Bahrain
Kuwait
Oman
Qatar
Saudi Arabia
UAE
Print
Email
Discuss this article (6 Comments)Construction chief predicts many firms will go bust
by This email address is being protected from spam bots, you need Javascript enabled to view it on Tuesday, 06 January 2009
CONSTRUCTION CRISIS: A number of builders in the region will go out of business due to cancelled projects and higher costs, it is claimed. (Getty Images)
A number of contractors could go out of business over the next three to four months due to a combination of project cancellations and continued labour and overhead costs, the managing director of a leading Dubai industrial construction firm has said.
March would be crucial for the industry in the UAE as by then it would become clearer which projects banks were willing to lend money to finance, Minoo Jamaji, MD of Roshan Construction, told Arabian Business.
He said his own firm, which specialises in turnkey industrial construction, had seen the value of the contracts in its order book for 2009 slide by around 15 to 20 percent to 1.5 billion dirhams during the last four months because of projects being cancelled or delayed.
But he said contractors in the freehold sector had been harder hit by a slowdown in the construction industry, with up to 80 percent of the projects some firms were involved in suspended in recent months.
“The next three to four months will be a test of survival and will be crucial for contractors to decide who moves forward and who will stop,” Jamaji said.
“Many will go bust as so many contractors have had projects cancelled and clients have not been paying, while overhead and manpower costs have continued.
“Up until now banks have not been giving a clear picture on whether they will give finances to developers and investors.
“March will see banks decide how much financing is available and developers will continue with projects accordingly as they depend on banks to build, plus by March we know how bad the market will be.”
His comments follow those by Sachin Kerur, a partner with construction law firm Pinsent Masons, who said that February and March would be crunch time for the industry as developers decide whether to go ahead with projects that have been placed on hold, or cancel them.
A number of projects in the Gulf have been cancelled or have slowed down due to a collapse in the real estate market and a freezing of the credit markets as banks decline to finance new projects due to the high risks involved.
READERS' COMMENTS
Disclaimer: The views expressed here by our readers are not necessarily shared by ArabianBusiness.com or its employees.
NO POINT IN STAYING IN U.A.E IF NO SAVING & DECENT LIVING
Posted by Shailesh Patel, Dubai, U.A.E. on Saturday 10 January 2009 at 22:49 UAE time
I think U.A.E and in particular Dubai has been going haywire with thoughtless mega projects without verifying the financial viability of the same and also wether the country is geared up to withstand the requirement of infrastructure which does not end with construction of bridges and new roads. I think very little thought has been given to the requirements of manpower and their sustaining the ever increasing cost of living.
This laws in the country keep on changing every other day be it regarding the residence visa, Emirates I.D., Salik, health Insurance, rent, or even the year end celebrations and basically no thought or due consideration is given to the needs or requirements of common people who are the ones who put in the maximum hardwork and still cannot find decent accommodation as they cannot afford to bring in family and don't find bachelors accommodation or are not allowed to share. I hope the government thinks about this and addresses the same at the earliest before it gets out of hand and the majority of people start packing their bags.
Posted by Shailesh Patel, Dubai, U.A.E. on Saturday 10 January 2009 at 22:49 UAE time
I think U.A.E and in particular Dubai has been going haywire with thoughtless mega projects without verifying the financial viability of the same and also wether the country is geared up to withstand the requirement of infrastructure which does not end with construction of bridges and new roads. I think very little thought has been given to the requirements of manpower and their sustaining the ever increasing cost of living.
This laws in the country keep on changing every other day be it regarding the residence visa, Emirates I.D., Salik, health Insurance, rent, or even the year end celebrations and basically no thought or due consideration is given to the needs or requirements of common people who are the ones who put in the maximum hardwork and still cannot find decent accommodation as they cannot afford to bring in family and don't find bachelors accommodation or are not allowed to share. I hope the government thinks about this and addresses the same at the earliest before it gets out of hand and the majority of people start packing their bags.
