THE frantic construction boom of the past four years was bound to ease up and the slow down is finally apparent. For the moment, most contractors are busy with work in hand but the flow of new orders has eased. In Abu Dhabi, by far the biggest market, most large-scale projects will come to an end in 1996.

The slow down is less apparent in Dubai, where essential infrastructure work will continue. The northern emirates, which depend on federal funds for public works, will feel the effect of tighter spending more than most.

The housing sector is becoming less active in Abu Dhabi as the government cuts spending and slows the pace of the new town projects outside Abu Dhabi city. However, a growing demand for infrastructure should partly compensate for a short-fall in other sectors, local analysts say.

Abu Dhabi island itself still has the air of an enormous building site. With most of the area already built up, blocks erected a decade ago are being knocked down and replaced by buildings with twice as many storeys. The new towers are still finding tenants and rents are stable but bankers and contractors wonder where the additional demand is coming from.


A rising expatriate middle class may provide some demand for more costly housing, but there are signs of some excess capacity in certain sectors. ‘My opinion as a banker is that this is a time for caution. Whenever property prices have gone up a lot, one expects them to stabilise,’ says a banker in Abu Dhabi.

The population is growing at about 3.5 per cent a year but new policies to check the number of expatriates are expected to bring about a net drop in population and demand for housing in Abu Dhabi city is certain to be affected. ‘I think there will be no more high-rise buildings apart from the ones in hand,’ says a banker in Abu Dhabi.

Any slowdown in the demand for housing will mainly affect the 20 to 30 local contractors that have cornered the market for any building up to 15 storeys high. International contractors concentrate on buildings with demanding specifications, particularly tall towers and projects for the oil companies, which require quality assurance certificates.

Examples are a $71 million headquarters complex for Abu Dhabi Marine Operating Company (ADMA-OPCO) and Abu Dhabi Gas Liquefaction Company (Adgas) on the Abu Dhabi corniche, just started by Six Construct; the 42-storey Baynounah tower on the corniche, the tallest building in the Gulf, to be completed by Six Construct by the end of the year; and a new complex for Abu Dhabi Drilling Chemicals & Products (ADDCAP) at Mussafah island being built by Costain of the UK.

But the main business for international contractors is oil, gas, power and water projects. The Athens-based Consolidated Contractors International Company (CCC) will be busy until 1996 with work on several such projects. It is carrying out the civil works for:

The $1,350 million onshore gas development project, known as Project 545. The main contractors are the US’ Bechtel and France’s Technip.

The Ruwais utilities upgrade project under a $17 million contract. The main contractor is Japan’s Chiyoda Corporation.

The Thamama C and F gas gathering and injection scheme, valued at $40 million. Bechtel has the $120 million turnkey contract.

The Taweelah B power station in joint venture with Six Construct, valued at $200 million. The consortium leader for the $1,630 million project is Germany’s ABB Kraftwerke.

Six Construct is also working on the other new power plant in Abu Dhabi, at Mirfa. It has an $82 million contract to carry out the civil works for the $490 million scheme, with Italy’s Ansaldo Energia as the main contractor.

Unless a project to expand the refinery or build a petrochemical complex at Ruwais is approved soon, contractors will have to concentrate on the non-oil sector in the next few years (see page 17). There will be strong competition for the estimated $200 million Sheikh Zayed grand mosque, which has been delayed since contractors were prequalified in July.

Major road works planned for remote parts of Abu Dhabi emirate have also been reduced as a result of a budget cut announced by the Abu Dhabi government in the summer (see page 9). ‘The Public Works Department (PWD) announced a Dh 6,000 million investment programme at the beginning of the year. Most of it was killed six months later,’ a contractor says. The only sizeable project tendered since July is the rehabilitation of 170 kilometres of road between Jebel Dhanna and Sila, for which contractors submitted proposals in November.

Projects put on hold or delayed include:

The third crossing to Abu Dhabi island. ‘The project has quietly gone into limbo,’ an engineer says. Consultants have submitted proposals in three bidding rounds since 1991 but no contract has been awarded yet.

The Tareefa-Medinat Zayed highway, costing Dh 340 million. The local Saif Bin Darwish won the construction contract in January this year but the project has been suspended.

An estimated 30 kilometres of road between Muqatra and Himeen in the western region, known as contracts 5A and 5B. Bids were invited but subsequently postponed until further notice earlier this year.

Some 90 kilometres of road between Al-Qaa and Umm Azimul south of Al-Ain. Tender documents were sent out earlier this year but the closing date has been postponed until further notice.

A road from Shaihan to Al-Saad near Al-Ain. Contractors were advised in April the project had been suspended until further notice.

A 140-kilometre road from Incineration near Mafra to Hameem near Liwa. The UK’s Sir Alexander Gibb & Partners has completed the designs but tenders will not be issued until 1995.

Because of their limited scope, most of these contracts will go to local companies. ‘Foreign companies need at least 100-kilometre contracts to be profitable. PWD called in international contractors but then split up the work into small packages,’ says a disappointed foreign contractor. There are a dozen local companies qualified to carry out road work for PWD and most are not yet affected by the cutback.

‘Everybody has enough projects in hand for the moment,’ says the chief engineer at one of the firms. Many other road projects are at the tendering stage and at least some are set to go ahead on schedule. Egypt’s Arab Contractors (Osman Ahmed Osman & Company) and the local General Transport Company were awarded contracts recently for two packages on the Abu Dhabi to Al-Ain expressway project.

There is still a backlog of infrastructure work connected with the recent building activity in the housing sector, in the capital and in other parts of the emirate. ‘The last eight to 10 projects that have come out for tender have all been sewerage projects,’ says a local contractor.


They include two contracts in Madinat Zayed, worth Dh 160 million in total, for which Arab Contractors submitted the lowest bids in September, and the sewerage works for a new contractors’ camp at Maziat near Al-Ain. Several packages of combined road and sewerage works are being put out to consultants and contractors in the Al-Ain area.

‘As far as infrastructure is concerned, they will have to go into second gear now because of population growth. I can’t see Abu Dhabi slowing down now,’ says chairman of the Gibb Middle East Group Samir al-Jawad.

Dubai is a smaller market that obeys its own rules. Most commercial, retail and residential projects are undertaken by private developers and the emirate government sticks to the provision of services. Infrastructure development is still very active and essential work will continue to play an important role despite the tighter financial circumstances.

‘Infrastructure is a priority,’ says Mohamed Alabbar, director-general of Dubai’s economic department. The priority at present is to remedy Dubai’s worsening traffic congestion. A programme to build three interchanges on access roads into the city is going ahead, with the first contract, for the trade centre interchange, awarded to CCC. The local UTCC Wade Adams submitted the lowest bid for the Garhoud interchange and the Zabeel interchange is in the bidding stage. However, other work is being delayed, including a plan to widen the road between Sharjah and Dubai.

A large new tourism project has been launched at Chicago beach in Jumeirah, where the local/UK Dutco Balfour Beatty is creating an island to be developed as a leisure area. Contractors have submitted prequalification documents for the largest single contract yet to be awarded for the project, the offshore hotel tower. The scheme will cost several hundred million dollars.