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Industry report
Construction
and Contracting
Industry in
the UAE
Table of contents 1 Executive summary 4
1.1 Sector performance ........................................................................................ 4 1.2 Construction material market analysis .............................................................. 4 1.3 Characteristics of the sector ............................................................................ 4 1.4 Funding and investment.................................................................................. 4 1.5 Outlook ........................................................................................................ 5 1.6 Competitive landscape .................................................................................... 5
2 Sector overview 6
2.1 Snapshot ...................................................................................................... 6 2.2 Market size ................................................................................................... 6 2.3 Segment Distribution ...................................................................................... 7 2.4 Geographical distribution .............................................................................. 14
3 Construction material market analysis 16
3.1 Value chain analysis ..................................................................................... 16 3.2 Construction raw material market .................................................................. 17 3.3 Construction material price index ................................................................... 18 3.4 Distributors and logistics providers ................................................................. 21
4 Characteristics of sector 22
4.1 Opportunities .............................................................................................. 22 4.2 Threats ....................................................................................................... 24 4.3 Trends and drivers ....................................................................................... 27 4.4 Legal structure ............................................................................................ 31 4.5 Characteristics of entrepreneurs .................................................................... 33
5 Key insights – Funding and investment 37
5.1 Financial funding and investment ................................................................... 37
6 PEST analysis 45
6.1 Political factors ............................................................................................ 45 6.2 Economic factors .......................................................................................... 46 6.3 Social factors ............................................................................................... 47 6.4 Technological factors .................................................................................... 48
7 Outlook 50
8 Competitive landscape 52
8.1 Overview .................................................................................................... 52 8.2 Arabtec Construction LLC .............................................................................. 52 8.3 Al Naboodah Construction Group LLC .............................................................. 54 8.4 Dutco Construction LLC ................................................................................. 55 8.5 HLG Contracting LLC .................................................................................... 56
Industry Market Research Report Construction and Contracting sector in UAE Page 4 of 60
1 Executive summary
The construction industry has rebounded from the 2009 financial crisis and the Dubai debt crisis,
driven by a relative increase in oil and gas prices, an expanding tourism sector and rising exports.
1.1 Sector performance
The construction sector in the UAE was valued at USD 44.5 bn in 2016 and contributed 10.9% of
the country’s GDP; the figure is expected to increase to 12.0% in 2017. The residential segment
generates the maximum revenue (~35%), followed by infrastructure (~20%) and office (~13%).
Further, most of the sector’s revenue is generated by two cities: Abu Dhabi (~50%) and Dubai
(~30%).
1.2 Construction material market analysis
The construction sector consists of three elements, which are essentially required for construction
activity: inputs (raw material and product manufacturing), construction process (design and
engineering, and construction) and outputs (operations and maintenance). The sector sources
almost 60% of its construction and raw materials locally, and the remaining 40% internationally.
1.3 Characteristics of the sector
Opportunities: A few factors that pose an opportunity for the country’s construction sector
include a positive outlook for the construction sector, a growing entertainment and tourism sector
and a growing focus on renewable energy.
Threats: A few factors that pose a threat for UAE’s construction sector include the effect of
changing climate conditions, growing competition, cash flow constraints, implication of VAT and
uncertainty over oil prices.
Trends and drivers: The key trends and drivers for the country’s construction sector include the
growing popularity of 3D printing, demand for green buildings and positive FDI flows.
1.4 Funding and investment
Construction and contracting projects in the UAE are funded through self-financed modes, bank
loans, non-banking financial institutions, private equity and venture capitals, and private
placements and bonds. Besides self-funded sources, as well as support from family member and
friends, bank loans are the most preferred way to fund construction projects.
Industry Market Research Report Construction and Contracting sector in UAE Page 5 of 60
1.5 Outlook
The outlook for the UAE construction sector appears to be positive; the sector is expected to
increase at a CAGR of 7.5% from USD 44.5 bn in 2016 to USD 63.8 bn in 2021. Its contribution
to the country’s GDP is also expected to increase from 10.9% in 2016 to 12.7% in 2021. The
sector is expected to benefit from new construction projects and further development of existing
projects, majorly due to international events such as Expo 2020 and government investment in
transportation, infrastructure and tourism.
1.6 Competitive landscape
The construction market, which comprises more than 6,000 companies, is fragmented and
constitutes many domestic and foreign players. Construction companies are primarily located in
Dubai and Abu Dhabi, as construction activity is mainly carried out in these emirates. Competition
in the market is strong as small companies as well as large players offer similar services.
Major companies in the country’s construction and contracting sector include Arabtec Construction
LLC, Al Naboodah Construction Group LLC, Dutco Construction LLC, HLG Contracting LLC and Al
Fara’a General Contracting Co LLC.
Industry Market Research Report Construction and Contracting sector in UAE Page 6 of 60
2 Sector overview
2.1 Snapshot
The UAE construction sector has rebounded from the 2009 financial crisis and the Dubai debt
crisis, driven by a relative increase in oil and gas prices, an expanding tourism sector and rising
exports. The sector outlook seems positive, considering further growth/development of the
tourism sector, international events such as Expo 2020 and major government investment in
transportation infrastructure.1
On the back of this growth, the UAE is expected to reclaim its crown from Saudi Arabia as the
largest construction market in the Middle East region by 2020.2
2.2 Market size3
In 2016, the market size of the construction sector in the UAE was USD 44.5 bn, and it is
expected to increase by 8.9% to reach USD 48.4 bn in 2017. Overall, the market is expected to
increase at a CAGR of 8.5%, from USD 36 bn in 2014 to USD 63.8 bn in 2021. BMI Research, a
Fitch Group Company, holds a positive outlook on the expansion of the UAE’s construction sector,
as it expects considerable investment inflows into Dubai’s and Abu Dhabi’s transport, energy and
tourism sectors.
The construction sector contributed 10.9% of the country’s GDP in 2016; the figure is expected to
increase to 12.0% in 2017. Overall, the sector’s contribution to the country’s GDP is expected to
increase from 8.7% in 2014 to 12.7% in 2021. Growth would be driven by continued investment
from private and government firms in the construction sector.
1 ‘UAE Construction Sector 2016’, Flanders Investment & Trade, December 2016 2 ‘UAE to reclaim crown from Saudi Arabia as biggest construction market in region’, thenational.ae, 21 Jan, 2017 3 ‘UAE - Q2 2017’, BMI Research, 2017 / Exchange rate (Average of 2016)1AED= USD0.272258 / LexisNexis, accessed on 25 May, 2017
Industry Market Research Report Construction and Contracting sector in UAE Page 7 of 60
2.3 Segment Distribution4
The major sub-sectors of the construction sector are infrastructure, residential, office, retail,
hospitality, healthcare and leisure.
According to industry experts, the residential segment generates the maximum revenue (~35%),
followed by infrastructure (~20%) and office (~13%).
The following sections provide details on the sub-sectors.
2.3.1 Residential
In the past (2013–14), residential projects accounted for the highest number of projects
completed. However, over the years, projects in the hospitality, education and healthcare sectors
have taken over, as large sums of money are invested in these sectors.
The UAE’s residential construction market is dominated by Dubai and Abu Dhabi, which account
for a large share of residential construction projects. The UAE government has undertaken
measures to bridge the gap between supply and demand for affordable housing for low-income
group. For instance, the government has allocated land in Al Quoz and Muhaisnah (Dubai) for
affordable housing units. The government is also expected to introduce a law that mandates
developers to allocate 15–20% of their projects to the affordable housing category.
4 ‘UAE Construction Sector 2016’, Flanders Investment & Trade, December 2016 / ‘JLL Real Estate Market Overview - UAE - 2016 Year In Review’ / Estimated figures are based on primary research and expert opinion
36.0
40.3
44.5
48.4
52.5
56.960.0
63.8
8.7%
10.6%10.9%
12.0%12.4%
12.7% 12.6% 12.7%
7%
9%
11%
13%
15%
10
20
30
40
50
60
70
FY14 FY15 FY16 FY17F FY18F FY19F FY20F FY21F
Market size % of GDP
Constr
uction industr
y v
alu
e, U
SD
bn
% o
f GD
P
Industry Market Research Report Construction and Contracting sector in UAE Page 8 of 60
Dubai residential market
The upper-mid and high-end residential market of Dubai is experiencing oversupply of units, with
a demand and supply gap of 13%. Additionally, about 51,000 units are expected to be delivered
by 2020. However, it is expected that the growing population and Expo 2020 will absorb the
oversupply.
*Future supply is the additional units delivered in that specific year.
Abu Dhabi residential market
Abu Dhabi, on the other hand, is experiencing over demand in the affordable housing space as
well as in the mid and higher end segments.
Some of the large residential projects that are under construction are as follows:
Project Project value (USD mn) Expected completion
Capital District- Abu Dhabi 40,000 2030
Mohammed Bin Rashid City 55,000 2023
Al Reem Island 37,000 2023
434449 456
471 471502
31
24
400
440
480
520
560
2013 2014 2015 2016 2017F 2018F
Dubai residential supply (2013–2018F)
Completed Future Supply*
Num
ber
of U
nits (
000’s
)
236244 245 248 248
253
5
7
220
240
260
280
2013 2014 2015 2016 2017F 2018F
Abu Dhabi residential supply (2013–2018F)
Completed Future Supply
Num
ber
ofU
nits
(000’s
)
Industry Market Research Report Construction and Contracting sector in UAE Page 9 of 60
2.3.2 Infrastructure
A significant number of infrastructure projects,
including road, airport and port projects, have
started in the recent past. These developments are
primarily due to the upcoming Expo 2020 event in
Dubai.
As per current statistics, the UAE ranks first in roads,
second in ports and third in airport infrastructure across the globe. Some of the large
infrastructure projects that are under construction have been listed below:
Project Project value
(USD mn) Expected completion
Dubai Metro Expansion 14,352 2030
Etihad Railway Network 11,000 2018
Dubai International Airport Expansion 7,800 2018
Abu Dhabi Metro 7,000 2020
Abu Dhabi Airport Expansion: Midfield Terminal 2,960 20195
2.3.3 Office
Dubai office market
In 2016, the Dubai office market space witnessed the delivery of 129,000 m2 of gross leasable
area (GLA), thereby taking the total Dubai office area to 8.6 million m2. The majority of these
completions were in Business Bay (56%) and TECOM A & B (32%). About 10,300 m2 of office
area was completed in Q4 2016, including The Edge in Dubai Internet City. In 2017, Dubai is
likely to witness the completion of about 300,000 m2 of office space, with supply primarily from
Business Bay (30%), Onyx Towers (22%) and Amesco Tower (20%).
5 ‘Abu Dhabi’s new airport terminal opening delayed to 2019’, arabianbusiness.com, 6 Mar, 2017
7,612 7,753
8,427 8,556 8,5568,858
302
84
7,000
8,000
9,000
10,000
2013 2014 2015 2016 2017F 2018F
Dubai office supply (2013–2018F)
Completed Future Supply
GLA (
‘000)
m2
Across the globe, in terms of
infrastructure, the UAE ranks:
1st in roads
2nd in ports
3rd in airport
Industry Market Research Report Construction and Contracting sector in UAE Page 10 of 60
3,130 3,1733,319
3,533 3,533
3,744
211
144
3,000
3,500
4,000
2013 2014 2015 2016 2017F 2018F
Abu Dhabi office supply (2013–2018F)
Completed Future Supply
GLA
(‘0
00)
m2
Abu Dhabi office market
The Abu Dhabi office market witnessed the completion of 214,000 m2 of GLA in 2016, taking the
total area to 3.5 million m2. In 2016, Abu Dhabi saw some popular project completions, including
Bloom Central, ADNOC HQ, Maryah Tower and the new FGB HQ. In 2017, Abu Dhabi is expected
to witness the completion of an additional 211,000 m2 of GLA, which will be dominated by the
delivery of ADIB on Airport Road, as well as Leaf and Omega towers.
Some of the large office projects that are under construction are as follows:
Project Project value (USD mn) Expected completion
Masdar City (mixed use) – Abu Dhabi 22,000 2026
Renaissance City (mixed use) – Abu Dhabi 25,000 2020
2.3.4 Retail
Dubai retail space
In 2016, about 261,000 m2 of retail space was completed in Dubai, which is the highest volume
since 2010. The city witnessed the completion of some distinguished retail projects in 2016,
including Phase 2 of The Avenue in City Walk (130,000 m2) and the Ibn Battuta Mall Phase II
(17,000 m2). In 2017, the retail market in Dubai is expected to add another 350,000 m2 of retail
GLA.
Industry Market Research Report Construction and Contracting sector in UAE Page 11 of 60
Abu Dhabi retail space
In 2016, Abu Dhabi witnessed no major completions, with total retail space stable at about 2.6
million m2. In 2017, about 85,000 m2 of retail space is scheduled for completion, which is
primarily within residential communities or towers.
The retail space is expected to increase significantly over the short-to-medium term with the
delivery of Al Maryah Central Mall in 2018 and Reem Mall in the subsequent years in Abu Dhabi.
Some of the large retail projects that are under construction are as follows:
Project Project value (USD mn) Expected completion
Yas Island Development 37,000 2025
Mall of the World 6,800 2022
Reem Mall 1,000 2018
Deira Islands Mall 355 2018
2,899 2,9553,180
3,441 3,4413,791
350
367
2,500
3,500
4,500
2013 2014 2015 2016 2017F 2018F
Dubai retail supply (2013–2018F)
Completed Future Supply
GLA
(‘0
00)
m2
2,194
2,567 2,620 2,623 2,623 2,708
85 382
2,000
2,500
3,000
3,500
2013 2014 2015 2016 2017F 2018F
Abu Dhabi retail supply (2013–2018F)
Completed Future Supply
GLA (
‘000)
m2
Industry Market Research Report Construction and Contracting sector in UAE Page 12 of 60
2.3.5 Hospitality
The UAE gains from its strategic geographical position – it serves as a transit point between East
and West. Due to this, it attracts a large number of visitors from all over the globe.
