Beware Gulf construction ‘hype’, top contractor warns
There is much talk of a surge in projects – but the industry needs to be realistic about timelines, cautions ALEC’s Barry Lewis
There is too much “hype” in the Gulf construction industry and too little realism over project-delivery timelines, a top UAE-based contractor has warned.
The region has seen a surge in project announcements, and there is positive sentiment in the market over events like the Dubai Expo 2020 and FIFA World Cup in Qatar.
But contractors will only start getting busy once such projects are finalized and approved, cautioned Barry Lewis, managing director of construction at ALEC.
“There’s a lot of talk and hype in the market, but there’s not that much conversion at the moment,” Lewis told Big Project ME.
“I think people have to be realistic about the timeline of delivery. Many projects have been launched, but they still need to go through the design development phase before it hits the contractors,” he added.
The UAE-based ALEC, part of the Al Jaber Group, is one of the biggest contractors in the region.
Lewis said he expects business in the sector to pick up towards the end of the year.
“You’ll find that the consultants and the authorities are quite active, but from a contracting perspective, you’ll see things coming through in the third and fourth quarter of the year – at least for the UAE. In Qatar, maybe from the end of the year, you’ll start seeing a lot more building activity,” he said.
Hesitation in the market is down to lessons learnt from previous years, Lewis added. Developers and investors are reluctant to spend money prematurely, he said, adding that the prevailing trend was to manage spending and the roll out of the development in the best way to suit the cash flow.
“I think there’s a lot of latent capacity within the market. We’ve certainly seen that, over the years, the market has got the ability to deliver large scale projects. But I think the reality is that people don’t want to spend money prematurely.
“The market is currently under pressure because there’s not enough cash in circulation. There are a lot of contractors – and companies in the supply chain – who are living with some of the legacy issues (of the crash). That needs to be tidied up,” he added.
