China State Construction Engineering Co is looking to enter markets in Saudi Arabia, UAE
One of China's biggest contractors is looking to use its experience of delivering mega-housing projects in its home markets to meet demand in the GCC - particularly in Saudi Arabia and the UAE.
China State Construction Engineering Co (CSCEC) is planning to target the need for governments in Saudi Arabia and the UAE to deliver large numbers of housing units for nationals by offering to develop and manage huge schemes over a 20-30 year period.
Middle East CEO Yu Tao told Construction Week that in China it has delivered schemes of up to 100,000 new homes on 10 sq km plots of land where it masterplans, designs, funds, builds and maintains projects through long-term joint ventures with government partners.
"That’s where we have built our reputation in the China market. We have 10 percent of the China market. Out of the 1.3bn population, 130m is living in a property that we constructed or developed.
"We like this kind of arrangement because it is a very high threshold," said Tao. "That really rates your ability – not just for so-called construction but for township planning, financial arrangement and a very good ability to sell.
"You have to generate income in order to finish the infrastructure and make the whole package viable."
He argues that the company, which had a turnover in 2012 of $93bn and a workforce of around two million people worldwide, has the resources to deliver such schemes as well as access to capital from Chinese banks.
"Chinese banks have become stronger in the world," he said. "They’re bigger in size and their involvement in the overseas market as well. So, to make use of the funds of the Chinese banks and to facilitate their development in the GCC is a major (potential) business to us."
Tao argued that the model developed in China is appropriate for the GCC, pointing out that CSCEC has already worked on mass housing schemes in Algeria and Libya.
"It depends on the government. This kind of approach was brought by the Chinese government and the municipalities in less than 10 years. It is becoming more popular.
"We’re very keen, if any of the governments in the GCC would like to assign us to be a master developer.
"If a developer or government cuts this (housing process) into pieces, the whole process will become longer."
CSCEC set up operations in the Middle East nine years ago. Since then, it has carried out around $4bn worth of projects and currently has a regional workforce of around 5,000.