbridge project, a 950-kilometer railway that will connect Jeddah and Dammam. Secondly the 450 kilometer Haramain high-speed which will connect Mecca and Medina via Jeddah and finally the North South Railway, which joins the northern mineral belt with Riyadh and the industrial city of Jubail.

Saudi Arabia: New project will change urban landscape

UNDP and the Government of Saudi Arabia last month launched a new project that would see the birth of six "economic cities", changing the development landscape of the Kingdom over the next decade. While past results of development in the country have been achieved through oil exports, the country has devised a long-term strategy leading, by 2025, to a greater mix of sectors in the economy, including new manufacturing industries and new universities for a strengthened knowledge base. The project, signed on 23 June by UNDP and the Ministry for Municipalities and Rural Affairs, aims to create foreign-investment zones for a new generation of high-tech and knowledge-oriented industries. It is part of efforts to spread public services more evenly and broaden the scope and effectiveness of development policies. With about 60 percent of Saudi Arabia's population below the age of 25 and expected population growth of 60 percent by 2025, policies for inter-regional equity and economic diversification support future employment needs for the growing youth population and prevent the future re-emergence of poverty.

Dubai: Real estate rebound

There have been some mixed messages concerning Dubai real estate in recent weeks, although most involved in the market suggest that the sector is now moving towards a recovery. Where there are differences of opinion is on when this rebound will fully kick in, how fast the property market will bounce back and how high the bounce will be. A clue was given in the data issued by the Real Estate Data and Research Section of the Dubai Land Department (DLD) on June 23, showing that there has been a sharp jump in the number of real estate transactions in Dubai over the first five months of the year. In total, 3462 sales were registered from January through May, with sales being valued at US$6.8bn and with 3169 of the sales being residential properties. Though it is unlikely that the total number of residential sales this year will top the peaks of 2007 or 2008, when 10,845 and 7638 properties changed hands respectively, the real estate sector is well placed to eclipse the 4961 residential sales recorded in 2009. Although there has been a pick-up in transactions, prices are still down compared to 2008 and 2009, when the average sale prices were US$2880 and US$2500 per sq meter, respectively. However, this year's average of US$2360 per square meter is still well up on the 2007 figure of US$1900 per square meter. (Source: OBG)

Abu Dhabi fund, Prudential team up on real estate

An Abu Dhabi state investment company is teaming up with Prudential Financial to invest in real estate in the Emirati capital and abroad. The government's Mubadala Development Company said that it is launching the joint venture with the U.S. financial giant's Pramerica Real Estate Investors property division. The venture will be based in Abu Dhabi. Its initial focus will be to fund real estate projects in the oil-rich capital, but it plans to branch out to other property investments around the world. Financial terms of the deal were not disclosed. Mubadala is one of several funds Abu Dhabi uses to invest its oil wealth. It is chaired by the emirate's influential crown prince.

Jordan: Building blocks

Jordan’s construction sector is still facing the challenges associated with the economic slowdown, though there are some signs that the building trade is starting to lay the foundations for a return to growth. Construction has been one of the main pillars of the economy, with more than 1600 building companies employing an estimated 100,000 workers and contributing 4.5% to GDP in 2009. Data issued by the Department of Statistics at the end of June showed that while the economy as a whole expanded by just over 2% in the first quarter of the year and many sectors posted growth well in excess of this figure, the construction industry retreated 2.44% compared to the same period in 2009. Though the real estate sector is starting to pick up, with residential sales in the first half of 2010 up by 17%, this increase in demand has yet to flow on to the construction side, with economist Jawad Anani saying that the majority of sales were of completed apartments, with low investment demand for new projects. “There is no physical evidence that construction activity grew over the past months,” Anani told local media on July 6. There are some signs, however, that momentum may be building in the construction sector, with figures released by the Central Bank of Jordan on July 7 showing an increase in credit made available to the industry. Though the bank’s report said there had been an 8.2% drop in loans being granted to individual clients, total lending levels were up 2.5% in the first five months of the year. (Source: OBG)

Lebanon: Real estate moving along

Lebanon's real estate sector, like the economy in general, is enjoying a surge, with record levels of sales and high returns for investors. However, there are concerns that the property growth could become too much of a good thing, with the rapid increases becoming unsustainable and a correction on the way. According to figures released by the state's Directorate of Real Estate in mid-June, there was a 41% increase in property sales in the first quarter of the year compared to the opening three months of 2009. In total, the 22,000 property transactions conducted throughout the quarter had a value of US$2.1bn, a new record. Combined with lower interest rates and an easing of loan restrictions by local lenders and state housing assistance schemes, this record may not stand for long, with some analysts predicting an even stronger performance in the market for the rest of the year. While most of the sector is still attracting investors, there have been some cautious notes being struck over the property boom. In its latest report on the state of the Lebanese economy, issued in early June, the IMF said the country was reaping the benefits of improved stability, with the economy performing strongly despite the general downward trend in the region. Though predicting that GDP could grow by more than 8% this year, the IMF did warn that the economy was still vulnerable to long-standing weaknesses such as high state debt levels and the slow pace of fiscal reform. Both criticisms could have been made - and often were - at any time over the past decade. (Source: OBG)

Omani Galfar Engineering wins US$101.3m port construction contract

Omani Galfar Engineering and Contracting Co said in a bourse filing yesterday it had won an OMR 39 million (US$ 101.3m/EUR 80.7m) contract to build a port on Al Halaniyat Islands, off the southern coast of Oman. Besides the port construction, the contract also includes the construction of a road network, Galfar said. The project is to be completed within 30 months with a three-month mobilization period. Oman targets to make Al Halaniyat Islands one of its major tourist destinations in an effort to diversify its income, which depends heavily on oil. Galfar is engaged in project management, engineering, procurement and construction in various areas, such as oil and gas, civil, electro-mechanical, roads and bridges and environmental projects. The company's activities, which cover Oman and the Gulf region, also include the construction of power transmission lines and substations, water and sewer networks, as well as maintenance works.

Drake & Scull Construction secures first major contract in Saudi

Drake & Scull Construction Saudi Arabia (DSC KSA), the civil contracting arm of Drake & Scull International (DSI) PJSC in the Kingdom, which was established recently, has been awarded a SR 450 million contract for Al Jawharah project in Jeddah, Saudi Arabia. Being developed by Damac properties, Al Jawharah is a 42-storey building located on the Jeddah Corniche. The –development will include five-bedroom penthouses as well as one, two, three and four-bedroom apartments spread across a built-up area of 87,000 square meters and is expected to reach completion in 28 months. Speaking of the win, DSC’s Executive Director, Saleh Muradweij said: “Being awarded this project and working with such a prominent developer such as DAMAC is a good indication that the newly-formed DSC KSA is off to an excellent start in the Kingdom.”