We noticed you're blocking ads.

Keep supporting great journalism by turning off your ad blocker.

Questions about why you are seeing this? Contact us

Font Size

- Aa +

Sat 23 Feb 2008 04:00 AM

Font Size

- Aa +

Abroad idea of investment

The trend among UAE construction firms of taking on overseas markets is reminiscent of a similar movement in the UK's IT industry.

The trend among UAE construction firms of taking on overseas markets is vaguely reminiscent of a similar movement in the UK's IT industry in the late 1990s.

Companies that grew phenomenally off the back of the internet boom opened a number of offices around the world.

That was, in part, in anticipation that they would enjoy a similar rate of success in emerging markets and raise cash for other areas of expansion.

Other reasons revolved around establishing themselves as an international player; a natural move for any company that has reached its full potential in its home market.

Unfortunately, what many of the companies faced on their transition abroad at the time was instant bust.

One of the problems was that their decisions were made at the height of a boom in their home territory, and were largely based on instinct rather than a thorough knowledge that their target markets were ready for what they had to offer.

It's difficult to pinpoint exactly when the shift by UAE firms towards overseas markets began, but it certainly gathered momentum among property developers when Emaar Properties announced the multi-billion dollar King Abdullah Economic City in Saudi Arabia in late 2005.

Limitless is another developer heavily pursuing opportunities overseas, even more so than at home, with projects planned in Russia, Malaysia and Vietnam.

But it's only been fairly recently that contractors have started to think about foreign shores and for some, the move is possibly for the wrong reasons.

Construction may be a mainstay of most economies, but those looking further afield should consider the pitfalls.

Finding the right partner of a similar status and mindset is crucial to success.

One thing holding back progress in many of the key markets, particularly Libya, is the lack of quality contractors.

This is being felt by both developers and contractors, and could well lead to a wave of joint ventures between local companies for foreign opportunities.

While it makes sense to want to spread financial risk, the move overseas should be strategic rather than at the whim of market forces. After all, blunders abroad could have a heavier impact on reputation than those at home.

Angela Giuffrida, Editor

Arabian Business: why we're going behind a paywall

For all the latest construction news from the UAE and Gulf countries, follow us on Twitter and Linkedin, like us on Facebook and subscribe to our YouTube page, which is updated daily.