Dubai hotel market
In 2016, Dubai’s hotel market saw the completion of about 6,600 rooms, thereby taking the total
hotel stock to about 78,600 keys. In Q4 2016 alone, Dubai witnessed the delivery of Jumeirah al
Naseem (430 rooms), the Premier Inn Ibn Battuta (372 rooms) and Nikki Beach Resort (117
keys). It is expected that about 13,900 keys could be handed over in 2017. Further, the hotel
supply will continue to increase because of greater demand from visitors to Expo 2020.
Abu Dhabi hotel market
In 2016, Abu Dhabi witnessed the introduction of about 1,000 hotel keys, thereby taking the
hotel room supply to 21,400 keys. In Q4 2016, Abu Dhabi saw the completion of Millennium Bab
Al Qasr (422 rooms). Other completions in 2016 include the Four Seasons (190 rooms and 125
serviced apartments), the Marriott Downtown (315 rooms) and the Marriott Executive apartments
Downtown (64 units). In 2017, about 2,000 hotel keys are expected to be delivered.
60,800 64,40072,000
78,600 78,600
92,500
13,900
15,000
50,000
70,000
90,000
110,000
130,000
2013 2014 2015 2016 2017F 2018F
Dubai hotel supply (2013–2018F)
Completed Future Supply
Num
ber
of ro
om
s (
Keys)
18,15019,700 20,400
21,400 21,40023,400
2,000
1,100
15,000
20,000
25,000
2013 2014 2015 2016 2017F 2018F
Abu Dhabi hotel supply (2013–2018F)
Completed Future Supply
Num
ber
of ro
om
s (
keys)
Industry Market Research Report Construction and Contracting sector in UAE Page 13 of 60
Some of the large hotel projects that are under construction are as follows:
Project Project value (USD mn) Expected completion
Paramount Hotel & Resorts 1,350 2018
Viceroy Dubai 1,000 2018
Al Habtoor City 3,000 2017
Jewel of the Creek 1,360 2017
2.3.6 Leisure
With an increasing number of tourists and a growing population, demand for the leisure market is
also increasing. The UAE has about 20 theme parks in the pipeline. The largest and most well-
known leisure construction project is DreamWorks Zone, which was completed during Q4 2016.
Some other announced projects such as a Holy Quran Park and Meydan One Ski (which includes
the world’s tallest observation deck, the world’s longest indoor ski slope and the largest dancing
fountain in the world) are expected to help Dubai reach its goal of 20 million tourists by 2020. In
Abu Dhabi also, a Warner Bros theme park, which will cost USD 1 bn, is expected to be
operational by 2018.
2.3.7 Healthcare
The construction sector has witnessed increasing investment in healthcare projects in the UAE. In
recent times, large healthcare project constructions have been noticed, including USD 1.2 bn Al
Ain Hospital in Al Ain, USD 136 mn medical mall in Khalifa City A in Abu Dhabi, and many more.
Some of the large healthcare projects that are under construction are as follows:
Project Project value (USD mn) Expected completion
Mediclinic Parkview Hospitality 190.5 2018
Aster Hospital 17.7 2018
Saudi German Hospital Ajman 89.1 2017
Al Burjeel Hospital 1,500 2017
Industry Market Research Report Construction and Contracting sector in UAE Page 14 of 60
2.4 Geographical distribution
2.4.1 Construction and contracting companies in the UAE6
As of May 2017, companies in Dubai and Abu
Dhabi accounted for about 47.6% and 22.8%,
respectively, of the total construction and
contracting companies in the UAE. This may
be due to a high concentration of construction
activities and urbanisation in the two cities.
Construction and contracting companies in the
UAE were primarily into engineering and
construction, real estate development and
home building services.
Some of the major companies are Arabtec
Construction LLC, Al Naboodah Construction
Group LLC, Dutco Construction LLC, HLG
Contracting LLC, Al Fara’a General Contracting
Co LLC, Wade Adams Contracting LLC and Actco General Contracting Company LLC.
2.4.2 Breakdown of revenue generated by geography7
According to industry experts, most of the
construction sector’s revenue in the region in
recent times has been generated by two
cities: Abu Dhabi (~50%) and Dubai (~30%).
This is majorly because of the numerous
construction projects that are in development
or have been completed in the region.
Further, industry experts predict that this
would be an ideal revenue generating
structure for the coming few years as well.
Some of Abu Dhabi’s major construction
projects that are currently under development
are Capital District, Al Reem Island,
Renaissance City, Masdar City and Yas Island.
A few of Dubai’s major construction projects
under development are Dubai Metro,
Mohammed bin Rashid City and the Business Bay.
6 FactSet, accessed on 2 Jun 2017 / Includes FactSet industries - [1415] Homebuilding; [401525] Facilities and Construction Services; [302510] Home Builders and Manufactured Buildings; [236] Construction of Buildings; [15] Building Construction General Contractors And Operative Builders; [16] Heavy Construction Other Than Building Construction Contractors; [17] Construction Special Trade Contractors; [3115] Engineering & Construction; [238] Specialty Trade Contractors; [237] Heavy and Civil Engineering Construction; and [4885] Real Estate Development 7 Estimated figures are based on primary research and expert opinion
47.6%
22.8%
7.3%
22.3%
Geographical locations of
construction and contracting companies (2017)
Dubai Abu Dhabi Sharjah Others
50.0%
30.0%
8.0%
5.0%
5.0% 1.0% 1.0%
Revenue breakdown by geography
Abu Dhabi Dubai Sharjah
Ajman Ras Al Khaimah Umm Al Quwain
Fujairah
Industry Market Research Report Construction and Contracting sector in UAE Page 15 of 60
2.4.3 Geographical breakdown of SMEs and
large companies8
According to industry experts, a majority of small
medium enterprises (SMEs) and large construction
companies are based in Dubai and Abu Dhabi. While
Dubai hosts 35–45% of large construction companies and
50% of SMEs, Abu Dhabi hosts 20–25% of SMEs and
30% of the large construction companies.
Sharjah is the third most-prominent emirate in terms of hosting SMEs and large companies.
In addition, for Expo 2020 Dubai, more than 12,000 vendors have been registered on the Expo
supply portal and out of these 60% are SMEs. In 2017, about 47 construction contracts are
expected to be rolled out worth USD 3 bn (AED 11 bn) and another 98 non-construction contracts
totalling USD 98 mn (AED 360 mn).9
2.4.4 Construction product and machinery companies in the UAE10
As of May 2017, Dubai, Sharjah and Abu Dhabi, contributed 43.2%, 11.5% and 10.9%,
respectively, of the total construction products and machinery companies in the UAE.
The construction products and machinery companies were primarily dealing in construction
material and building products. Some of the major companies include Ras Al Khaimah Ceramics
PSC, Depa Ltd, Arkan Building Materials Company (Arkan) P J S C, Porcellan Co LLC, Gulf Cement
Company (PSC), Union Cement Company (PSC), Fujairah Cement Industries Company (PSC) and
Sharjah Cement and Industrial Development Company (PSC).
8 Estimated figures are based on primary research and expert opinion 9 ‘Behind the headlines – Dubai’s booming economy and what it means for your business’, vz.ae, 31 May 2017 10 FactSet, accessed on 2 Jun 2017 / Includes FactSet industries - [1230] Building Products; [20252010] Building Materials and Garden Supply Stores; [451535] Construction Materials; [4441] Building Material and Supplies Dealers; [32712] Clay Building Material and Refractories Manufacturing; [321992] Prefabricated Wood Building Manufacturing; [332311] Prefabricated Metal Building and Component Manufacturing; [52] Building Materials, Hardware, Garden Supply, And Mobile Home Dealers; [24] Lumber And Wood Products, Except Furniture; [3448] Prefabricated Metal Buildings and Components; and [1135] Construction Materials
43.2%
11.5%
10.9%
34.4%
Geographical locations of construction product and machinery
companies
Dubai Sharjah Abu Dhabi Others
Dubai hosts:
35–45% of large construction
companies
50% of SMEs
Industry Market Research Report Construction and Contracting sector in UAE Page 16 of 60
3 Construction material market analysis
3.1 Value chain analysis11
The construction sector consists of the following elements, which are essentially required for
construction activity:
Inputs (raw material and product manufacturing): The input elements include
construction raw material such as steel, cement, brick, labour and other construction material,
which are used to construct a building/structure. The parties involved include the
manufacturer of the raw material.
Construction process (design and engineering, and construction): This includes biding,
designing and construction of the building. The parties involved in this element include the
owner of the building, architect, engineer and contractor.
Outputs (operations and maintenance): Once the building is constructed, it is operated
and maintained by a maintenance company. The parties involved include owner of the
building, building occupants, maintenance companies and real estate companies that facilitate
the process of buying and selling of the property.
Note: Some companies may overlap in one or the other head, such as a company might be a construction material supplier as well as a constructing company. Example: Al Naboodah Construction Group LLC (ANCG) positions itself in the GCC construction industry as self-sufficient, supplying its own asphalt, concrete, and plant and machinery. 11 Construction industry report, fpts.com.vn / Building material suppliers in UAE, alluae.ae / Forbes Middle East Celebrates The Top 100 Real Estate Companies In The Arab World, forbesmiddleeast.com / General web search
Major logistics & transportation
service providers in the UAE
Major constructing companies
in the UAE
Major real estate companies
in the UAE
Major construction material
suppliers in the UAE
Inputs Constructors Outputs
Industry Market Research Report Construction and Contracting sector in UAE Page 17 of 60
60.0%
40.0%
Construction raw material
sourced
Locally Internationally
3.2 Construction raw material market 12
According to industry experts, the construction sector
in the UAE, sources almost 60% of its construction
and raw materials locally, and the remaining 40%
internationally. Considering the vast range of
construction projects, from multi-storied hotels and
residential villas to theme parks, the region imports
construction materials of all kinds from numerous
countries across the globe.
Also for the products domestically manufactured, most
of the raw material and construction components are
manufactured in the free zones located in the region,
mainly in Dubai. Apart from domestic manufacturers,
several international brands / companies are now
manufacturing building raw materials in these free zones, thereby helping customers procure
material locally. For example, several European brands are now manufacturing spare parts,
mechanical and electrical components, etc., in these free zones.
However, there are a few raw materials, such as timber,
marble and natural stones, and sand that are majorly
sourced internationally. According to a UN report, the
country imported USD 456 mn worth of sand, stone and
gravel in 2014. Despite the fact that the county has sand
in abundance, it is not suitable for construction projects as
it has a higher salt content and is too fine to be used in
construction.
A few of the major countries / geographical regions from where the country imports and exports
construction material are as follows:
Import: China, Europe, the US and India
Export: China, India, Japan, Iran, Korea and the US
(majorly focused on the Asian market)
The following are the primary construction material types and their sources:
12 “Strange but true: the UAE imports its sand”, edgardaily.com, 18 May, 2016 / Fpt Securities – Construction Industry Report, May, 2015 / Estimated figures are based on primary research and expert opinion
Key construction cost
components:
Raw material: 60–70%
Labour: 10–20%
Machinery: 10–20%
Total costs majorly include:
Steel: 25–30%
Concrete: 15–18%
Industry Market Research Report Construction and Contracting sector in UAE Page 18 of 60
3.3 Construction material price index13
The Dubai Chamber monitors the price movements of 251 construction materials used in
construction projects in Dubai and publishes their Construction Material Price Index (CMPI). The
index shows the construction material prices prevalent across the UAE. The Q1 2017 CMPI
indicates that the prices of false ceiling, cement and gypsum, pipes and fittings, steel, aluminium
sheet, and wires and cables increased significantly from Q1 2016 levels.
At the same time, prices of a few construction materials declined during the period. These
products include ready-mix concrete, timber, sanitary ware and waterproofing products.
Construction materials with relatively stable prices include bricks; aggregates, gravel and sand;
tiles and flooring materials; glass and mirrors; paints and varnish; and marble and natural
stones.
