Arabtec said it won a Dh1.46 billion contract to build the wasl Tower beside Dubai’s main highway.
The mixed-use tower is being developed by Wasl Asset Management (Wasl) on a site at Sheikh Zayed Road on the opposite side to Dubai Mall.
The 63-storey, 300m-high building, will house a Mandarin Oriental hotel and serviced residences, as well as a series of vertical gardens designed by Amsterdam-based UN Studio.
It is due for completion in 2020, and is one of more than a dozen hotel projects being developed by Wasl in the run-up to 2020 – although most of these are three- and four-star properties.
The chief executive of Arabtec Holding, Hamish Tyrwhitt, saidthe contract “has been awarded based on our track record of delivering world-class mixed-used developments, adding to Arabtec Construction’s existing portfolio of over 22 projects we are currently building in the UAE”.
He said that the long-term outlook for the construction sector in its key geographic markets, especially the UAE where most of its projects are located, remains positive.
“With the combination of the strategic repositioning of the business, strong industry fundamentals and catalyst events such as Expo 2020 fast-approaching, we believe that the year ahead will see Arabtec continue on its path to a successful and sustainable future.”
The builder has a backlog of Dh17bn, equivalent to about two years of current revenue.
Arabtec is currently in the midst of a rights issue, which is the first part of a recapitalisation plan that will see it raise Dh1.5bn from investors through the issue of new shares, then cancel Dh4.1bn worth of shares with a view to writing off accumulated losses of the same value.
The rights issue has effectively been underwritten by Arabtec’s major shareholder, Aabar Investments, which currently holds a 36.11 per cent stake in the company.
A new International construction market survey produced by project management firm Turner & Townsend showed that activity in the Gulf’s construction markets remained relatively subdued last year. The firm tracked 43 markets and said that the three Middle East markets monitored – the UAE, Qatar and Oman – all reported lower-than-average cost inflation. Globally, an increase in construction activity saw costs rise by an average of 3.7 per cent in 2016. However, costs stayed flat in Oman and only increased by 0.5 per cent in Qatar. In the UAE, costs rose by 1.5 per cent, due mainly to activity in Dubai.
“In recent years, Middle Eastern countries had some of the highest margins in our survey, in part due to the increased risk of operating in these regions,” the report said. “The fall in the price of oil, however, pushed margins down in the region as the construction market slows and companies are reducing prices in order to win work.”
Construction inflation is expected to remain flat in Oman this year, but will increase by 2 per cent in the UAE and 1.5 per cent in Qatar as activity picks up in both countries.