Firms going bust
Posted by ANIL MATHEW, DUBAI, UAE on Friday 9 January 2009 at 13:57 UAE time
I guess the writing on the wall is there for all to read. The other day, I casually offered 400K for a three bedroom Arabian Ranches villa with pool. This is the kind that normally goes at 5 million. They took me seriously and now they've been trying to contact me to finalise the deal. I guess the smart ones will cut their loses and get out ASAP.
Posted by ANIL MATHEW, DUBAI, UAE on Friday 9 January 2009 at 13:57 UAE time
I guess the writing on the wall is there for all to read. The other day, I casually offered 400K for a three bedroom Arabian Ranches villa with pool. This is the kind that normally goes at 5 million. They took me seriously and now they've been trying to contact me to finalise the deal. I guess the smart ones will cut their loses and get out ASAP.
Major correction very soon
Posted by Shafeek, Kannur, India on Tuesday 6 January 2009 at 15:08 UAE time
Developers and real estate giants had grabbed exorbitant profits, that is the reason whole world developers,real estate co., and investors were attracted to Dubai. It has been the reason for increasing the accommodation cost as well as the higher accommodation allowance from employees, which will affect the overall living cost of this locality. Major correction is indeed coming and rents should be brought down to affordable standards.
Posted by Shafeek, Kannur, India on Tuesday 6 January 2009 at 15:08 UAE time
Developers and real estate giants had grabbed exorbitant profits, that is the reason whole world developers,real estate co., and investors were attracted to Dubai. It has been the reason for increasing the accommodation cost as well as the higher accommodation allowance from employees, which will affect the overall living cost of this locality. Major correction is indeed coming and rents should be brought down to affordable standards.
UAE Business
Posted by Thomas Joseph, Ajman, UAE on Tuesday 6 January 2009 at 14:47 UAE time
According to my thinking, UAE's problem is not only because of the global economic crisis but also due to instability of laws and the change from day to day. UAE is inviting foreigners to invest and assuring people that all fruitful basement will be provided them to do business and / or enjoy the visitors, Just for example, for the New Year Day, all of a sudden, declared no celebration, then, what will be the factor consideration of the people who invested and spent lot of money in the hospitality industry? Another, the world community invested a lot in real estates and the govt. promised to give residential visa for all such investors but, one day it become void, and under this circumstances, how can you invite new investors in this field? Still uncertainty is going on in many things due to instability of the laws in the emirates. Govt has to re-think to boost the countries developments.
Posted by Thomas Joseph, Ajman, UAE on Tuesday 6 January 2009 at 14:47 UAE time
According to my thinking, UAE's problem is not only because of the global economic crisis but also due to instability of laws and the change from day to day. UAE is inviting foreigners to invest and assuring people that all fruitful basement will be provided them to do business and / or enjoy the visitors, Just for example, for the New Year Day, all of a sudden, declared no celebration, then, what will be the factor consideration of the people who invested and spent lot of money in the hospitality industry? Another, the world community invested a lot in real estates and the govt. promised to give residential visa for all such investors but, one day it become void, and under this circumstances, how can you invite new investors in this field? Still uncertainty is going on in many things due to instability of the laws in the emirates. Govt has to re-think to boost the countries developments.
Click here to post a comment
MORE FROM ARABIANBUSINESS.COM
TOP IN MIDDLE EAST CONSTRUCTION & INDUSTRY
TOP MIDDLE EAST BUSINESS STORIES
ALSO IN MIDDLE EAST CONSTRUCTION & INDUSTRY
LATEST MIDDLE EAST BUSINESS NEWS
- Sport: Westwood extends lead after Race to Dubai's Day 3
- Financial Markets: Saudi index down, banks and petchems weigh
- Real Estate: Merger technical talks to conclude in a month - Emaar
- Banking & Finance: Dubai's Abraaj eyes property investments
- Banking & Finance: Emirates NBD launches bank’s new brand identity
Mobile