13 Dubai Chamber, accessed on 12 Jun 2017
6.1%
4.7%
3.0%
3.0%
2.3%
1.9%
2.2%
1.3%
7.9%
10.9%
4.5%
0.2%
0.0% 2.0% 4.0% 6.0% 8.0% 10.0% 12.0%
False Ceiling
Cement & Gypsum
Pipes & Fittings
Steel
Building Metal Products
Wires & Cables
Construction material, whose prices increased in Q1 2017
Y-o-Y (%) Q-o-Q (%)
Qatar
(~60%)
Turkey
Oman
China
UAE
UAE (Ras Al
Khaimah and Fujairah)
Saudi Arabia Bahrain
UAE (Dubai) China
China
UAE (Ras Al Khaimah)
Steel Cement &
gypsum Aggregates,
gravel & sand Aluminium
sheets Tiles & flooring
Korea
Japan
Turkey
Egypt UAE (Dubai)
UAE (Dubai)
Tunisia Egypt
Indonesia
Malaysia
New Zealand India
Syria
Jordan
Oman Egypt
Glass & mirrors Wires & cables Timber Marble & natural
stones
Industry Market Research Report Construction and Contracting sector in UAE Page 19 of 60
Details of the CMPI for various construction materials during Q1 2016–Q1 2017 are as follows:
Construction material
Index Percent change
Q1
2016
Q2
2016
Q3
2016
Q4
2016
(A)
Q1
2017
(B)
Q-o-Q
(A–B) Y-o-Y
Steel 72.0 79.4 75.1 77.6 79.9 3.0 10.9
Bricks 93.2 99.3 102.5 102.5 102.5 0.0 10.0
Cement & gypsum 95.5 95.5 94.6 92.4 96.8 4.7 1.3
Aggregates, gravel & sand 110.4 110.4 110.4 110.4 110.4 0.0 0.0
Aluminium sheets 91.2 93.1 91.2 93.1 95.3 2.3 4.5
Tiles & flooring 108.9 108.0 106.9 106.9 106.9 0.0 -1.8
Glass & mirrors 123.1 123.1 122.1 122.1 122.1 0.0 -0.8
Wires & cables 96.2 101.7 101.9 94.5 96.4 1.9 0.2
False ceiling 86.2 86.2 83.0 83.0 88.1 6.1 2.2
Sanitary ware 98.6 99.7 101.3 100.8 100.5 -0.3 1.9
-0.1%
-0.3%
-0.3%
-0.5%
3.1%
1.9%
2.0%
-2.2%
-3.0% -2.0% -1.0% 0.0% 1.0% 2.0% 3.0% 4.0%
Waterproofing product
Sanitary ware
Timber
Ready made concrete
Construction material, whose prices declined in Q1 2017
Y-o-Y (%) Q-o-Q (%)
Industry Market Research Report Construction and Contracting sector in UAE Page 20 of 60
Construction material
Index Percent change
Q1
2016
Q2
2016
Q3
2016
Q4
2016
(A)
Q1
2017
(B)
Q-o-Q
(A–B) Y-o-Y
Pipes & fittings 83.0 89.1 86.8 86.9 89.5 3.0 7.9
Ready-mix concrete 112.1 111.3 109.7 110.2 109.6 -0.5 -2.2
Timber 89.5 91.3 91.3 91.7 91.3 -0.3 2.0
Water proofing product 97.8 98.2 98.4 100.9 100.8 -0.1 3.1
Paints & varnish 106.0 106.0 106.0 106.0 106.0 0.0 0.0
Marble & natural stones 125.7 125.7 119.2 121.0 121.0 0.0 -3.7
Industry Market Research Report Construction and Contracting sector in UAE Page 21 of 60
3.4 Distributors and logistics providers14
Most of the construction projects in the region are required to abide by tight deadlines and quality
measures, making them highly dependent on construction product suppliers/traders/distributors
and external third-party logistics providers. Any delay in sourcing raw materials would result in
un-timely delays, missed deadlines and increased costs to get back on track.
Most construction material suppliers/traders/distributors and related logistics service providers
are based in Dubai, Abu Dhabi and Sharjah. This huge market is essential to support the growing
construction business in Dubai and Abu Dhabi. Further, the proximity of Sharjah to Dubai is a key
reason for the presence of a huge number of construction material providers and logistics service
providers in the region.
14 Estimated figures are based on primary research and expert opinion
30%
25%
20%
13%
7%
3%2%
Construction material suppliers/
traders/distributors by region
Dubai Abu Dhabi Sharjah
Ras Al Khaimah Ajman Fujairah
Umm Al Quwain
40%
30%
15%
7%5%
2%
1%
Construction material logistics
service providers by region
Dubai Abu Dhabi Sharjah
Ras Al Khaimah Ajman Fujairah
Umm Al Quwain
Industry Market Research Report Construction and Contracting sector in UAE Page 22 of 60
4 Characteristics of sector
4.1 Opportunities
4.1.1 Positive outlook for the UAE construction sector
The growing construction market in the UAE holds several opportunities for companies operating
in the construction sector in the UAE. The UAE construction sector is believed to be worth USD
48.4 bn in 2017. This positive growth is majorly attributed to increasing government expenditure
on infrastructure and industrial construction projects.
According to a Middle East market intelligence report, titled Outlook for GCC Construction
2017, the overall construction market in Gulf Cooperation Council (GCC) member states is
expected to improve in 2017. The report predicts that the GCC holds significant opportunities
for the construction sector despite the slowdown in awarding construction project due to lower
oil prices in 2016.15
According to industry experts, the UAE’s construction sector is expected to grow by 8.9% y-o-
y in 2017, majorly because of projects related to Expo 2020, Dubai Creek Harbour and Dubai
South.16
The commercial construction market, which includes retail, office and other commercial
spaces, is expected to be driven majorly by increasing government investment in office and
retail space in the region. Further, the industrial construction market and the residential
construction markets are also expected to grow.
4.1.2 UAE’s growing entertainment and tourism sector17
The entertainment and tourism sector in the UAE is one of the key factors driving the region’s
growth, apart from its oil-based economy. The sector is expected to grow rapidly, majorly backed
by exponential growth in the region’s tourism and hospitality infrastructure. For example, several
tourist attractions such as the Dubai Parks and Resorts and the Dubai Opera were completed in
2016. There are many more tourist attractions that were recently started, such as Louvre Abu
Dhabi and Dubai Safari followed by new projects such as
Six Flags Park, scheduled to be completed by H2 2019, and
the Sea World on Yas Island, Abu Dhabi, by 2022.
According to the World Economic Forum’s Travel and
Tourism (T&T) Competitiveness Report 2017, the UAE has
been named the most competitive economy for developing
its travel and tourism sector in the Middle East and North
Africa (MENA) region. According to the report, the UAE’s
15 “Positive outlook for the GCC construction sector in 2017”, thebig5hub.com, 30 Apr 2017 16 “UAE construction sector to witness 4% growth in 2017”, venturesonsite.com, 11 Oct 2016 17 “UAE tourism sector to hit Dh237b”, khaleejtimes.com, 27 Dec 2016 / “UAE named as MENA’s top economy for tourism growth”, arabianbusiness.com, 15 Apr 2017 / The UAE Real Estate Market – 2016: A Year in Review, report by JLL / Exchange rate (Average of 2016) 1AED = USD0.272258
World Economic Forum’s T&T
Competitiveness Report 2017
named the UAE as the most
competitive economy for
developing its travel and
tourism sector in the MENA
region.
Industry Market Research Report Construction and Contracting sector in UAE Page 23 of 60
performance has been continuously improving, with its score rising 1.4% since 2015.
Further, upcoming tourist attractions, large-scale international events such as Expo 2020, and the
growing meetings, incentives, conferences, and events (MICE) market are expected to accelerate
tourist arrivals especially to the UAE and the GCC in general. International tourist arrivals to the
GCC are expected to grow by 5.7% annually until 2020. Hence, the region’s entertainment and
tourism sector presents significant opportunities for the construction sector in the region and a
positive outlook.
4.1.3 UAE’s growing focus on renewable energy to aid the construction
sector18
The UAE plans to invest USD 163 bn in clean energy projects to ensure that half of the country’s
power needs are met by renewable sources by 2050.
In January 2017, Dubai launched an energy strategy called The Dubai Clean Energy Strategy
2050, which outlines plans to meet its target of producing 75% of its power from clean energy
sources by 2050. The strategy targets to generate 7% of its energy requirements from clean
energy by 2020, rising to 25% by 2030. Further, by 2050, it plans to generate 75% of the
emirate’s energy requirements from renewable/clean sources: renewables – 44%, clean fossil
fuels – 12%, nuclear – 6% and gas – 38%.
Similarly, the Abu Dhabi government has also set a target to source 7% of its energy
requirements from renewables by 2020.
To achieve these targets, the country has launched several large-scale infrastructure projects
including the Mohammed bin Rashid Al Maktoum Solar Park, the Hassyan Clean Coal Power Plant
and the Barakah Nuclear Power Plant. A few public buildings and commercial sites are also
starting to fit roof-top solar panels. Several other large-scale projects would need to be
constructed to meet the country’s renewable energy targets, thereby presenting opportunities for
the overall construction sector in the UAE.
18 ‘UAE economy: Renewable energy industry remains a priority in the UAE’, eiu.com, 23 Jan 2017 / ‘UAE invests £134bn in renewab les in push to reach 50% clean energy target’, independent.co.uk, 11 Jan 2017
“The UAE has rich cultural heritage, natural diversity and the developed infrastructure that make it a strong
competitor on the world tourism map.”
– Sultan bin Saeed Al Mansouri, Minister of Economy, the UAE
“Our aim is to balance our economic needs with our environmental goal. He who does not think of energy
is not thinking about the future. The UAE government has made an achievement in drawing up a unified
energy strategy for the country.”
– Sheikh Mohammed bin Rashid al-Maktoum, Prime Minister, the UAE
Industry Market Research Report Construction and Contracting sector in UAE Page 24 of 60
4.2 Threats
4.2.1 Effect from changing climate conditions19
Climatic conditions in the UAE are particularly harsh as compared with other countries. The
region’s climatic conditions include high temperatures, high humidity and occasional sand storms.
These conditions not only make it difficult to construct buildings and other construction projects,
but also put the lives of construction workers at risk.
According to The UAE Climate Change Risk and Resilience
Report, higher heat and humidity will endanger health and
decrease productivity in the construction sector during the
coming years. The report forecasts that the global impact of
heat on the workplace would lead to productivity loses of
nearly USD 2 tn by 2030.
Other environmental facts that are increasing threats to the construction industry, as highlighted
in the report, are as follows:
Sea level rise risk: Coastal urbanisation is fast-growing in
the UAE, making the region vulnerable to sea level rise
(SLR) risk. The coastal belt houses several prestigious
hotels and resorts and has several others in construction
presently. In Dubai, the urban area almost tripled during
1984–2003, with an artificial expansion of the city surface
due the projects such as the Palm Islands and the World archipelago. Similarly, in Abu Dhabi,
most of the city’s major developments are being built along the Emirate’s islands.
Greenhouse gas emissions: The region is also facing
challenges of increasing greenhouse gas (GHG) emissions.
Most of the designs of buildings in the modern urban
centres, such as Abu Dhabi, Dubai and Al Ain, are generally
19 ‘UAE climate change risks & resilience: an overview of climate change risks to 12 key sectors’, indiaenvironmentportal.org.in, 27 Mar 2017 / ‘Rising temperatures put outdoor workers’ lives at risk’, thenational.ae, 28 Mar 2017
93%
7%
75%
25%
2030 2050 2020 25%
75%
Non renewable energy Clean energy
The Dubai clean energy strategy 2050
By 2050, the UAE’s
temperature and humidity
would rise by 2º and 10%
respectively.
The UAE’s 85% of the
population located in low-
lying zones
In 2014, operating buildings
accounted for 28% of the
total energy consumption
and 59% of total water
consumption in Dubai
Industry Market Research Report Construction and Contracting sector in UAE Page 25 of 60
considered inefficient in terms of energy and water consumption. Most of these buildings are
believed to be unsuitable to the arid climate of the region. Their design and building material
focuses more on aesthetics and cost rather than environmental performance. The structures
generate a lot of demand for electricity and water, to cope up with overheating weather
conditions, thereby becoming significant sources of GHG emissions.
4.2.2 Growing competition20
The construction industry in the UAE is fragmented
and highly competitive in nature. Several small and
large companies operate in the sector, most of which
constantly face stiff competition not only from
regional companies, but also from several other
global companies and new entrants. A number of
international firms are targeting the high-growth,
low-risk emerging market; however, local players
continue to dominate in the region. Increasing
competition in the sector may lead to price erosion,
thereby inflating marketing costs.
A highly competitive market can adversely affect the company’s revenue, in case it fails to retain
and attract clients. Hence, companies in the sector are required to constantly come up with
innovative products and services for their customers
to create a competitive edge.
4.2.3 Cash flow constraints21
Contractors and sub-contractors in the UAE
constantly face the challenge of delays in receiving
payments. Cash is an essential component of the
sector, and any delays in payments not only affect
construction companies, but also the construction sector as a whole.
The Colliers Abu Dhabi and Dubai Construction Cost Benchmarking reports that delays in
payments ‘negatively impact the industry’s ability to deliver quality projects within budget and on
time’.
To ensure these delays do not affect ongoing projects, construction companies are depending on
debt financing to meet their requirements. In the current low-interest rate environment, this
looks like a short-term solution, but any mismatch in their fund flow would make them more
vulnerable.
Further, contractors are looking at various other funding mechanisms such as Joint ventures,
build-own-operate-transfer (BOOT) projects or public private partnerships (PPPs). According to
industry experts, it is also important for banks to identify innovative structures to support
contractors, in order to support cash flows and pay-outs.
20 Avention, accessed on 26 May 2017 / ‘UAE Construction Sector Fiercely Competitive’, bmiresearch.com, 15 Sep 2014 / Primary 21 ‘Delayed payments said to be key issue facing UAE contractors’, arabianbusiness.com, 4 Feb 2017 / ‘Contractors work out solutions for payment delays’, gulfnews.com, 21 Nov 2016
In 2016, 6-month cash flow delays in
the construction sector in Dubai
almost became a norm against the
usual
90–120 days turnout period.
Prominent construction companies in
the UAE:
Arabtec Construction LLC
Al Naboodah Construction Group
LLC
Dutco Construction LLC
HLG Contracting LLC
Al Fara’a General Contracting Co
LLC
Wade Adams Contracting LLC
Actco General Contracting
Industry Market Research Report Construction and Contracting sector in UAE Page 26 of 60
4.2.4 Proposed VAT to affect the construction sector22
The tax-free status of the GCC countries has been a major attracting factor for international
corporations and foreign individuals, both of which are of great economic importance to the
region. However, six GCC countries, which are the UAE, Saudi Arabia, Bahrain, Oman, Qatar and
Kuwait, announced that starting January 2018, they plan to introduce VAT on selected goods and
services. The tax will be applicable to all companies with revenues of more than USD 100,000.
The implementation, however, has taken place only in UAE and Saudi Arabia as per schedule and
implementation in other GCC countries has been delayed.
According to the managing director of the IMF, VAT in the GCC countries may raise revenues
equivalent to 2% of the region’s GDP. The government may further invest this VAT revenue in
infrastructure-related construction projects. While in the longer run, VAT might affect the
construction industry positively; in the shorter run it is definitely going to be a challenge.
According to industry experts, local construction companies are likely to feel the immediate
effects of VAT in the form of administration costs.
