Arabtec won a Dh2 billion contract from Abu Dhabi’s Aldar Properties to build 1,017 villas on Yas Island.
Arabtec said that the completed villas will have a built-up area of close to 440,000 square metres and that construction is set to start on site immediately.
Rumours about this deal first emerged last month, sending the stock soaring 14 per cent on December 22.
It has since pared gains but following the contract announcement it climbed by more than 6 per cent to close at Dh1.23 per share on Monday.
Sanyalak Manibhandu, the head of research at NBAD Securities, said that Arabtec’s contract announcement was “the first piece of good news they’ve had in a long time”.
However, he felt that the 6 per cent increase in its share price was “an overreaction”.
“Is it going to make them any money? The competition is very fierce so I don’t think any contractor can make much profit from any of these contracts being awarded in the present climate,” he said.
“Both Arabtec and DSI have shown that what they announce as profit one year can be altered 18 months down the road. They have a lot of good news to deliver before people take them as having turned the corner.”
Last week, the head of building consultancy Arcadis’s Middle East buildings division said construction costs in the region were likely to remain competitive throughout 2016.
“I think it’s a great time to be a client,” he said. “With the market being tighter, all contractors and consultants are fishing in a smaller pool for work right across Qatar, KSA and the UAE.”
The contract represents the final package to be awarded for the West Yas development following infrastructure, public realm, school, clubhouse, retail and mosque packages, Aldar said in a statement..
West Yas is located along Yas Island’s mangroves and will feature both four and five bedroom villas with prices starting at Dh4 million. They are expected to be handed over at the end of 2017 and are only available to Emiratis.
Talal Al Dhiyebi, chief development officer at Aldar Properties, said that demand for the villas has been “very strong”.
The first phase went on sale in September and were all sold out, while a second phase was marketed in October.
In November, Aldar launched sales of a second Yas Island development - Mayan, which is located between Yas Plaza, Yas Beach and Yas Links golf course and will consist of 800 units.
Property prices in Abu Dhabi have held up better than in Dubai, thanks to a lack of stock. Data published by ReidIn earlier this week showed that sale prices in Abu Dhabi in December were 2 per cent lower year-on-year, while in Dubai residential prices fell by 11 per cent in the same period.
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