UAE contractors are racing to expand into Saudi Arabia, which is set to surpass the emirates as the biggest construction market in the region.
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Last Updated: May 24, 2011
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Saudi Arabia will generate US$400 bn (Dh1.4 trillion) in construction contracts in the next five years compared to US$250 bn in the UAE, according to data released Tuesday at the Arabian World Construction Summit in Abu Dhabi.
Last year the UAE was the biggest market in the GCC with $28 bn in projects in the pipeline, compared to US24.5 billion in Saudi Arabia, research by Meed Projects found. Over the last five years the UAE accounted for US$320 bn in projects, while Saudi Arabia generated US$250 bn.
Al Jaber Group, the Abu Dhabi construction company, will soon open an office in Riyadh, its first in the kingdom, said H.E. Fatima Obeid Al-Jaber, the company's chief operating officer.
The new branch will focus on infrastructure projects, she said during the conference.
"We are just trying to test the market," Ms Al-Jaber said. "There's a lot of interest in Saudi Arabia."
Drake & Scull International (DSI), the mechanical, electrical and plumbing specialist, expects to grow its revenue 25 to 30 per cent this year, primarily from Saudi Arabia business, chief executive Khaldoun Tabari said .
More than 50 per cent of DSI''s backlog of projects is in the kingdom, Mr Tabari said. After last month's acquisition of International Center for Contracting Company for SR128 mn (Dh125.3 mn), the company has more than 10,000 employees in Saudi Arabia.
UAE developer Emaar and construction company Arabtec already have established projects in Saudi Arabia.
Several executives surveyed at the conference said they were looking to expand into Saudi Arabia to take advantage of the expected building boom.
But developing a presence won't be easy, many experts emphasised.
"You have got to be able to get labour into the country or develop a labour force from the native population, and right now both those options are a challenge," said Thomas Wilson, a partner in Kilpatrick Townsend, a law firm hoping to grow its presence in Saudi Arabia.
Competition for projects in the region is also growing. More than 42 companies recently bid on a road project in Qatar, said Ed James, head of Meed Insights.