While, it is expected that government-funded construction projects would be exempted from the
tax, or at least receive rebates, private construction companies would have to comply with the
decision, which in turn is expected to raise overall construction costs.
22 ‘How will VAT affect the GCC construction sector?’, thebig5hub.com, 30 Nov 2016 / ‘How will VAT affect the GCC’s construction sector?’, constructionweekonline.com, 11 Mar 2017
“While six-month credit terms are not being embedded into contract arrangements, the practice of late
payments is becoming an epidemic in some parts of the sector, placing additional pressure on contractors.
Due to the nature and structure of the industry, contractors do tend to bear challenging contract
arrangements, often to the detriment of their business.
– Sachin Kerur, Head, Pinsent Masons M. E.
“Cash flow is thus the key — the contractor should not allow a project to get to a stage where they are
reliant on debt to finance it. This could be very high risk ... unless of course there is a separate agreement
with the client for a lump-sum deferred payment based on sales.”
– Niall Greene, Managing Director, Middle East, Linesight
“It is going to be extremely challenging. Businesses need to look at their arrangements. And the sooner,
the better, as the sector will face a scramble leading up to 2018, mainly due to the lack of domestic
legislation currently in place.”
– Jeremy Cape, Partner, Squire Patton Boggs
“Construction firms will certainly have a lot of complex issues to deal with, especially if there are certain
exemptions or rate reliefs on [particular] types of construction works… And in an economy that has been
tax-free for most of its history, businesses might find it difficult to get used to timely tax compliances.”
– Rakesh Pardasani, Partner, RSM UAE
Industry Market Research Report Construction and Contracting sector in UAE Page 27 of 60
4.2.5 Uncertainty over oil prices23
Government spending in the UAE and other GCC countries is majorly dependant on oil prices. The
region is increasingly facing threats from fluctuating oil prices, which results in reduced
government expenditure in times of a downward trend in price. The region’s overall economic
activities have been impacted, mostly due to falling commodity prices, particularly oil.
Any further drop in oil prices may force the UAE government to rethink its spending strategies.
Hence, uncertainty over oil prices is believed to be a constant challenge for the overall economic
condition of the country, thereby also affecting the country’s construction sector.
4.3 Trends and drivers
4.3.1 3D printing becoming popular in the UAE’s construction sector 24
In April 2016, His Highness Shaikh Mohammad Bin Rashid Al Maktoum, VP and Prime Minister of
the UAE and ruler of Dubai, launched the Dubai 3D Printing Strategy. The aim of the strategy is to
ensure that about 25% of buildings in Dubai are based on 3D printing technology by 2030. This is
a unique global initiative, which focuses on using the technology for the service of humanity, as
well as to promote the status of the UAE and Dubai as a leading centre of 3D printing technology
by 2030.
The strategy is focused on the use of 3D printing technology in three areas: construction, medical
products and consumer products. However, a majority of the focus is towards its use in the
construction sector, wherein the implementation phase includes launching the first pilot project
with Dubai Holding. In this phase, developers will be inspired to work on prototype projects, and
23 ‘Top 5 challenges for the GCC construction industry in 2016’, doka.com, 25 Jan 2016 / ‘GCC contract awards to drop by 15% in 2016’, thenational.ae. 17 Jan 2016 / ‘UAE and Dubai economic activity slows on back of low oil prices’, consultancy.uk, 2 Nov 2016 / opendataforafrica.org, as accessed on 7 Jun 2017 24 ‘UAE aims to be global hub for 3D printing’, gitex.com, Mar 2017 / ‘Dubai 3D Printing Strategy’, government.ae
20
40
60
80
100
120
May-1
2
Jul-
12
Sep-1
2
Nov-1
2
Jan-1
3
Mar-
13
May-1
3
Jul-
13
Sep-1
3
Nov-1
3
Jan-1
4
Mar-
14
May-1
4
Jul-
14
Sep-1
4
Nov-1
4
Jan-1
5
Mar-
15
May-1
5
Jul-
15
Sep-1
5
Nov-1
5
Jan-1
6
Mar-
16
May-1
6
Jul-
16
Sep-1
6
Nov-1
6
Jan-1
7
Mar-
17
May-1
7
Dubai crude oil prices: May 2012–May 2017 (USD / barrel)
USD
/ b
arr
el
Dubai crude oil prices have fluctuated
significantly in the last few years
Industry Market Research Report Construction and Contracting sector in UAE Page 28 of 60
the private sector and consultants will be encouraged to adopt 3D printing technology through a
combination of direct impact incentives.
Key initiatives
In May 2016, within a month of the launch of the Dubai 3D Printing Strategy, the world’s first
fully functional 3D printed building was inaugurated in Dubai by His Highness Shaikh
Mohammad. The one-storey prototype building, was 3D-printed using a 20-feet high, 120-feet
long and 40-feet wide 3D printer. The building with floor space of about 250-sq m was built in
17 days, at a cost of about USD 140,000, cutting both building and labour costs by 50%,
compared with conventional buildings of similar size.1
In March 2017, Cazza, a US-based 3D technology-focused construction company, announced
plans to build the world’s first 3D-printed skyscraper in the UAE. While the company has not
disclosed details about the project, such as its height, commencement or completion dates,
reports mention that the building would be nearly 40–50 stories. For the project, the company
plans to print concrete and steel materials using its cranes.1
Expected benefits of 3D printing
Reduce construction costs by:
50–70%
Reduce labour costs by:
50–80%
Reduce construction waste by:
60%
4.3.2 Growing demand for green buildings25
The UAE holds the largest share of green buildings in the MENA region, with nearly 65%. The UAE
government has implemented several policies and regulations to promote the adoption of green
buildings. One of these mandates require all government-owned buildings to be green. A 2013
global industry survey revealed that that more than half of the ongoing projects were green in the
UAE, indicating that construction firms in the country are early and strong adopters of green
building projects.
The climatic conditions of the UAE (hot desert climate and water scarcity issues) make it one of
the most challenging markets in the world to implement sustainable building solutions. Despite
these challenges, the UAE was named one of the top 10 markets for green building space by the
US Green Building Council (USGBC) in 2015.
25 ‘United Arab Emirates – Construction’, export.gov, 15 Aug 2016 / ‘UAE named one of top ten markets for green building space’, dmgeventsme.com, 28 Aug 2016
“The UAE is presenting to the world the first integrated and comprehensive strategy to exploit 3D
technology to serve humanity. We have also framed practical plans and precise goals to turn the strategy
into reality — the reality that will contribute to the progress and prosperity of the world and help preserve
our human heritage.”
– Shaikh Mohammad Bin Rashid Al Maktoum, VP and Prime Minister, UAE
Industry Market Research Report Construction and Contracting sector in UAE Page 29 of 60
Key initiatives
According to Green Technologies, a Dubai-based
Engineering Consultancy Company, the UAE accounts for
the highest number of USGBC LEED (US Green Building
Council Leadership in Energy and Environmental Design)-
certified buildings (221), followed by Saudi Arabia (124)
and Qatar (97), as on August 2016. Further, the number of projects under LEED certification
process, reveal the UAE’s growing commitment towards sustainability in construction.
The UAE was reported to have the eighth-largest stock of LEED-certified buildings outside the
US. Further, consultancy firm Solidiance ranked Dubai no. 8 in the list of the top 10 global
cities for green buildings.
609
99 8237 27 23
The UAE Saudi Arabia Qatar Lebanon Oman Jordan
Projects currently under LEED certification process (as on August 2016)
“The government plays a very important role in promoting and enforcing policies to reduce carbon footprint
in the UAE. Government entities such as DEWA, ADWEA, and SEWA are implementing new plans and
policies in this regard, and sustainability initiatives such as Abu Dhabi’s Estidama and Dubai’s Green
Building Code are really promising.”
– Dr. Alaa K Ashmawy, Professor and Dean, School of Engineering at American University in Dubai
The UAE has a significant lead over other GCC countries in the number of
LEED projects.
The UAE has almost 6 times more projects under LEED certification
process as compared with its nearest market, Saudi Arabia.
Dubai ranked no. 8 in the
list of the top 10 global
cities for green buildings.
Industry Market Research Report Construction and Contracting sector in UAE Page 30 of 60
4.3.3 Positive FDI in UAE construction sector26
During 2010–15, foreign direct investment (FDI) in the sector grew at a CAGR of 5.9%, from USD
3.3 bn to USD 4.4 bn. While it witnessed a decrease of 8.3% y-o-y in 2015, industry experts
predict that FDI in the sector would remain positive and grow in the next few years.
In 2015, FDI in the construction sector consisted of nearly 4.1% of the total FDI in the UAE.
The top 3 sectors for FDI were wholesale and retail trade (26.2%); real estate, renting and
business activities (25.8%); and financial intermediation (19.1%).
4.3.4 Increasing safety concerns for construction workers27
In July, 2016, the Ministry of Human Resources and Emiratisation announced that all construction
facilities with more than 500 workers would have to appoint at least one local occupational health
and safety officer from 2017.
According to the ministry, this move would help in emiratising the occupational health and safety
profession in the construction sector and major industrial enterprises. It was reported to target
nearly 400 facilities in the construction sector, which would also include close follow-ups in order
to evaluate compliance levels across the targeted facilities.
Key initiatives
A key initiative that strengthens the region’s growing focus on safety measure for construction
workers is an inspection campaign in Abu Dhabi. In April 2017, municipality inspectors started
inspecting construction sites in Abu Dhabi to ensure that worker safety rules are being
addressed. The campaign focused on encouraging safe and healthy working environments at
construction sites, thereby protecting the lives of not only the workers but also passers-by.1
26 old.fcsa.gov.ae, accessed on 15 Jun, 2017 / Exchange rate (Average of 2015) 1AED = USD0.272259
27 ‘Health and safety officers mandatory in construction companies’, gulfnews.com, 16 Jul 2016
3.33.1
3.53.9
4.84.4
2010 2011 2012 2013 2014 2015
FDI in construction (USD bn)
Despite the decrease, experts predict
that FDI in the sector would remain
positive and grow in the next few
years.
Industry Market Research Report Construction and Contracting sector in UAE Page 31 of 60
4.3.5 Increasing fire safety standards in the UAE28
The UAE has witnessed a few major fire accidents in the past at places including the 79-storey
residential Marina Torch Tower in February 2015, the Address Hotel Downtown Dubai on New
Year’s Eve in December 2015, the Sulafa Tower in Dubai Marina in July 2016, and the Oceana
Residence in Palm Jumeirah in December 2016. All of these incidents resulted in increased focus
on fire safety standards and led to the launch of an updated UAE Fire and Life Safety Code in
January 2017.
Key initiatives
The UAE had issued the first edition of its Fire and Life Safety Code in 2011 and made a few
amendments to it in 2012. The code made it mandatory for buildings taller than 15 metres to
use fire-rated facade cladding. It is estimated that nearly 70% of the buildings in Dubai that
were constructed prior to 2013, may be fitted with non-fire rated ACPs and hence, pose a
greater exposure to fire mishaps than buildings built since then.
The new code has undergone major changes to accommodate the evolving economic and
urban developments in the UAE. Apart from stricter regulations related to the use of fire-rated
facade cladding in buildings, the code now also covers requirements to store flammable
liquids, use of renewable energy, and material certification to make sure that building
materials with fire performance are made to the same specifications, despite the fact that they
are manufactured in Europe, the Middle East or China.
4.4 Legal structure29
The UAE’s construction-specific laws comprise federal and emirate laws and regulations. The main
federal law is the Civil Transactions Code Federal Law No. 1 of 1985, which contains general
contract principles, a section on Muqawala (a contract to make a thing or perform a task), which
relates specifically to construction-related matters. Apart from federal laws, emirates laws also
exists; Dubai has numerous regulations, codes of practice, standards, guidelines and circulars,
which are issued by Dubai Municipality and the free zones of Technology, Electronic Commerce
and Media (TECOM) and Jebel Ali Free Zone (JAFZA), that are in relation to building standards in
28 ‘The Burning Issue: Fire Safety in the UAE’, cbnme.com, 2 Feb 2017 / ‘Updated UAE fire code launched at Intersec 2017’, constructionweekonline.com, 22 Jan 2017 29 ‘United Arab Emirates’, dlapiperrealworld.com, accessed on 26 May, 2017
“We shall stop granting facilities employing 500 plus workers any further work permits if they don’t hire at
least one local occupational health and safety officer. The decision came following a strategic plan to
promote employment opportunities for locals in the private sector to implement the Emiratisation file which
has our wise leadership’s clear attention.”
– Saqr Ghobash, Minister for Human Resources and Emiratisation
“Due to increased construction and infrastructure activity in the UAE, we want to keep up to international
safety standards, and we constantly strive to evolve and be better than yesterday.”
– Lt. Col. Ali Al Mutawa, Assistant General Manager for Smart Services, DCD
Industry Market Research Report Construction and Contracting sector in UAE Page 32 of 60
their relevant jurisdictions. The legal structure includes building standards, health and safety,
environment guidelines and other technical conditions. The following is a brief on the regulatory
environment of the UAE construction sector:
Building regulation and standards: Administrative Resolution No. 125 of 2001 about the
adoption of Building Regulations and Standards provides a comprehensive discourse about
how to build in Dubai Municipality governed areas. Similar standards are used in JAFZA and
TECOM areas.
Licences and permits: All contractors should have a contractor classification licence that
allows them to work as a contractor. The permits required are dependent on which
municipality the site is located in: Dubai Municipality, JAFZA or TECOM. Certificates/Permits
relate to civil works, building permit (design drawing of proposed building), environmental
permit/licence, access road and internal road network, disposal of hazardous waste, no-
objection certificate from defence and airport authority, building completion certificate and
others.
