Al Habtoor Leighton Group has clinched the Gulf's biggest single building deal worth Dh8.85 billion (US$2.4bn) in a move that bucks the slowing property trend in Dubai. The construction company has won the contract to build Dubai Pearl, a huge development planned opposite Palm Jumeirah, and consisting of four 73-storey mixed-use towers, a luxury hotel and retail and leisure facilities. "While these are challenging times, Dubai Pearl's confidence in the robustness of Dubai's real estate sector remains high," said Abdul Majeed Ismail al Fahim, the chairman of Pearl Dubai. "This deal underlines our strong commitment to the UAE economy and puts us in a unique position to make a significant contribution to the real estate sector." The contract will include civil and mechanical engineering works, landscaping and internal infrastructure. Construction will begin in January. The deal comes against a tide of bad news in the sector which has been hit by the global credit crisis. Analysts at Al Mal Capital, an investment bank, expect growth in the construction sector will slow this year to 15 per cent, from 20 per cent, and then ease to 13 per cent next year as a result of the liquidity squeeze. The deal follows Pearl Dubai's Dh100 million acquisition last month of Archangel, an island that forms part of Siberia in the north of Nakheel's The World island development. The company will spend a further Dh800m building on the island, which will be for the sole use of residents at Dubai Pearl. Dubai Pearl, which was launched in 2003, was intended to be developed by a company owned by Dubai Pearl Incorporated, part of the Qatar-based Omnix International. But delays led the Dubai Technology, e-Commerce & Media Free Zone (Tecom) - the zone in which the project is located - to assume control in 2006. Pearl Dubai then took over the project's development in October last year and foundation work began earlier this year. The project was originally valued at Dh9bn, but now carries a price tag of Dh15bn. "We adjusted our numbers upwards. Rather than cutting back, we said we would add to the project and make it unique. We're positioning it as luxury," Mr Fahim said. Last month, DIFC Investments, the investment arm of the Dubai International Financial Centre, ploughed more than Dh3bn into the project. The company will develop office and residential buildings. Al Habtoor Leighton Group was formed in September last year through a joint venture between Australia's Leighton International and Al Habtoor Engineering. The company is also working on a Dh2.9bn contract to build the Trump International Hotel and Tower on Palm Jumeirah in a joint venture with Murray and Roberts, a South African construction firm. "This is yet another example of the group's overall strength, and is another vote of confidence in the strength of the UAE market," said David Savage, the group's managing director. Still, Al Habtoor's contract win comes at a time when many construction firms are concerned that profit margins will be squeezed for the next few years due to some deals not coming to fruition. "The whole picture has changed for us and we need to be very careful about what's happening," said Riad Kamal, the chairman of Arabtec, the nation's largest and only publicly listed construction firm. "While we don't feel there's going to be any major problem for us over the next year or two, we have been having conversations with individual developers [about working closer together]. Our strategy at the moment is survival." Andrew Greaves, a partner at the law firm Trowers & Hamlins, said: "The credit crunch is biting. Contractors might have had it all their own way for a few years, but the supply chain now needs to look more closely at closer relationships with each other." agiuffrida@thenational.ae
