DUBAI: The United Arab Emirates largest contractor by market value, Arabtec Construction is targeting five projects in Egypt as it looks to expand in the region amid a real estate slump in its home market.
We have the strategy to move into these countries if projects become available to us, Arabtec s chief executive Thomas Barry told Reuters on Tuesday.
The projects will be in Cairo and other parts of Egypt, the most populous Arab country with about 80 million people, Barry said, declining to give further details.
In Egypt you have relative fundamental soundness and a population dynamic that is more stable than the United Arab Emirates, hence there is a lower perceived risk to the downside, said Saud Masud, property and construction analyst for the Middle East and North Africa at UBS investment bank.
While about eight of every 10 people in the UAE are foreign residents, Egypt s booming population is mainly native. The UAE links residency rights mainly to employment.
Investors are ploughing ahead with large residential projects in and around Cairo and see continuing demand as the country s population continues to grow.
Population growth in Egypt has remained high at around 2 percent for the last decade and the fertility rate, at about 3.1 children per woman – compared with 2.1 in the United States – has also been stable, the United Nations said last year.
Arabtec said on Saturday it had set up a joint venture in Saudi Arabia to tap growth opportunities in the Arab world s largest economy as Dubai s once-booming property sector slows.
Over half the residential and commercial property projects due for completion in the emirate between 2009 and 2012 have been put on hold or cancelled, Jones Lang LaSalle said on Monday.
It became essential for us to do so (expand) because of the market conditions in Dubai so we have to seek other markets, Barry said.
Dubai residential real estate prices have fallen by an average of 25 percent from September peaks, Morgan Stanley said last month, adding some $263 billion of projects had been cancelled or put on hold in the UAE.
Arabtec has laid off 250 employees of 5,000 working in administration as a result of the financial crisis.
Arabtec and Malaysian engineering firm WCT Bhd are seeking at least $460 million in compensation for a Dubai race course that was cancelled in January.
Dubai-based investment bank Shuaa Capital said Arabtec s new joint venture in Saudi Arabia was a timely relief for the firm, in a note on Monday.
Arabtec has a backlog of projects worth 39 billion dirhams ($10.62 billion), including 10 billion dirhams for a tower project in St Petersburg in Russia, which is awaiting final approval by the board of Gazprom.