Health and safety: The key health and safety provisions fall under Federal Law No. 8 of
1980 (as amended ‘the Labour Law’), as well as all employment-related matters in addition to
numerous regulations, codes of practice and specific technical guidelines. Health and safety
laws and requirements are administered by both the federal law of the UAE and the law of the
Emirate of Dubai. The law governing the health and safety of employees is the Labour Law. In
addition, the Ministry of Labour also makes important decisions. The Labour Law and
ministerial decisions set the main standards suitable for occupational health and safety and
impose obligations on both the employer and the employee. In addition to the federal law, the
Emirate of Dubai has additional codes of practice, circulars and technical decisions relating to
specific environmental and occupational health and safety issues.
Environment assessment and sustainability: The Ministry of Environment and Water
(MEW) governs the environmental protection in the country. The MEW is empowered to
delegate its powers to a ‘Competent Authority’ for each emirate. The major federal laws that
regulate environmental protection affecting the construction sector are the Federal Law (24)
of 1999 (protection and development of the Environment), the Federal Law (23) of 1999
(exploitation and protection and development of Living aquatic resources) and the Federal Law
(1) of 2002 (radiation).
Other obligatory requirements: Developers/Owners are required to obtain no-objection
certificates from utility suppliers such as Dubai Electricity and Water Authority, Roads and
Transport Authority, Dubai Municipality and Etisalat (the UAE-based telecommunication
company). The Civil Code also imposes certain conditions on Muqwala contracts, including a
provision that a contractor is liable for damage caused by its acts.
Industry Market Research Report Construction and Contracting sector in UAE Page 33 of 60
Regulatory developments
The following are key legal developments concerning the construction sector in the UAE.
Manage jointly-owned properties: In April 2017, the Real Estate Regulatory Authority set
specific guidelines and legislation concerning the management of jointly-owned property in
Dubai. The legislation requires the owners’ association (OA) or the OA manager to set aside
budgets and establish two separate funds for the property. The fund includes the general fund
and the reserve fund, both of which are contributed by the owners.
Emirati employment: In January 2017, the Ministry of Human Resource and Emiratisation
began monitoring private industrial and construction companies to ensure compliance with the
decree about Emirati (citizens of UAE) employment. As per the decree, companies with 500 or
more workers must employ at least one Emirati and companies with 1,000 or more must
employ at least two Emirati.30
Public private partnership (PPP) framework: In Q4 2016, the UAE was preparing a
framework to govern PPP. This draft was expected to encourage more private sector
participation in infrastructure projects. It also provides an opportunity to the private sector to
be comfortable while operating with the government.31
Property advertisement: The new regulation that came into force on October 09, 2016
states that ‘all real estate companies and institutions that wish to publish any real estate
announcements or advertise properties in print, online, radio and social media etc. will now
need to get a permit for each property to do so’.
4.5 Characteristics of entrepreneurs32
The global ranking of doing business in the UAE has improved in 2017. According to the Doing
Business ranking by the World Bank Group, the UAE ranked no. 26 in 2017, up 8 positions from
no. 34 in 2016.
According to the index, the ‘Protecting Minority Investors’ and ‘Starting a Business’ rankings
changed positively in 2017, whereas the ‘Dealing with Construction Permits’, ‘Getting electricity’,
‘Paying Taxes’ rankings remained unchanged.
30 ‘Private UAE companies to be monitored for compliance with Emiratisation decree’, thenational.ae, 1 Jan, 2017 31 ‘UAE to pass PPP law by year-end’, constructionweekonline.com, 9 Nov, 2016 32 doingbusiness.org, accessed on 7 Jun 2017 / Data based on primary research and expert opinion
Industry Market Research Report Construction and Contracting sector in UAE Page 34 of 60
Doing Business ranking by the World Bank
Area of business Doing Business
2017 rank
Doing Business
2016 rank
Change in
rank
Overall 26 34 8
Starting a Business 53 65 12
Dealing with Construction
Permits 4 4 -
Getting Electricity 4 4 -
Registering Property 11 10 1
Getting Credit 101 97 4
Protecting Minority Investors 9 48 39
Paying Taxes 1 1 -
Trading Across Borders 85 84 1
Enforcing Contracts 25 24 1
Resolving Insolvency 104 99 5
Global ranking of the UAE in different areas of doing business.
The Emirates NBD UAE Purchasing Managers’ Index (PMI), a composite indicator that
provides an overview of the country’s operating conditions in the non-oil private sector, registered
a positive trend since November 2016, before declining for the first time in seven months in April
2017. It registered a 19-month high of 56.2 in March 2017 and remained fairly stable at 56.1 in
April 2017. In May, it declined to 54.3 from the previous month’s figure of 56.1; however, the
average PMI reading year-to-May was 55.6 – well above the average of 53.4 recorded in the
same period last year.33 The chart below depicts the PMI trend over the last 12 months.
33 “UAE PMI signals strong growth in April”, emiratesnbdresearch.com, 3 May, 2017 / “UAE PMI eases in May” emiratesnbdresearch.com, 5 Jun, 2017
55.354.7
54.153.3
54.255.0 55.3
56.0 56.2 56.1
54.3
Jul-16 Aug-16 Sep-16 Oct-16 Nov-16 Dec-16 Jan-17 Feb-17 Mar-17 Apr-17 May-17
NBD UAE Purchasing Managers’ Index (PMI)
Registered an increasing trend from Nov 2016 to Mar 2017
In Mar 2017, it registered a 19-month high figure
Industry Market Research Report Construction and Contracting sector in UAE Page 35 of 60
Basis the age group, the entrepreneurs are ranked as follows:
Age 30–40 years (maximum number of entrepreneurs): A majority of start-up owners
are in this age group, as they come with relevant experience in construction sector and have
the know-how and enthusiasm to start a company.
Age 20–30 years: People in this age group do not have much experience but are
enthusiastic, resilient and optimistic, with vision for a start-up. They have a greater appetite
for risk taking.
Percentage of
construction industry
entrepreneurs by
gender:
Male: 70–75%
Female: 25–30%
Maximum number of
entrepreneurs in the
region lie in the
following emirates
(in order of their
presence):
Dubai (maximum)
Abu Dhabi
Sharjah
Ajman
Ras Al Khaimah
Facts related to entrepreneurship / start-ups in the construction sector
The construction sector will be one of the key drivers of the UAE’s as well as
Dubai’s growth in 2017. A number of start-ups and entrepreneurship in this
field are coming up in all prominent regions. The following are the key
characteristics of start-ups:
Demographic
characteristics
Gender
characteristics
Location
characteristics
Location
characteristics
Entrepreneurs in the
region mostly are from
the following
nationalities:
India (~ 50%)
Philippines (~30%)
Pakistan
Jordan
Egypt
Palestine
Syria
Entrepreneurs in the
region mostly lie in the
following age groups:
Rank 1
(maximum): 30–
40 years
Rank 2:
20–30 years
Rank 3
(minimum):
40 – 50 years
Industry Market Research Report Construction and Contracting sector in UAE Page 36 of 60
Age 40–50 years (minimum number of entrepreneurs): People in this age group have
considerable experience and know-how about starting a company. They are more settled in
life and are less likely to take the risk of investing in a new venture.
Preference of entrepreneurs for free zones and mainland
Both free zones and the mainland region in the UAE offer their unique set of attractions / factors
for entrepreneurs to establish their projects in the region. A few common observations are as
follows:
Free zones: Industrial construction projects are popular in free zones; residential, retail,
hospitality and leisure-related construction projects are popular in the mainland region.
Main land: Securing a bank loan in the mainland region is easier than in free zones. This is
majorly because a start-up project needs to have a local partner (from the UAE) to establish
its business in the mainland region, thereby facilitating easier funding and loan access.
Compared with the mainland, free zones face more challenges in securing project funds and
bank loans.
Industry Market Research Report Construction and Contracting sector in UAE Page 37 of 60
5 Key insights – Funding and investment
5.1 Financial funding and investment
The following are the modes of funding in the UAE construction and contracting industry
5.1.1 Self-funded or family funded
Self-funding along with support from family member and friends is the most preferred way for
initial investment in projects in the UAE. Once they exhaust their own sources of funds, they
approach other funding channels.
– Dubai Walls Construction LLC launched four mid-income residential projects in Jumeirah
Village Circle, with an investment of USD 136.24 m, all of which is self-funded.34
5.1.2 Bank loans
Bank loans are the second most-preferred way of funding projects. On a broader perspective,
banks in the UAE are on their way to recovery, following recent years of dismal performance
because of low oil prices. As per a 2016 report by Alvarez & Marsal (a US-based financial advisory
company) on the UAE banking sector, banks in the UAE are in better shape than their global
peers.35
34 “Dubai Walls bags Myra’s residential project contract in Dubai,”, projects.zawya.com, Sep 14, 2016 35 “UAE banking sector on its way to recovery, report says,”, thenational.ae, Apr 17, 2017
Funding/Investment in construction
and contracting industry
Self-financed
modesBank loans
Non-banking
financial
institutions
Private-equity
and venture
capitals
M&A and
Private
placements
Bonds
“The good news is we are seeing signs of this downward cycle bottoming out. There is plenty of reason for
banks’ shareholders to feel optimistic. Returns are still considerably higher than in other parts of the world
and banks are being run very prudently. Capital adequacy ratios and coverage ratios, a sure sign of a
bank’s health, have also been increasing”
Saeeda Jaffar, Managing Director, Alvarez & Marsal
Industry Market Research Report Construction and Contracting sector in UAE Page 38 of 60
As per statistics from the Central Bank of UAE, in the last few months, there has primarily been
an increasing trend in credits taken and bank deposits.
The above chart shows that gross credit has increased from December 2016 (USD 428.8 bn) to
March 2017 (USD 434.9 bn); however, it decreased marginally to USD 434.5 bn in April 2017. On
the other hand, bank deposits have witnessed continuous growth in the last five months ending
April 2017.
As of March 2017, construction and real estate accounted for 18.1% of the overall bank credit to
UAE residents*. The chart below shows that a large share of bank credit is provided for personal
loans, followed by construction and real estate activities.36
*Residents include corporates, individuals, government, GREs (Government ownership of more than 50%) and NBFCs **Others includes manufacturing; transport, storage and communication; mining and quarrying; electricity,
gas and water; agriculture; and all others
36 Banking & Monetary Statistics, UAE banks, centralbank.ae, Apr 2017 / Exchange rate (As on Mar 31, 2017): AED 1=USD 0.2722
428.8429.5
431.7 434.9434.5
425.5 425.3
430.6
436.2437.0
420
430
440
Dec-16 Jan-17 Feb-17 Mar-17 Apr-17
Valu
e (
US
D b
n)
UAE gross credit vs bank deposits
(Dec 16–Apr 17)
Gross credit Bank deposits
29.7%
18.1%
11.3%
10.3%10.3%
20.2%
Breakdown of bank credit to UAE residents* by economic activity,
Q1 2017 (ending Mar 2017)
Personal loans Construction and real estate
Government Trade
Financial institutions(excluding banks) Others**
Both gross credits and bank deposits
have shown upward trends in recent
times, indicating banking growth in the
UAE.
Industry Market Research Report Construction and Contracting sector in UAE Page 39 of 60
Over the last two years (March 2015 to March 2017), bank credit for construction and real estate
activity has been increasing every quarter, though the growth rate has been fluctuating.
*Residents include corporates, individuals, government, GREs (Government ownership of more than 50%)
and NBFCs
As per the financial stability report published by the Central Bank of the UAE, total real estate
market lending by banks in the UAE increased in both 2015 and 2016.
*The values depicted in the chart are approximates and does not match exactly, as the actual values were
not available in the source.
57,331 58,84060,876
63,97065,815 65,976
68,27572,068 72,685
-0.9%
2.6%
3.5%
5.1%
2.9%
0.2%
3.5%
5.6%
0.9%
-2%
1%
4%
7%
10%
0
25,000
50,000
75,000
Mar-15 Jun-15 Sep-15 Dec-15 Mar-16 Jun-16 Sep-16 Dec-16 Mar-17
Bank credit to UAE residents* for construction and real estate activity
(Mar 15–Mar 17)
Credit (USD m) Y-o-y growth
22.2
52.6
18.7
59.0
21.5
64.1
0.00
20.00
40.00
60.00
80.00
Under construction Completed
Valu
e (
US
D b
n)
Real estate-related lending by
category*
2014 2015 2016
24.9
49.9
24.9
52.8
26.5
59.1
0.0
20.0
40.0
60.0
80.0
Individuals Corporate
Valu
e (
US
D b
n)
Real estate-related lending by
borrower type*
2014 2015 2016
Industry Market Research Report Construction and Contracting sector in UAE Page 40 of 60
In 2016, lending to real estate properties under construction and completed real estate increased
approximately by 14.9% y-o-y and 8.7% y-o-y, respectively. Similarly, there has been growth in
lending by both individuals and corporates. Growth in real estate lending in 2016 indicates a
positive market sentiment.37
* The values depicted in the chart are approximates and does not match exactly, as the actual values were
not available in the source.
UAE banks’ lending to residential real estate properties increased by 10.3% y-o-y in 2016, owing
to an increase in both residential and commercial lending in the market. Financing of commercial
properties, which includes non-residential properties, services and developers, showed an
aggregate growth of about 10% y-o-y in 2016.
5.1.3 Private equity and venture capital firms
Private equity and venture capital (PE/VC) are not among the prominent sources of funding, and
traction here is low.
As pert FactSet, the number of funding deals in the construction and contracting business in the
UAE by private equity firms and venture capitalists for the past 10 years has been limited. Major
investments are in the construction sector. In 2017, Abu Dhabi witnessed the highest number of
private equity deals since 2007, followed by Dubai.38
37 Financial stability report 2016, centralbank.ae, accessed on Jun 5, 2017 / Exchange rate (Average of 2016): AED 1=USD 0.272258 38 Factset, accessed on Jun 5, 2017
32.5
20.9
8.0 9.0
4.4
33.2
23.4
8.29.9
2.7
36.7
27.0
8.7 9.9
3.3
0.0
5.0
10.0
15.0
20.0
25.0
30.0
35.0
40.0
Residential Non-Residential Services Developer Other
Valu
e (
US
D b
n)
Real estate-related borrowing by type of property*
2014 2015 2016
Residential projects have clearly dominated
the borrowing space; however, over the
last three years (2014-16), borrowings in
non-residential projects have grown the
most (~30%).
