Dubai contractors face bankruptcy threatby ConstructionWeek staff on Dec 8, 2009
By Andrew White
The construction industry in Dubai has no chance of recovery in 2010, Khaldoun Tabari, vice chairman and CEO of Dubai-based engineering contractor International, has said.
Speaking at the Arabian Business Conference 2009, he added that forsolely operating in the emirate, there were big problems.
"If you are 100 percent in Dubai with nothing outside you are dead," he told Arabian Businessin an interview.
“What does it mean if you are dead? If you are a construction company and you pay 10,000 or 20,000 people, and you do not get any work because there’s an abundant supply of buildings, you are going to be bankrupt.”
The UAE's real estate and construction sectors have been badly hit by the downturn. A recent report suggests they have seen the biggest declines in the Middle East region. Some 566 projects have been shelved or cancelled in the country – the majority of which are in Dubai – according to the research house Proleads.
Tabari added that Dubai real estate operators were likely to face further difficulties over the coming months.
“We had hundreds of real estate developers, but these are not going to exist anymore, that’s a simple fact,” he said.
“There’s going to be consolidation or they’re going to go out of business, because they’re not going to make their payments. We’re going to see less and less developers in this business; it will be an orderly exit.”
Listed on the Dubai Financial Market, DSI operates in engineering, procurement and construction (EPC), and civil contracting in addition to the development of design and build engineering expertise in infrastructure, water & power (IWP).
Tabari also revealed that the company was looking to buy two companies in Saudi Arabia, at a combined value of up to $400m, during the first quarter 2010. He has already said that two planned acquisitions in Kuwait and Qatar will cost $40m to $55m.
In November, DSI bought 82 percent of a water treatment company from Bilfinger Berger AG, Germany’s second-biggest builder, to tap growing regional demand. DSI acquired the majority stake in Passavant-Roediger for $39m.