Three of the biggest contractors in Dubai have revealed their order books have taken a hit in recent weeks with pre-construction contracts cancelled amid growing signs of a slowdown in the construction sector in the emirate.
Murray & Roberts has put a freeze on recruiting new staff after having two large pre-construction contracts terminated within the last four weeks – involving Nakheel and Bawadi, according to Malcolm Murphy, regional business development director for the South African contractor.
It follows the recent announcement that work on the Trump tower, which Murray & Roberts was also involved in on behalf of Nakheel, has been suspended.
Al Shafar General Contracting (ASGC) said it was scaling down its expansion plans for 2009 after negotiations for contracts valued at “billions of dirhams” were cancelled in recent weeks, chief executive Bishoy Azmy said.
Al Naboodah Laing O’Rourke has had one “medium-sized” contract cancelled in Dubai but it was a “bit too early” to tell “how things will shape down,” said chief operating officer Norman Haste.
As the real estate market in Dubai begins to slow down new construction projects are being put on hold or cancelled altogether by developers.
Murray & Roberts’s Murphy described the current market conditions as “difficult.” “We’ve had people now that we were going to employ that now we’re not going to employ,” he said.
“Before we were picking and choosing what projects we were going for, there will be difficult times in the next three to four months but hopefully the situation will improve.”
As part of the Al Habtoor-Murray & Roberts-Takenaka (HMRT) consortium earlier this week it won a $1.33 billion contract to build Concourse 3 at Dubai International Airport.
ASGC’s current order book was valued at six billion dirhams ($1.6 billion), involving contracts in Dubai and Abu Dhabi, said Azmy.
“Most of the new projects we were in the final stage of negotiations with clients over have now been stopped in terms of awarding them to contractors,” he said.
“This seems more and more like an unreality and we are curtailing our expansion and matching our expansion to meet demand.”
Haste, from Al Naboodah Laing O’Rourke, said: “I think it will be the end of this month before we know how things will shape down. We currently have a secure workload for the remainder of this financial year.
“But like everyone else we are waiting to see how things will shape down and how it will affect the next financial year 2009-10. Realistically, we probably expect some difficulties but we are not over-pessimistic about it.”
He said he saw opportunities going forward in power generation, waste water treatment and waste management if Dubai pushed ahead with much-needed infrastructure projects during the current conditions.
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