Industry Market Research Report Construction and Contracting sector in UAE Page 41 of 60
*Includes engineering and design services
International PE firms realise the potential in the Middle East market. However, stringent local
laws and restrictions on foreign ownership create a competitive disadvantage compared with local
corporates, when it comes to bidding. To counter these challenges, some international PE firms
partner with local PE firms. A prime example of this is the Blackstone Gems Education deal with
Fajr Capital (a sovereign-backed private equity firm headquartered in Dubai) and Bahrain
Mumtalakat Holding Company (Mumtalakat), the investment arm of the Kingdom of Bahrain.39
5.1.4 M&A activities and private placement
The UAE’s construction and contracting sector
witnessed the announcement of 30 M&A during
January 2013–May 2017. Most of these deals
were announced in 2014 and 2015. In 2017
(until May), the sector witnessed the
announcement of five deals.40
Over the past 10 years, in the UAE, majority of
the M&A deals were in Dubai (57.1%), followed
by Abu Dhabi (42.9%).
A large number of the acquirer companies are headquartered in the UAE. A few of the deals
involved more than one acquirer and were carried out by companies from different countries. The
majority of the acquirers in the UAE are located in Dubai.
39 ‘Middle East Region’, bakermckenzie.com, accessed on 6 Jun 2017 / ‘Fajr Capital, Mumtalakat and Blackstone acquire significant minority stake in GEMS Education’, blackstone.com, accessed on 6 Jun 2017 40 FactSet, accessed on 2 Jun 2017 / Includes FactSet industries - [1230] Building Products; [20252010] Building Materials and Garden Supply Stores; [451535] Construction Materials; [4441] Building Material and Supplies Dealers; [32712] Clay Building Material and Refractories Manufacturing; [321992] Prefabricated Wood Building Manufacturing; [332311] Prefabricated Metal Building and Component Manufacturing; [52] Building Materials, Hardware, Garden Supply, And Mobile Home Dealers; [24] Lumber And Wood Products, Except Furniture; [3448] Prefabricated Metal Buildings and Components; and [1135] Construction Materials
46.2%
23.1%
23.1%
7.7%
Breakdown of private equity deals by sector (2007–17)
Construction
Professional, scientific,and technical services*
Real Estate and Rentaland Leasing
Construction materialmanufacturing
53.8%
30.8%
7.7%7.7%
Breakdown of private equity deals by state/province (2007–17)
Abu Dhabi
Dubai
Ash Shariqah
Al Fujayrah
5
7 76
5
2013 2014 2015 2016 May 2017
Total number of M&A deals announced
Total number of M&A deal announced
Industry Market Research Report Construction and Contracting sector in UAE Page 42 of 60
*Others includes: Saudi Arabia, Bahrain, Cayman Islands, France, Mauritius, and Sweden / **Information on
acquirer state for one of the M&A deal was not available.
A majority of the M&A deals occurred in the construction and contracting industry, with the target
companies located primarily in Dubai.
The following table provides information on some of the prominent M&A deals in the UAE from
2016 onwards:
Announced
date Target Acquirer Deal value Synopsis
3 Mar 2017 Balfour
Beatty Plc
/Middle East
Joint
Ventures 2/
Dutco Group
of
Companies
USD 13.72
mn
Dutco Group completed the acquisition of a
49% minority stake in Dutco Balfour Beatty LLC
and BK Gulf LLC joint venture companies from
Balfour Beatty Plc for USD 13.7 mn in cash.
Dutco Balfour Beatty and BK Gulf are 51:49
joint venture companies between Dutco Group
and Balfour Beatty.
51.7%
6.9%
10.3%
3.4%
3.4%
3.4%
20.7%
Number of deals by acquirer
country (2013–17)
The UAE India US Austria
Malaysia UK Others*
57.1%
42.9%
Number of deals by acquirer
state in UAE (2013–17)**
Dubai Abu Dhabi
65.4%
15.4%
11.5%
7.7%
Number of deals by target
company state (2013–17)
Dubai Abu Dhabi Ras al Khaimah Al Fujayrah
73.08%
26.92%
Number of deals by sector
(2013–17)
Construction and contracting
Building materials and products
Industry Market Research Report Construction and Contracting sector in UAE Page 43 of 60
Announced
date Target Acquirer Deal value Synopsis
16 Feb 2017 Al Jaber
LEGT
Engineering
& Contracting
LLC
Emirate of
Dubai
(UAE);
Investment
Corp of
Dubai
– Investment Corp of Dubai acquired Al Jaber
Legt Engineering & Contracting LLC, a building
and industrial site developer, for an undisclosed
amount. The acquisition would allow
Investment Corp of Dubai to expand its service
offerings.
13 Feb 2017 Wideurope
Engineering
Middle East
FZC
Mott
MacDonald
Group Ltd
– Mott MacDonald Group completed the
acquisition of Wideurope Engineering Middle
East FZC, an engineering and design consulting
services provider, for an undisclosed amount.
The acquisition enhances Mott MacDonald
Group’s offerings, services and capability in the
energy sector and provides access to new
markets.
4 Jan 2017 Sky Steel
Systems LLC
Palfinger AG – Palfinger AG acquired a 20% stake in Sky Steel
Systems LLC, a building and maintenance unit
manufacturer based in Dubai, for an
undisclosed amount. The acquisition would
expand the serving offering of Palfinger AG in
the field of building maintenance in the Gulf
region and Saudi Arabia.
31 May
2016
Novus
Community
Management
Three60
Communities
– Three60 Communities, a subsidiary of Eltizam
Asset Management Group, completed the
acquisition of Novus Community Management,
a real estate service provider and a subsidiary
of PRD Nationwide Middle East Real Estate LLC,
for an undisclosed amount. The acquisition
allows Three60 Communities to enhance its
existing portfolio of real estate services and
expand its geographical presence and client
base.
31 May
2016
Premium
Community
Management
Three60
Communities
– Three60 Communities completed the
acquisition of Premium Community
Management, a Dubai-based real estate
services provider, for an undisclosed amount.
The acquisition allows Three60 Communities to
enhance its existing portfolio of real estate
services and expand its geographical presence
and client base.
17 May
2016
Leaders Fort
Contracting
LLC
Emaar
Industries &
Investments
PJSC
– Emaar Industries & Investments PJSC
completed the acquisition of a minority stake in
Leaders Fort Contracting LLC for an undisclosed
amount.
12 Apr 2016 ERE Homes Gulf
Sotheby’s
International
Realty; High
End Real
Estate LLC
– Gulf Sotheby’s International Realty, a
subsidiary of High End Real Estate LLC,
completed the acquisition of ERE Homes, a
Dubai-based real estate services provider, for
an undisclosed amount. The acquisition would
strengthen and increase Gulf Sotheby’s’
Industry Market Research Report Construction and Contracting sector in UAE Page 44 of 60
Announced
date Target Acquirer Deal value Synopsis
property management services and existing
business offerings.
11 Jan 2016 Tarmac
Trading Ltd.
/Tarmac
Middle East
Business/
Colas SA;
Colas Moyen
Orient SAS
– Colas Moyen Orient SAS, a subsidiary of Colas
SA, completed the acquisition of a minority
stake in Tarmac’s Middle East business, Tarmac
Trading Ltd, a subsidiary of Anglo American Plc,
for an undisclosed amount. The transaction
includes a stake in six operating joint venture
entities. The entities produce and supply
building materials and construction products.
The acquisition enables Colas Moyen Orient
SAS to expand its business in the Middle East.
Private placement: Private placement is another source of funding in the UAE construction and
contracting sector. For example, in 2014, Lamprell Plc, located in Dubai, UAE, generated funds
through private placement by offering subscription rights and shares as securities.41
5.1.5 Bonds
The UAE bond market is still at a nascent stage as the market is governed by the Federal Debt
Management Law. However, a new debt law is expected to be introduced in the UAE that will
allow the federal government to sell sovereign bonds in the future. The law will also encourage
the government to issue bonds in the local currency.
In April 2016, Abu Dhabi raised USD 5 bn from the international market, its first bond sale since
2009. In 2014, Dubai had issued a bond sale and raised a USD 750 mn sukuk and is expected to
raise more in the coming years.42
In February 2017, the International Monetary Fund (IMF) called on the UAE to tap bond markets
and the assets of its sovereign wealth funds instead of using its local bank deposits to balance its
budget. This is expected to increase the bond market locally, which will ultimately lead to rising
investment in the construction and contracting industry in the UAE.43
41 FactSet, accessed on Jun 5, 2017 42 ‘UAE debt law to awaken sleeping giant bond market’, globalconnections.hsbc.com, 16 Sep 2017 43 ‘UAE federal debt management law set for this year’, thenational.ae, 12 Feb 2017
Industry Market Research Report Construction and Contracting sector in UAE Page 45 of 60
6 PEST analysis
6.1 Political factors
6.1.1 PPP framework
In 2016, the UAE government was preparing a framework to govern public private partnership
(PPP). This new initiative is expected to motivate private construction sector companies to
participate in infrastructure projects. It will also facilitate working between the private sector and
the government.44
6.1.2 Plans for creation of federal real estate regulatory authority
In August 2016, the UAE government was considering the establishment of a federal real estate
regulatory authority, as it did not have a government body to supervise the sector. However,
emirates such as Ajman and Dubai have their own real estate regulatory authorities: the Real
Estate Regulatory Authority (RERA) in Dubai and Ajman Real Estate Regulatory Authority.45
6.1.3 Promotion of sub-contracting
Sub-contracting of construction projects has become an essential part of modern construction
projects due to the increased complexity and different type of projects. The UAE government
recognises and allows sub-contracting in the construction sector. The law allows not just sub-
contracting of part of the project but also the complete construction work of the project, unless
otherwise stated by the law. However, the UAE law does not reduce the main contractor’s liability
for the work. Article 890 (2) of the Civil Code provides that the main contractor responsibility vis-
à-vis the employer shall remain as it is in respect of the subcontract works.46
6.1.4 Developing a framework to accommodate 3D printing technology
The UAE government acts swiftly to modify regulatory frameworks, which is a necessity due to
rapid technological advancement. To become the 3D printing centre of the world, Dubai
Municipality in July 2016 has been developing a framework of rules and regulations for 3D
printing in the construction sector.47
44 ‘UAE to pass PPP law by year-end’, constructionweekonline.com, 9 Nov, 2016 45 ‘Real Estate Regulation Act, 2016 (RERA) - Are we ready?’, grantthornton.in, Aug 2016 46 ‘Subcontracting in the UAE – Basic Legal Principles’, cbnme.com, 24 Nov, 2016 47 ‘Dubai Sets Up Rules and Regulations for 3D Printing in Construction, Moving Further Along the Road to Becoming the 3D Printing Center of the World’, 3dprint.com, 14 Jul 2016
“The documentation will be used to draft a new law encouraging more private sector participation in
infrastructure projects” "It will give the opportunity to the private sector to be comfortable when they
operate with the government.”
– Abdullah bin Mohammed al-Nuaimi, Minister of Infrastructure Development
Industry Market Research Report Construction and Contracting sector in UAE Page 46 of 60
6.2 Economic factors
6.2.1 Short-term and long-term economic outlook48
The short-term economic outlook for the country has improved, majorly due to recovering oil
prices as a result of Organization of the Petroleum Exporting Countries (OPEC) cuts implemented
in January 2017. This has resulted into a slightly stronger macroeconomic performance,
comprising growth, government finances and the current account position.
Backed by these factors, D&B upgraded the UAE’s outlook to ‘improving’ in February 2017. D&B
also upgraded the trend indicators on the Credit Environment Outlook from deteriorating to stable
and the Market Environment Outlook from stable to improving.
As per the First Abu Dhabi Bank (FAB, the biggest lender in the UAE), the UAE is expected to lead
economic growth in the Arabian Gulf region in 2017, primarily due to higher spending, spurred by
rising oil prices. Also, as per the FAB, the UAE was the first country in the GCC to execute fiscal
measures such as municipality fee increases, subsidy reduction and use of alternate sources to
fund government spending.49 It is expected that factors such as recovery in oil prices and growing
public and private sector activity propelled by preparations for Expo 2020 will witness real GDP
growth between 4% and 5% per annum over 2017–2020, which is higher than the 3.1% growth
in 2016.50
However, real GDP growth has slowed from 6.8% in 2012 to an estimated 3.5% in 2016. This is
majorly because of low oil prices, as compared with that during 2010–14, and the OPEC
production quotas. These factors have been putting pressure on the government’s fiscal position,
as a result of which the government is implementing spending cuts and considering raising tax
revenues. While government spending in the region has been a major driver of the economy of
the country, such spending cuts are expected to impact the country’s short-term economic
outlook.
In the longer run, the government is trying to diversify its economy from an oil-based one to a
more market-based one, particularly in Dubai, which will result in its improved economic
potential. The country is also implementing measures to reduce its involvement in the economy
by promoting privatisation plans. It is trying to make its private sector less dependent on
government contracts. Considering all of these measures, the long-term economic outlook for the
country looks positive at the moment.
48 Country Insight Report – United Arab Emirates, D&B, Jun 2017 49 ‘UAE set to lead region in economic growth, says NBAD’, thenational.ae, 22 Jan, 2017 50 ‘UAE GDP growth forecast to rise 4%-5% from 2017- 2020, driving projects rebound’, thearabianpost.com, Aug, 2017
“The city’s ground breaking approach to construction will have a major impact on the industry. Therefore,
this new system must be accompanied by new legislation that regulates the work in the field and also
preserves the results of the projects that will be implemented using this technology. A general frame for
the laws have been laid, and the rules were already amended to match with the new technology.”
