No 'rapid returns' in KSA and Qatar

Many contractors have been setting their sites on Riyadh (pictured) and Doha.

A top Dubai construction lawyer has warned contractors against the dangers of entry into the KSA or Qatar real estate markets without adequate planning and preparation.

Pinsent Masons partner Sachin Kerur told Construction Week this morning that neither market should be viewed as an opportunity for short-term financial turnaround.

“There are lots of excellent projects going on, particularly in Saudi Arabia,” Kerur said. “But you have got to be properly geared up for the market and you have got to pursue for the longer term.

“You can’t expect to go in there and make rapid returns on a short business cycle.”

Both the KSA and Qatar real estate sectors have been touted as alternatives for Dubai-based firms that have seen a reduction in available contracts due to the fall in demand for real estate across the Emirate.

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“We see much potential for growth in Saudi Arabia, where the demographic creates a good demand for real estate,” Bahrain-based Arcapita investment director and Victory Heights general manager Yasser Abdullah.

“It’s a natural market that will be there for the long term, and Qatar is coming up as well.”

Abdullah also singled out Abu Dhabi, which he said “has already put forward its own initiatives, and we see it as a good potential area for investment.”

But Kerur, speaking on the subject of Saudi, added: “That is one market where choosing a solid partner is absolutely essential.”

Last month, Dubai-based contracting giant Arabtec announced the formation of a joint venture with two KSA partners to establish Arabtec Saudi Arabia.

The KSA partners are CPC Services, a member of the Saudi Bin Laden Group, and Prime International Group Services.

Arabtec will have a 45% stake in the partnership with CPC 35% and Prime 20%.

KSA, Qatar and Abu Dhabi sit on generous natural resources, which have cushioned them from the worst effects of the financial crisis.

KSA and Abu Dhabi saw their coffers boosted by last summer’s record-breaking oil revenues, while Qatar sits on the world’s third-largest natural gas reserves behind Iran and Russia.

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