Abu Dhabi Land projects 70% growth

Abu Dhabi Land, the UAE-based contracting company and part of the Royal Group, said it projects a 70 per cent growth in 2009 compared to 2008. In 2008, the company had a turnover of about Dh130 million.

Speaking to Emirates Business, CEO Syed Basar Shueb said the company has submitted tenders for five major contracts and is expecting the first of the contract valued at Dh500m to be awarded next week. The five contracts are together valued at more than Dh6 billion.

Although the economic slowdown has impacted the construction industry, the market in Abu Dhabi continues to boom creating excellent opportunities for contractors migrating to the emirate from other places, said Shueb. Abu Dhabi Land is also looking towards several acquisitions, and has earmarked Dh500m for acquisitions, he added.


Could you elaborate on the activities of the company and the projects you are currently working on?

Abu Dhabi Land is a multi-construction activity company and started its operations in 2006. Our main focus is on enabling work, earth works, infrastructure work, marine works and construction and management of labour camps.

During the past three years we have worked on about 30 different projects. We are currently working on various projects across Abu Dhabi. Our current projects include coastal protection of Al Reem Island and reclamation of Al Reem Island.

In the marine works department, we have successfully completed the Dolphin Island project for Tamouh investment and currently we are in the execution of the phase one of Tamouh Marina. We have also worked on other enabling and road works on the Reem Island. We are one of the major players on the Reem Island and outside especially in the construction and management of staff accomodations.

On the Reem Island alone we have one of the state-of-the-art but temporary staff accommodation. It is divided into seven different phases and each phase has nine buildings with each building catering to 384 individuals.

The standards are the best in the country and we did not get to hear any complaints from any of our staff. The residents are provided with all facilities with regard to food, sports and recreation and all other basic requirements.

Currently, we have about 22,000 workers living there.

We are fully compliant with labour ministry rules and regulations and apart from it have a monthly review of policies. Our idea is to give the best service to the workers so that when they go back to work they give their best to help us maintain the building and construction standards.

The total cost of constructing these accommodations was about Dh300m. We are looking at expanding the facility to create accommodation for another 3,000 workers. The expansion includes construction of another nine buildings at a cost of Dh60m and will be completed in September.

As per the agreement with the developers of Reem Island, the facility will operate for eight years. Any future expansions will depend on the requirements.

We have the facility to double the capacity and provide accommodation to around 50,000 workers.

We are building two other accomodations in Musaffah for 8,000 workers and another one near Abu Dhabi airport. The work started recently. And we have completed four buildings.

What is the progress of work at various sites you are involved in?

As I said earlier, we are involved in the phase one of Tamough marina. The construction is 95 per cent complete and is going to be handed over by the end of August as per the plan of Tamouh investment to deliver their development of marina by the end of the year. We have finished our work almost a month away from the completion date.

We recently commenced the final phase of dredging, reclamation works for Dolphin Island. Our engineers did an excellent job to shape the island by constructing rock bunds and rock revetment walls to obtain the desired Dolphin Shape. The surrounding areas were dredged to form accessible channels to pump the fill materials to reclaim the island to the required limits and levels. The project is due for completion in two years.

We have also made headway within its involvement with the coastal protection Works for the Marina Square in Sector One of Al Reem Island development in the capital. We have successfully completed nine different piling jobs on Reem Island and the marina works.

We are working on the leveling and road works on plot four. We are raising the ground level by four metres.

Are you bidding for any new projects?

We are currently bidding for plot two and three for infrastructure and road works contract and we are quite hopeful of winning the contract, which will be awarded in a week's time.

We are also tendering for five different projects in Abu Dhabi. These are very large and long-term projects. Each project is more than a Dh1bn. Currently, we are tendering one of the private developers the infrastructure contract alone is valued at over Dh2bn. The four projects put together will be about Dh6bn.

How has the company performed over the past three years and how are you foresee 2009 and the coming years to be?