– Khalid Saleh Al Mullah, Director of Dubai’s Building Department
Industry Market Research Report Construction and Contracting sector in UAE Page 47 of 60
6.2.2 Growing FDI in construction sector51
FDI in the construction sector grew at a CAGR of 5.9%, from USD 3.3 bn in 2010 to USD 4.4 bn
in 2015; however, it decreased by 8.3% y-o-y in 2015. It accounted for nearly 4.1% of the total
FDI in the UAE in 2015. Wholesale and retail trade (26.2%); real estate, renting and business
activities (25.8%); and financial intermediation (19.1%) were the top 3 sectors for FDI. Although
the share of FDI in the construction sector is small, it is expected to grow at a robust rate in the
next few years due to investor-oriented reforms in FDI. The reforms include simplifying the
process for obtaining construction permits, compensating for power cuts and reducing the lead
time for obtaining an electricity connection.
6.3 Social factors
6.3.1 Growing population
The UAE population is expected to increase at a CAGR of 1.4%, from 8,580,000 in 2015 to
10,581,000 in 2030. Urban population constitutes about 85% of the total population across the
forecast years and is expected to increase at a CAGR of 1%, from 7,282,000 in 2015 to
8,507,000 in 2030. Increasing population will drive urbanisation and demand for housing,
infrastructure and hospitals, which will further boost the construction sector in the UAE.52
6.3.2 Growing hospitality sector
The UAE hospitality industry is growing significantly and is boosted by the growing hospitality and
tourism industry. It is expected that in the UAE, about 59 hotels (which is about 18.7% of the
total new hotels to be opened in the Middle East and Africa) will be opened by 2017 - 2018.53 The
hospitality industry revenue is expected to increase at a CAGR of 10.8% to reach USD 9.8 bn over
2015–2020. The industry will also be driven by the Dubai 2020 Expo. These growth areas are
expected to provide a significant boost to the construction industry in the country.54
51 old.fcsa.gov.ae / Exchange rate (Average of 2015) 1AED = USD0.272259
52 ‘UAE population and statistical trends’, gulfnews.com, 17 Nov, 2016 53 ‘59 hotels set for opening in UAE in 2017, says report’, khaleejtimes.com, 15 Sep, 2016 54 ‘UAE hospitality revenue forecast to reach $9.8 billion by 2020’, thenational.ae, 23 Aug, 2016
3,029
6,8897,282
7,982 7,9238,507
6691311 1298 1377 1464 1549
0
3,000
6,000
9,000
2005 2010 2015 2020F 2025F 2030F
Urban and rural population
Urban Rural
Popula
tion (
‘000)
Industry Market Research Report Construction and Contracting sector in UAE Page 48 of 60
6.3.3 Affordable housing policy approved for Dubai55
In March 2017, the government approved an affordable housing policy that aims to provide
housing units for low-income working people and renovate some old areas in Dubai. The policy
classifies the low-income population into Emiratis and non-Emiratis, including expats and workers,
in planned sectors in Dubai.
6.4 Technological factors
6.4.1 Increasing innovations in construction sector
The UAE is among the world’s most-attractive construction markets that had a strong
construction pipeline of more than USD 700 bn in 2016, constituting over one-third of the GCC’s
pipeline. Many mega construction projects in the UAE’s pipeline contribute to the innovations
pipeline of the sector. In 2016, Legoland Dubai – Castle Kingdom, Abu Dhabi Midfield Terminal, Al
Habtoor City Theatre, Dubai Opera, and NAS Arena won Tekla Global Building Information
Modeling (BIM) Awards in recognition for their leading use of 4D digital models that have the
potential to increase productivity and collaboration.56,57
6.4.2 Increasing contribution of 3D printing in construction sector
3D printing has transformed the way buildings or homes are being built. The technology has
lowered costs and reduced the time taken to implement projects.
As per the Dubai Media Office, 3D printing in Dubai’s construction sector is expected to increase
by 2% in 2019 to up to 25% by 2030.58 Dubai 3D Printing Strategy aims to make Dubai a global
capital of 3D printing technologies by 2025, focusing on three key sectors: construction, medical
products and consumer products.
The use of 3D printing in the construction and building sector is anticipated to focus on
facilities and parks, lighting products, construction joints, bases and foundations, buildings,
55 ‘Low-income housing policy approved for Dubai’, gulfnews.com, 12 Mar, 2017 56 ‘UAE mega-projects rank among the most innovation and least wasteful’, technicalreviewmiddleeast.com, 24 Nov, 2016 57 ‘UAE projects world’s most innovative, least wasteful’, emirates-business.ae, 21 Nov, 2016 58 ‘25 per cent of Dubai’s construction to be 3-D printed by 2030, Ruler announces’, thenational.ae, 28 Apr, 2016
“Voluntary programmes and social responsibility initiatives have always been a top priority for Dubai government. “We
all have a shared responsibility to spread happiness among all members of the society through providing them and
their families with decent lives. Our ambitions in Dubai have no end and every new project we announce represent the
fruit of hard work made by various work teams.”
– Shaikh Hamdan Bin Mohammad Bin Rashid Al Maktoum, Crown Prince of Dubai
and Chairman of Dubai Executive Council
“This year has been a seminal moment for GCC construction innovation, and 2017 will see continued
momentum with government BIM directives, and pre-fabrication, and BIM gaining wider take-up. The
UAE’s strong showing in international awards demonstrates the country’s standing as a global BIM
leader,” said Paul Wallett, Regional Director of Trimble Solutions Middle East.”
– Paul Wallett, Regional Director of Trimble Solutions Middle East
Industry Market Research Report Construction and Contracting sector in UAE Page 49 of 60
mobile homes, stores and residential villas. The value of the 3D printing technology-based
construction sector in Dubai is expected to be about USD 816.7 mn (AED 3 bn) by 2025.59
6.4.3 Developing insulating material for the UAE market
Due to predominantly hot weather conditions in the UAE, technological advancements are focused
on developing insulating material that will reduce the UAE’s energy consumption (per capita
consumption), currently among the highest in the world. In March 2017, United Arab Emirates
University (UAEU) announced that its scientists had developed a composite form of insulation
material that aims to help the construction sector become more energy-efficient and eco-friendly.
The material, which has received patent approval, is made from a blend of unsaturated polyester
liquid with date-pits powder. Scientists expect the insulating material (made from agriculture
waste) to help cut the harmful emissions and pollutants in the environment.60
59 ‘UAE aims to be global hub for 3D printing’, gitex.com, 12 Mar, 2017 60 ‘UAE scientists creates new building materials from agricultural waste’, thebig5hub.com, 12 Mar, 2017
“We believe that 3D printing technology is capable of transforming the construction sector by lowering
costs and reducing the time it takes to implement projects. It will also help reduce manpower
requirements as well as waste generated from construction which can be harmful to the environment. We
will also focus on using this technology in other vital sectors such as medicine and consumer products to
offer goods and services at competitive prices.”
– Shaikh Mohammad Bin Rashid Al Maktoum, VP and Prime Minister of the UAE and Ruler of Dubai
"Materials typically used for insulation, such as polyurethane, polystyrene, and mineral wool, suffer from
low mechanical properties that limit their use in the construction process. This means there is the need for
an insulating material that possesses excellent mechanical and physical properties in terms of saving
energy, preventing water leakage, ease of handling, and which can be used extensively,"
"In the UAE, there is an ongoing search for alternative means and materials that preserve and minimise
the loss of energy in buildings,"
– Dr Basim Abu-Jdayil, Professor in Chemical and Petroleum Engineering, UAEU
Industry Market Research Report Construction and Contracting sector in UAE Page 50 of 60
7 Outlook
Moody’s Investors Service changed the rating outlook on the Government of UAE from negative to
stable in March 2017. Moody’s also affirmed the long-term Aa2 (rated as high quality and very
low credit risk) issuer rating.
The key drivers of this positive change are as follows:
Efficient policy response to the low oil price environment
Expected improvement in the fiscal and current account positions
Economy’s growth and diversification prospects
The outlook for the UAE construction industry appears to be positive as the industry is expected
to benefit from the rapid and further development of international events such as Expo 2020 and
government investments in transportation, infrastructure and tourism. While the sector is
expected to increase at a CAGR of 7.5%, from USD 44.5 bn in 2016 to USD 63.8 bn in 2021, its
contribution to the country’s GDP is expected to increase from 10.9% in 2016 to 12.7% in 2021
(refer to page 4).
Further, the government set aside USD 4.6 bn (AED 17 bn) in the 2016 budget for infrastructure
development until 2020. This investment will go towards the development of housing, roads,
health facilities, railways, schools and public buildings.61
Strong project pipeline in the UAE: According to MEED projects, as of spring 2017, the total
value of projects in the GCC that are either in the planning or delivery stage is worth USD 2.7 tn,
with the UAE’s share is estimated to be about USD 830 bn.62
Dubai is expected to have a positive outlook for the construction business in 2017 and
beyond, as it has a total of 4,000 active projects worth USD 313.6 bn underway. According to
the BNC’s Dubai Overview Report, the urban construction sector in Dubai has more than 3,200
active projects (equivalent to more than USD 245 bn). This is followed by the transport sector
with 187 projects (worth USD 32.4 bn), the utilities sector with 203 projects (USD 24.3 bn),
the industrial sector with 377 (USD 5.8 bn), and the oil and gas sector with 12 projects (USD
4.6 bn).63
Abu Dhabi has also become the next destination for investors eyeing long-term growth. The
emirate has earmarked USD 100 bn for investment until 2030. A major part of the investment
is expected to be in the real estate and transportation sectors. This investment is expected to
contribute to the significant growth of the UAE construction industry.64
61 ‘UAE Construction Industry Outlook to 2020: Infrastructure Opportunities following Dubai 2020 Expo Event and Market Challenges’, prnewswire.com, 30 Nov, 2016 62 ‘Construction 2017: A positive market outlook?’, deloitte.com, 2017 63 ‘Dubai’s projects industry bullish at Dh1.15 trillion’, khaleejtimes.com, 15 Feb, 2017 64 ‘UAE Construction Industry Outlook to 2020: Infrastructure Opportunities following Dubai 2020 Expo Event and Market Challenges’, prnewswire.com, 30 Nov, 2016
Industry Market Research Report Construction and Contracting sector in UAE Page 51 of 60
“The United Arab Emirates’ economy is the most diversified within the Gulf region. Diversification efforts
have helped the UAE to build up solid financial buffers that allow the government to continue supporting
the economy’s non-hydrocarbon activities such as real estate, construction, trade, retail and tourism. The
UAE remains a very attractive economy for international investors. Its favourable business environment
benefits from high productivity, excellent infrastructures, strong connections to international markets and
a dynamic private sector.”
– Seltem Iyigun, Coface MENA economist
“The UAE construction sector is projected to sustain robust growth over the coming years thanks to grand
ventures currently being implemented in Dubai, which will host the Expo 2020. Likewise, Abu Dhabi is
expected to announce a number of projects by the end of the second quarter which bodes good for the
entire construction sector.”
– Dr J.R. Gangaramani, President and executive chairman of Al Fara’a Group
Industry Market Research Report Construction and Contracting sector in UAE Page 52 of 60
8 Competitive landscape
8.1 Overview
The construction market, which comprises of more than 6,000 companies, is fragmented and
constitutes many domestic and foreign players in the market. Construction companies are
primarily located in Dubai and Abu Dhabi, as construction activity is mainly located in these
emirates.
Competition in the market is strong as small companies as well as large players all offer similar
services.65 To stay ahead of the competition, many companies have diversified in terms of the
sub-segments they operate in. Further, companies also focus on geographical diversification so as
to guard themselves against risk in any particular region. Diversification is usually difficult for
small construction firms, and large firms with scale tend to score over small ones. However, with
supportive government policies, SMEs are also gaining ground. According to Neil Petch, chairman
at Virtugroup (a holding company that provides consulting to start-ups in the UAE), “As of May
2017, 43% of contracts in Expo 2020 have gone to SMEs.” Further, because barrier to entry in
the market is low, the sector witnesses a lot of new ventures and start-ups. Rising number of
start-ups is further expected to increase the competition.66
Prominent construction companies include Orascom Construction Ltd, Dubai Holding Commercial
Operations Group LLC, Arabtec Holding, Damac Real Estate Development Ltd, Aldar Properties,
National Petroleum Construction Co, AL Hamra Construction Co, Al Naboodah, Dutco
Construction, HLG Contracting LLC and Al Fara’s General Contracting Co.
Among these, as per industry experts, the following are the primary construction companies in
the UAE: Arabtec Construction LLC, Al Naboodah Construction Group LLC, Dutco Construction
LLC, HLG Contracting LLC and Al Fara’a General Contracting Co LLC.
8.2 Arabtec Construction LLC67
Arabtec Construction LLC is a construction and engineering services company based in the UAE. It
is majorly involved in developing high-rise projects, mixed-use spaces, residential towers, hotels,
residential communities and luxury villas, airports, commercial developments, hospitals,
museums, stadiums and other miscellaneous projects.
The company has a backlog of USD 5.2 bn of booked construction work.
65 Marketline, accessed on 23 Jun 2017 66 ‘Behind the headlines – Dubai’s booming economy and what it means for your business’, vz.ae, 31 May 2017 67 arabtecuae.com, accessed on 13 Jun, 2017 / LexisNexis accessed on 13 Jun, 2017 / General Press search
Industry Market Research Report Construction and Contracting sector in UAE Page 53 of 60
The company operates as a subsidiary of Arabtec Holding PJSC, and has a strategic partnership
with Nasser Bin Khaled Al Thani & Sons Holding Company.
