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RELATED ARTICLES: Top 20 MEP consultants | Facilitating growth in MEP | Top MEP projects in Kuwait
MEP services in the region have experienced an incredible growth rate of 19% over the last three years, due to the construction boom and soaring oil prices.
However, this figure tumbled to 5.5% between 2008 and 2009 due to the slowdown in the construction industry resulting from the global financial crisis.
Despite this, the market is expected to grow at a compound annual rate of 11% during the next five years, according to Frost & Sullivan senior research analyst Vivek Vijayakumar.
Following the recent sharp decline, growth is expected to pick up again towards the end of 2010, or at the beginning of 2011 at the latest, and then continue its upward trend until at least 2013. This is very good news for the MEP contracting sector in particular.
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Indeed, the MEP contracting sector in the UAE seems in an ideal position to take advantage of the new growth trend. “The UK is definitely the more challenging business environment at present. It is really down compared to a year ago. In comparison, the sector over here is far more stable, and there are still opportunities available.
“Our challenge at present is to take advantage of these opportunities, and to formulate an all-encompassing growth strategy to take us forward,” said Drake & Scull International PJSC (DSI) MEP director Charles Lever. Al Habtoor-Specon MD Thrasos Thrasyvoulou concurred: “Personally I believe that, after the initial shock of the downturn in late 2008, the market in general has absorbed this and stabilised.”
Stabilisation
As an example of this stabilisation, sub-contractors are expected to be able to bid for the MEP and related finishing works contracts on the long-delayed Dubai Lagoon project within the next four months. Developer Schön Properties said the project will require one or two additional contractors for each set of works, depending on the size of the sub-contractor.
For Zones 2 and 4, there are seven sub-contracts outstanding, including the MEP and elevator contracts, as well as those for finishing works such as joinery, paint work, marbling and kitchen fit-outs. Sensaire has already commenced with the MEP works for Zone 3, which are scheduled for completion in 2011, while the MEP works for Zone 1 have also begun, with a view to handing over the first eight residential towers by the end of 2010.
Salah Yatim, project director for Commodore Contracting Company, the main contractor for Zones 2 and 4, said: “We will be finalising the other packages for Zones 2 and 4 with Schön in the near future. Each package will be awarded according to the overall programme. One or two sub-contractors will be required, depending on the size of the company, and whether or not they can cope with the work across the two zones.”
“We will hopefully be inviting companies to bid for the additional subcontracts for Zones 2, 3 and 4 in the next three to four months, depending on the market conditions,” confirmed Schön Properties VP Danial Schön. The development, which currently covers 1.9 million square feet and consists of four separate residential zones, will be handed over to end users in stages, with different contractors working on different zones at different times.
Problems
What are some of the problems facing the MEP contracting industry at present? “The market is fragmented and highly competitive due to the presence of many small- and medium-scale companies at the local level, which have capacities to carry out either one or two of the three types of services by competing directly with other contractors, or by sub-contracting with top companies, thereby providing more opportunities for the growth of local players,” said Vijayakumar.
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I am shocked for not seeing the names of BK Gulf of UAE, Midmac of Qatar, BEC of Oman and Bader Al Mulla of Kuwait in th