Construction giant eyes Kuwait, North Africa

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NEW FOCUS: Al Habtoor Leighton says it is looking to Kuwait and North Africa for new contracts. (Getty Images)

Dubai-based Al Habtoor Leighton Group is seeking building contracts in Kuwait and North Africa as it shifts away from relying on work in the UAE, its managing director said on Wednesday.

Construction companies have stepped up efforts to move into new markets as the real estate sector in Dubai experiences a slowdown that has led to scores of project cancellations and estimated price declines of 41 percent in the first quarter.

Al Habtoor, an affiliate of Australia's Leighton Holding, generates about 80 percent of its revenues from the UAE, particularly the capital Abu Dhabi, which has been less hit by a real estate downturn than neighbouring Dubai.

"We are actively looking for work in Kuwait and North Africa," David Savage said.

He said the company - one of several contractors to have recently won contracts for work in Saudi Arabia - was primarily seeking large infrastructure projects in Kuwait, the world's fourth-largest oil exporter.

"We are tendering and have tendered for work in Kuwait for 18 months. Some of that is hopefully going to convert to contracts soon ... certainly within this year," Savage said.

Al Habtoor won a contract earlier this month worth 2.6 billion dirhams ($707.9 million) along with Saudi Arabian building firm Al Rajhi Projects to build a mixed-use development in the Saudi capital, Riyadh.

The world's top oil exporter has pledged to keep state spending high as it rides through a period of lower oil prices.

In the first quarter, the kingdom awarded $11 billion worth of contracts for development projects, more than double capital spending commitments compared with the year earlier.

Many regional building firms, including Dubai's Arabtec Holding, are seeking to expand into Saudi Arabia, the most populous Gulf Arab country, which is trying to bridge a major housing deficit.

Al Habtoor also has projects in Qatar and is bidding for work in Oman, Savage said, putting the firm's total order book at around 26 billion dirhams, enough work for two years.

"The bulk of our revenue comes from the UAE and Abu Dhabi is our biggest revenue source," Savage said.

More than 80 percent of revenues in 2010 would be generated in the UAE, with Abu Dhabi projects comprising 70 percent, he said. Abu Dhabi holds the bulk of the UAE's oil reserves.

Savage added that Al Habtoor was receiving compensation for two construction contracts in Dubai worth almost $2 billion, although he declined to specify how much the firm would receive.

Compensation relates to contracts for the $789.5 million Trump Tower, a project designed by U.S. property magnate Donald Trump and suspended last year, and a $1.17 billion contract for construction of a concourse at Dubai International Airport.

A consortium including Al Habtoor and South Africa's biggest construction firm Murray & Roberts, withdrew from the concourse project in April, citing the parties' "inability to conclude an acceptable contract". (Reuters)

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