Key Facts
Company type Subsidiary
Headquarters Dubai, UAE
Website arabtecuae.com
Founded 1975
Employees ~40,000
Revenue -
CEO & Executive Director Raja Hani Ghanma
8.2.1 Key projects
Completed: Burj Khalifa, Ocean Heights, Sky Gardens, The Conrad Hotel, Infinity Tower,
Tiara Palm Dubai Hotel and Tiara Residences, Al Waab City, Hanging Gardens, The Address,
Downtown Dubai, Fairmont Hotel, Burj Al Arab, Emirates Palace Hotel, Al Furjan, Dubai Silicon
Oasis, Dubai International Airport, Terminal 2- Expansion, World Trade Centre, Doha, Qatar,
Dubai Maritime City, Dubai Pearl, Dubai Sports City (Stadium 1 and 4), and Ghantoot Horse
Racing Grandstand, Louvre Museum
Ongoing: Al Ain Hospital, Tiara Towers, Abu Dhabi Plaza, Msheireb Downtown, St. Regis Hotel
and Residences, King Abdulaziz International Airport, Midfield Terminal Building at Abu Dhabi
International Airport, and the Bahrain International Airport - Airport Modernization Program
8.2.2 Key developments
Date Description
21 May
2017
Arabtec Construction wins USD 398 mn contract for 2020 tower
Arabtec Construction has been awarded a AED 1.46 bn (USD 398 mn) contract by Wasl
LLC for the construction of the 2020 Tower in Dubai, UAE.
17 Apr 2017
Arabtec Holding appoints CFO
Arabtec Holding announced the appointment of Peter Pollard as its new group CFO.
Pollard joins Arabtec from outsourcing firm Serco Group, where he was working as
managing director of its Hong Kong business. Before that, he held a number of senior
financial positions in contracting and property companies in the UAE, Asia and
Australia. He had previously worked as the CFO at Leighton Contractors (now renamed
CPB Contractors).
24 Jan 2017
Arabtec Construction wins USD 1.1 bn contract for Bahrain airport terminal
Arabtec Construction and its JV partner TAV Construction of Turkey won a USD 1.1 bn
contract to construct a terminal at Bahrain International Airport.
The first bid on the project from contractors was invited in August 2014.
Industry Market Research Report Construction and Contracting sector in UAE Page 54 of 60
Date Description
28 Nov
2016
Arabtec Holding appoints CEO
Arabtec announced the appointment of Hamish Tyrwhitt as its CEO, effective 28
November 2016.
Before that, Tyrwhitt worked for 27 years at Leighton Holdings Ltd. He held various
positions in Australia and Asia before being appointed as Leighton’s CEO from 2011 to
2014. In March 2015, he became CEO of Asia Resources Minerals, an Indonesian coal
mining company listed in London.
7 Oct 2016
Arabtec Construction wins hotel contract in Dubai
Arabtec Construction won a USD 92.5 mn contract to build a five-star hotel at Dubai
Media City.
8.3 Al Naboodah Construction Group LLC68
Al Naboodah Construction Group LLC (ANCG) is a UAE-based contractor engaged in civil
engineering, building and MEP in the GCC. ANCG positions itself in the GCC construction industry
as self-sufficient, supplying its own asphalt, concrete, and plant and machinery.
The company’s civil engineering, building and MEP businesses have government departments,
major airports, private developers, architects, major contractors and private companies as clients.
The company is a part of Al Naboodah Group Enterprises.
Key Facts
Company type Subsidiary
Headquarters Dubai, UAE
Website alnaboodahconstruction.com
Founded 1960s
Employees ~16,000
Revenue –
CEO Colin Timmons
8.3.1 Key projects
Completed: Dubai International Airport Expansion (Phase 2), General Aviation and Heliport,
Dubai World Central Airport, Phase 1A and 1B, SP100 – Miscellaneous Airfield Works – Dubai
International Airport, Dubai International Airport - Refurbishment of Two Runways, Abu Dhabi
Airport Tunnel Project, Al Barari Development Phase 1 Main Villa, The Harvard Medical School
Retail, Auditorium and Conference Space, Dubai Police GHQ Forensic Building, The i-Rise
Tower, The Oberoi Centre at Business Bay, Arabian Centre Mall, 79 Villas – Lime Tree Valley,
Al Khawaneej Villas, Olive Point Villas, Sienna Lake Villas, Dubai Ring Road Phase 1 (Sheikh
Mohammad Bin Zayed Road)
68 alnaboodahconstruction.com, accessed on 13 Jun, 2017 / LexisNexis accessed on 13 Jun, 2017 / General press search
Industry Market Research Report Construction and Contracting sector in UAE Page 55 of 60
8.3.2 Key developments
Date Description
19 Jun 2016
ANCG announces appointment of CEO
ANCG announced Colin Timmons as CEO of the company effective July 2016, while
its existing CEO, Steve Lever, will retire from his position on 1 July 2016.
Timmons joined the company in March 2016 as COO. Before joining the company,
Timmons held a number of senior roles with major UK-based construction
companies, and has been general manager for Al Faraa General Contracting Co in
Abu Dhabi.
8.4 Dutco Construction LLC69
Dutco Construction Company LLC operates in a diverse range of construction and engineering-
related fields in the Middle East construction industry. The company is a contractor for various
civil engineering, roadworks, drainage systems, bridges and dams in the UAE, and offers its
clients specialist scaffolding and formwork, interiors and plant divisions.
Dutco Construction is a part of Dutco Group of Companies, which was founded in 1947 and is
based in Dubai, UAE.
Key Facts
Company type Subsidiary
Headquarters Dubai, UAE
Website www.dutco.com
Founded 1947 (Dutco Group of Companies)
Employees 20,000 + (Dutco Group of Companies)
Revenue -
CEO Tariq Baker (Dutco Group of Companies)
8.4.1 Key projects
Recent projects: The Palm Island Interchange, the Ras Al Khor Crossing, the widening of
both Sheikh Zayed Road and Emirates Road and the improvement of Interchange no. 3.
Building works have included Dubai Heritage Vision, Dutco Group Headquarters Building, Town
Houses project in Mirdif and Dubai Global Village
69 dutco.com/construction/construction.aspx, accessed on 13 Jun, 2017 / LexisNexis accessed on 13 Jun, 2017 / General press search
Industry Market Research Report Construction and Contracting sector in UAE Page 56 of 60
8.4.2 Key developments
Date Description
02 Mar 2017
Dutco group finalises acquisition of Balfour Beatty shares
Dutco Group finalised the acquisition of the minority shares held by the UK’s Balfour
Beatty within its joint companies Dutco Balfour Beatty, Dutco Construction Company
and BK Gulf for USD 13.8 mn.
8.5 HLG Contracting LLC70
HLG Contracting LLC (HLG) is a diversified international contractor in the Middle East. The
company is 45% owned by CIMIC Group, an international contractor and contract miner, with
annual revenue exceeding USD 9.9 bn*, and 55% by Riad Al Sadik, currently serving as a
Chairman of HLG.
HLG has an extensive track record in large-scale projects across the region, with a client base
across both the public and private sectors. It focuses on two core market sectors: infrastructure
and building
HLG was formed in 2007 following the merger of a building contractor, Al Habtoor Engineering
with Gulf Leighton, the CIMIC Group’s original operating company in the Gulf region.
Key Facts
Company type Joint venture
Headquarters Dubai, UAE
Website www.hlgcontracting.com
Founded 2007
Employees 28,000
Revenue71, 72 USD 489.5 mn as on 31 December 2016
CEO and Managing Director Moustafa Fahour OAM
8.5.1 Key projects
Completed: KPIZ Secondary Infrastructure Area A Phase 1B, St. Regis Saadiyat Island
Resort, ZADCO Accommodation and Utilities Project, Satah Al Razboot Field Development
Project, Khalifa Port and Industrial Zone (Industrial Zone Area A Infrastructure), Abu Dhabi
Islamic Bank - New Headquarters, Qusahwira Phase I, Development Building & Services,
Habtoor Grand Beach Resort & Spa, Dubai International Airport Expansion Phase II - Terminal
3, Concourse 2, Rashid Hospital, New Dubai Hospital, Goldcrest Views 1, Madinat Jumeirah
Resort Development, Shangri-La Hotel, Dubai, Jumeirah Beach Residence - Sector 4,
*As reported on company website 70 hlgcontracting.com, accessed on 13 Jun, 2017 / LexisNexis, accessed on 13 June, 2017 / General press search 71 cimic.com.au, accessed on 13 June, 2017 72 Exchange rate (Average of 2016)1AED= USD0.272258
Industry Market Research Report Construction and Contracting sector in UAE Page 57 of 60
Movenpick Hotel Jumeirah Beach, Dusit Thani, Dubai International Airport - Concourse 1,
Sheikh Rashid Terminal, Jumeirah Beach Hotel, The Galleries at Downtown Jebel Ali, Executive
Towers at Business Bay, Grand Millennium Dubai, Iris Bay, Burj Al Arab
Ongoing: Abu Dhabi International Airport – Infrastructure, Mafraq Hospital, Gate Avenue,
Bay Views Hotel at Business Bay, Jewel of the Creek, Al Garhoud Towers, EKFC 3 Long Term
Expansion, Access to Bluewaters Island, Fakeeh Academic Medical Center Main Construction
Works, JAFZA Convention Center – Phase 3, Al Habtoor City - Hotel Development, and Dubai
Pearl
8.5.2 Key developments
Date Description
1 Apr 2017
HLG appoints CEO and MD
HLG appointed Moustafa Fahour OAM as its new CEO and MD.
Before this, he was executive general manager, Finance, at CIMIC Group, and prior
to that, he was group CFO at HLG Contracting.
9 Feb 2017
HLG announces Abdul Rahman Jarrah as its acting CEO
Abdul Rahman Jarrah, who was a member of Cimic subsidiary Thiess’ executive
leadership team, was appointed as acting CEO, replacing the former CEO Jose
Lopez-Monis, who was arrested in Dubai in August 2016 and subsequently released
without charge.
9 Feb 2017
HLG appoints CFO
HLG appointed Khalil Muhammad as its new CFO.
He joined HLG in 2010 as a CFO, Qatar. Khalil later assumed the responsibilities of
the KSA and Oman too. Prior to joining HLG, Khalil worked with Canadian Imperial
Bank of Commerce as director corporate and other, Diamond Trust Bank Tanzania as
general manager and PricewaterhouseCoopers Pakistan as manager assurance
services.
26 Jan 2017
HLG wins contract from Hasabi Real Estate
HLG won a contract valued at USD 109.18 mn73 for the construction of Al Garhoud
Towers by Hasabi Real Estate – Dubai’s development company.
The project is scheduled for completion in Q3 2018.
30 Nov 2016
Shareholder changes in HLG
HLG announced the completion of the transfer of HLG shares from one of its
shareholders (Al Habtoor Holding LLC) to another shareholder (Riad Al Sadik).
CIMIC Group’s shareholding in HLG is unchanged at 45%.
HLG confirms the change of its name from Al Habtoor Leighton LLC to HLG
Contracting LLC. The withdrawal of Al Habtoor from HLG marks the end of a
partnership that was formed in 2007 when Al Habtoor Engineering merged with Gulf
Leighton, part of CIMIC Group.
29 Nov 2016
HLG wins contract from United Development Company (UDC)
HLG won a contract valued at USD 158.9 mn7 for the construction of Al Mutahidah
Towers by United Development Company (UDC) – Qatari public share holding
73 Exchange rate (Average of 2016)1AED= USD0.272258
Industry Market Research Report Construction and Contracting sector in UAE Page 58 of 60
Date Description
company.
The project is scheduled for completion in Q3 2019.
3 Nov 2016
HLG wins contract from Dubai International Financial Centre (DIFC)
HLG won a contract valued at USD 133.41 mn for the construction of the Gate
Avenue at DIFC Project in Dubai, UAE, for Dubai International Financial Centre
(DIFC).
According to the website, the first phase is set for completion by end-2017.
8.5.3 Al Fara’a General Contracting Co LLC74
Al Fara’a General Contracting Co LLC (AFGCO) is a civil construction company that provides
engineering and construction services and solutions. It offers a comprehensive array of
capabilities in building, civil engineering, MEP and contracting-related specialities (ground
technologies, structures, airports, healthcare, hospitality, education, defence, oil and gas).
The company has operations in the UAE, the KSA, Qatar and Oman, and partners in Korea, the
UK, Canada and the US. Al Fara’a General Contracting operates as a subsidiary of Al Fara’a
Group.
Key Facts
Company type Subsidiary
Headquarters Abu Dhabi, UAE
Website www.alfaraa.com
Founded 1980
Employees 18,000
Revenue –
President and Executive Chairman Dr. Jawaharlal R. Gangaramani
8.5.4 Key projects
Recent projects: Abraj Al Raha, Abu Dhabi Future School - Al Zakher, ADNIC, ADNOC Filling
Stations, Al Ain Labour Village, Al Barsha Hotel Apartment, Al Bateen School, Al Jimmi Mall, Al
Khabisi Wedding Hall, Al Mada-2 Residential Complex, Al Mazrouie Tower, Al Muwaji
Residential Complex, Al Samaliah Island - Student Accomodation, Al Sayegh Tower, and Al
Shaheens School
74 alfaraa.com, accessed on 13 Jun, 2017 / General press search
Industry Market Research Report Construction and Contracting sector in UAE Page 59 of 60
8.5.5 Key developments
Date Description
1 Sep 2016
Al Fara’a Group starts first phase of Maryah Plaza
Phase 1 of the Maryah Plaza was announced to be completed in 2016 when the
project was launched in 2013; however, work on the phase was delayed because
of a downturn in the property market.
Al Fara’a Group is the main contractor for the project, awarded by Farglory Middle
East.
Industry Market Research Report Construction and Contracting sector in UAE Page 60 of 60
Confidentiality
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-- End of Report –