Dubai: The big tenders awarded last year and currently underway are keeping the construction sector ticking along nicely in Dubai. And to an extent that more than compensates for any slackness in new project awards during the first quarter of this year.
“A fair number of last year’s contracts were huge — some of them truly iconic — and released by Dubai’s largest semi-governmental organisations such as Meraas,” said Dr Saleh M. Chehade, chief contracting officer at the Projects Unit of Juma Al Majid Group.
“These projects are in the main driven by the need to have all deliverables in place well before the Expo 2020 event. This is the reason why Dubai’s construction industry is discounting any impact on sentiments that have to do with oil prices.”
The majority of the ongoing projects have tight 24-36 month completion schedules — another factor that could rule out the possibility of any slack creeping in.
“Even otherwise, we are projecting a pick-up in pace from the second half of this year itself,” Chehade said. “The wheel of new project activity will have to keep running over the next two years with the Expo dateline in mind.”
The Juma Al Majid Group’s construction division started the year with Dh2.4 billion worth of business. Its primary interests are in electromechanical works, fit-outs and interiors, supplying firefighting equipment.
“[Of the Dh2.4 billion order book] several projects have made progress and the residual value is about Dh1.2 billion,” Chehade said. “Usually we have a residual order book of above Dh1 billion.”
Around 80 per cent of its order book relate to projects in Dubai. More recently, contracts have also been won in Saudi Arabia and Qatar.
The average value of an electromechanical contract is between Dh50 million to Dh100 million, while fit-outs deals also tend to be of a similar size. While supplying firefighting equipment and related services are smaller in scale, averaging between Dh10 million to Dh20 million, they command the best margins.
According to Chehade, his firm could consider joint ventures if the size of the projects handled exceeds Dh100 million, both within the mandate of an individual project or an extended one for strategic benefits.
