Joint venture to make stir with prison project plans

A local contracting joint venture is preparing for plans to build new prison facilities by the Abu Dhabi Government.

Al Fara'a General Contracting, one of the capital's oldest construction firms, and Wates Group, a family-owned UK contractor that set up office here last year, said they were gearing up for tenders worth hundreds of millions of dirhams to build the facilities.

"We see a big opportunity," said James Wates, the deputy chairman of Wates.

The Government has bolstered the order books of local contractors during the property downturn with billions of dirhams worth of schools, hospitals and universities.

While profit margins have been squeezed, many of these companies have seen their orders shift away from the private development of homes and offices.

Developers such as Aldar Properties and Sorouh Real Estate have delayed plans for future projects to focus on existing buildings.

A new sector is emerging for police and prison facilities, said Dr Jawaharlal Gangaramani, the president and executive chairman of Al Fara'a.

"Custodian centres are coming in a very big way," Dr Gangaramani said. "All of these facilities are approved and on a fast track. Some of the specifications we have never heard of in this part of the world, especially with sensors and how to monitor the prisoners in a very high-tech way."

Tenders are yet to be issued by the Abu Dhabi Police Department, but there are plans for a single major facility and a range of smaller ones for short-term incarceration.

"My understanding is that as Abu Dhabi really measures up to global standards as to the way it is, it is wanting to enhance everything it does," said Mr Wates.

A rising population in line with the Abu Dhabi Plan 2030 roadmap for development will also require larger facilities, he said.

The joint venture between Wates and Al Fara'a also plans to pitch for more school projects, which are growing at a faster rate than previous years.

It is already building the Dh150 million (US$40.8m) Al Bateen School, which will accommodate up to 1,120 students and is due for completion next year, as well as a Dh65m extension and upgrade of existing facilities at the British School Al Khubairat.

Mr Wates said his company planned to increase its revenues from Abu Dhabi, its only foreign outpost, to between £100m (Dh590m) and £130m by 2014. That would represent between 5 and 7 per cent of its total revenues.

In the UK, the company is expecting a cut of public sector spending after austerity measures announced by the government. Some 70 per cent of its projects are now related to the UK government, he said.

Despite the downturn, Dr Gangaramani said Al Fara'a had increased its revenues from last year. He said the key for a long-term business in the region was to not always focus on profits.

"The profit margins may get a little bit hit," he said. "But it cannot be about the bottom line all the time. This weather will change within another one year. Every five years, there is a cycle everywhere. As long as we are not taking on leverage and any risk is taken in an affordable manner, things will go well."

The company is focusing on "special opportunities" and civic projects, added Dr Gangaramani.