Capital pays off for Al Habtoor

Abu Dhabi is now the top market for Al Habtoor Leighton Group, the Dubai contractor.

The Capital Gate is an Al Habtoor construction.

Abu Dhabi has replaced Dubai as the largest market for the engineering contractor Al Habtoor Leighton Group (HLG).

A recent series of contract wins in the capital by the Dubai company includes a Dh510 million (US$138.8m) deal announced yesterday to build an accommodation and administration complex for the Abu Dhabi Company for Onshore Oil Operations (Adco).

Al Habtoor also announced a Dh110m contract to design and build a chilled-water facility at the new Zayed University campus, which the company is constructing in a joint venture with Murray & Roberts of South Africa.

"There is a definite shift to Abu Dhabi," said Chris Gordon, the group general manager for Al Habtoor Leighton. "Abu Dhabi is significantly more buoyant than Dubai."

Al Habtoor Leighton is 45 per cent owned by Leighton Holdings, an Australian development and contracting company, which is a subsidiary of the international conglomerate Hochtief. Leighton paid about $715m for a stake in Al Habtoor Group in 2007.

This month, Leighton said it would raise about $800m from shareholders, in part to compensate for the troubles of the Dubai unit. Leighton announced on April 11 it would inject Dh1 billion into HLG and write down the value of its stake in the company by $200m to $525m. Last year the company wrote down the value of its stake from $1.1bn to $845m.

"Conditions for our business in the Middle East are still proving to be volatile, recovery of receivables has not improved and the winning of new projects remains slow," said David Stewart, the chief executive of Leighton.

Abu Dhabi has been one of the few brights spots for HLG as it struggles to expand its business after the slowdown in Dubai. Its high-profile projects include the Paris-Sorbonne University on Reem Island, Capital Gate Tower, Zayed University and Arzanah Medical Complex.

Last month, a joint venture between HLG and Murray & Roberts won a Dh2.2bn deal to build the Mafraq hospital project for Seha, the Abu Dhabi Health Services Company. And this month HLG won a Dh400m contract to build a headquarters for Abu Dhabi Islamic Bank.

The contract with Adco, HLG's first with the subsidiary of the Abu Dhabi National Oil Company, calls for the construction of housing, a sports centre, clinic and workshops at the Qusahwira oilfield.

HLG also aims to expand its business in Qatar, where the company is bidding on a "substantial amount" of transport and social infrastructure projects, Mr Gordon said.

The company has been active in Qatar for several years but has had trouble getting paid, Khalaf al Habtoor, the chairman of Al Habtoor Group, told Arabian Business magazine this month.

Half of the Dh4bn the company was owed for completed projects was from Qatar, Mr al Habtoor said.

But Mr Gordon said yesterday the company's problems being paid in Qatar were no different from the situation in other markets. "We are working through it with clients," he said.

HLG is "seeing some movement" in the amount of money owed to it, Mr Gordon said, but he declined to comment further.

HLG is also changing its specialities as it moves to adjust to the work available in the region, he said.

"There is an increased focus on major infrastructure projects and less dependence on buildings," Mr Gordon said.