5 February 2014
Dubai-based contractor Arabtec has signed a memorandum of understanding to build 37 mixed-use, residential and hotel towers in Abu Dhabi and Dubai.Â
The client for these projects, which are worth a total of $6.1bn, is Aabar.
As this developer is owned by the government of Abu Dhabi, the deal has been taken as proof that the emirate’s government is ready to renew its policy of aggressive investment following four years of caution.Â
The deal will deliver a huge boost to the fortunes of Arabtec, which reported a turnover of only $1.5bn in 2012.The contractor is the largest construction firm in the Gulf region by market value, with a workforce of 63,000.Â
One of the main beneficiaries of the deal will be the company that gave the work to Arabtec: Aabar began acquiring shares in the publicly-owned contractor in 2012 and now owns 22% of it.Â
The announcement pushed up stock markets, especially cement shares, in Abu Dhabi and Dubai because it was taken as another sign that their real estate markets are recovering strongly after property prices halved during the global financial crisis.
One of Arabtec’s recent wins is the $270m Fairmont Abu Dhabi Hotel and Serviced Apartments in Abu Dhabi
Arabtec also secured a $1.55bn contract to build a resort in the Aqaba area of southern Jordan last month, and will undertake other building projects across the whole of the Middle East and North Africa.Â
Nishit Lakhotia, head of research at Securities & Investment Co in Bahrain, told the Reuters news agency that the firm was moving away from its familiar markets.
He said: "This is uncharted territory for Arabtec, to do such giant projects across the region with a backlog in excess of 60 billion dirham ($16.3 billion)."Â
However, he added that the firm had been preparing to broaden the scope of its operations. "The recent strategic partnerships, acquisitions, rights issue and management changes are all part of this preparation," he said.Â
The contractor announced yesterday that it was planning to recruit about 10,000 additional workers from across the Middle East and North Africa region.Â
Hasan Abdullah Ismaik, the chief executive of Arabtec, said: "We have developed a fully-fledged strategy geared at attracting local talents to our fast growing business.
"We have a wide range of openings, from junior positions all the way to senior executive management."