During the past three years our growth was about 100 per cent year on year. In 2008, the company had a turnover of about Dh130m. We have always been doing well from day one. We also chose the right kind of business and at the right time. Investing in labour camps was a wise thing and today infrastructure development is the key business area within the construction sector. The complete strategy was based on the Abu Dhabi Government's 2030 plan. That is when we put our act together. During the next three years we are still anticipating a good growth rate. Most companies have been affected in 2009 and have registered slower growth. As far as we are concerned this year we are expecting the company to grow by about 70 per cent and thereafter we are expecting it to grow by 25 per cent year on year for the next three years. If we get at least one of the four other projects that we have bid for, we are expecting to comfortably achieve our target.

What are the company's expansion plans?

We are looking at expanding in order to make us into a multi-activity construction company that can carry out all types of work. We are mainly looking at acquisitions. We have allocated almost Dh500m of for this purpose. Right now we do not have a civil construction division and we also lack downstream capacity. We are looking towards acquiring companies not just in the UAE but across the GCC and the rest of world, including China, GCC and Europe. We are also planning to have some permanent staff accomodations.

Has the current economic condition made it more difficult to get banks to finance?

If you have a good balance sheet, banks are still lending. We have not had any issues with the banks. Yes the procedures have become more strict, unlike earlier days when it was pretty easy. They need to see the balance sheet, the profitability, the business plan of the company they need to see the project feasibility the plan should have economic sense and the company should have the strength to pay back. At the end of the day they look at the balance sheet. We are in the process of getting bank finance now.

Are you involved in any construction activity outside Abu Dhabi? How are you handling the increasing competition from growing number of companies entering Abu Dhabi?

The company is mainly focused on projects in Abu Dhabi. There is a lot of work that has to be done here. In fact the number of companies in Abu Dhabi cannot fulfill the demand here. We need another 30 per cent more companies here to meet the present demand.

We are aware of new companies being set up here and more moving from other emirates especially Dubai to Abu Dhabi. Every business in order to establish has to have several requirements fulfilled and it is not an easy task. The new companies have to catch up with the existing ones. We do not consider the new players as a threat. Competition is always welcome. Our strategy of being focused has benefitted us in a great way.

We were lucky to have initially got some good contracts. Once we completed our work in the best way possible we managed to prove our merit and that helped us a lot.

How have you benefitted from the reduced construction cost and easy availability of staff?

It is wrong to say that staff are easily available. It is hard to find good staff even in the present market.

Cost of construction has, however, gone down. The material prices have dropped as speculators have exited the market. Prices will stabilise during the next few months, which will benefit both the developers and the contractors. Yet contractors are a bit sceptical as the 2008 experience was quite bad.

Construction cost has reduced by about 40 per cent. Cement prices have fallen from Dh360 to Dh285. Yet people have not felt a significant drop. We are expecting cement to fall further by another 10 per cent.

In Abu Dhabi, the contractors and developers have, however, been supporting each other. When there was a major fluctuation the developers understood us and now it is our turn. When it comes to steel we have been buying materials in bulk and we are also hedging as well. We buy steel ahead of time, we always keep 30 per cent of excess steel in an effort to met the targets.

Could you explain the safety initiatives being adopted by Abu Dhabi Land?

We do have an excellent health and safety policy. We review our safety policy every month. Apart from the international policy, the company itself has its own HSE policy. We have not had a single incident of accident in the construction of our staff accomodations on Reem Island.

Even when it comes to marine construction our policy is based on high international standards. We have a separate marine environmental and health policy, which can match the best in the world.

Do you see a need for a uniform standard across the UAE?

The basic standards across the UAE are the same as per the local requirements. The local environments and ground situation is different. There is a federal authority working on standardising the codes across the UAE. But my opinion is that definitely you cannot make a single standard across the UAE as the soil strata is different. Although it is the same country it is not the same soil. It varies. We have mountains in Ras Al Khaimah and Al Ain, but is of a totally different type. The soil condition in Abu Dhabi itself is different. Half of Abu Dhabi mainland is desert, which you do not see in other emirates.

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