Developers look to Saudi Arabia and Qatar

Dubai construction companies are looking to expand into Saudi Arabia and Qatar where growth is likely to be sustained over the next few years, executives said today.

Building firms at a conference in Abu Dhabi said expansionary government budgets and promises of sustained economic growth in Saudi Arabia would help them prosper despite the tough financial climate.

Saleh Muradwiej, an executive director at Dubai contractor Drake & Scull, said: "Saudi Arabia is definitely the place where growth is going to be sustained for the next two to three years."

Drake, which specialises in mechanical, engineering and plumbing businesses, was in talks to buy companies in Saudi Arabia and Qatar and would examine three to five opportunities in the next two to three months, he said.

Riad Kamal, chief executive of Arabtec Holding, said: "It will be difficult to pick up additional work in 2010-11 so we are finding ways to find work outside of our immediate geographical area. We are looking at Saudi and Qatar. Negotiations are ongoing."

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Construction in Saudi Arabia has not been as severely hit as in Dubai, which has seen $582 billion worth of construction contracts put on hold or cancelled in recent months. Boasting a 25 million-strong population, Saudi Arabia is able to sustain demand.

"There is a huge opportunity in Saudi Arabia for housing, a real demand for middle-class housing," said Khalid al-Zamil, managing director of strategic planning at Saudi's Zamil Group.

Ali Kolaghassi, vice-president of privately held Saudi Oger, told Reuters: "Saudi Arabia, Abu Dhabi and Qatar are the best markets in the GCC. Construction costs are down 40 percent. It is time to take advantage ... Yes, there is a major slowdown in sales but this enables opportunities for developers who are solid and not leveraged."