Industry hedges during turmoil in Egypt
Gulf contractors cautious on projects after sixth day of turmoil
Gulf contractors that have operations in Egypt are adopting a ‘wait and see’ approach as the political turmoil in the most populous Arab state moves into its seventh day.
Executives at Arabtec Construction and Six Construct told CW that it was too early to make an assessment of the situation in the country or how it would affect current projects.
At the start of this year, Arabtec Egypt received a letter of award from Emaar Misr, subsidiary of property developer Emaar Properties, to build 74 residential villas and 30 town houses as part of the Al Marassi project at Sidi Abdul Rahman on the country’s north coast.
The country was previously cited at the Construction Week conference in Abu Dhabi last November by Thomas Barry, Arabtec Construction CEO, as being a key growth area for the company as it diversifies its projects outside the UAE.
Six Construct has one project in the country through Besix, a joint venture with Orascom Construction Industries (OCI), the Egyptian contractor, to build a new Ain El Sokhna Oil and Gas Powered 1,300MW power plant – a $60 million contract signed last August.
“This is in a remote area,” said Phillippe Dessoy, general manager of Six Construct. “You will have to wait and see after these events.”
Egypt had previously represented one of the biggest growth markets for construction in the Middle East due to a wide range of projects across many sectors, including the tender process for consultancy on its first nuclear power plant.
Peyman Mohajer, managing director of engineering consultancy Ramboll Middle East, said the company was relying on regular intelligence reports from the country and endeavoured to get a balanced view of the situation.
He added that one potential positive that may result from the country’s calls for social change is the added momentum for socially beneficial projects such as the construction of hospitals and schools.
“The private developers might move faster. But the impact in Tunisia and Egypt psychologically will cause a lot of companies to wait and see; in that respect, it will have an effect in the short term.”
Dubai’s index fell 4.3% yesterday as the ripple effect from Egypt – in which its own stock market has closed – continue to be felt. Arabtec Holding fell 6.74% to AED 1.66. Drake & Scull International, which won its first MEP contract in Egypt last week, shed 8.25% to an even AED 1. Union Properties lost 4.16% to 34 fils.
The ADX General Index in Abu Dhabi fell 3.68% to 2,561.06, with Aldar Properties shedding more than 8.8% to close at AED 1.65, compounding the developer’s stock value loss driven by its asset sale to the government last week. The DSM Index in Qatar closed down 2.94% to 8,709.77, while the Muscat Securities Market in Oman fell 3% to 6,731.77.
In Riyadh, the Tadawul rebounded 2.47% to close up to 6,421.97 having fallen 6.43% the previous day. Zamil Industrial Investment Company, the manufacturing conglomerate whose subsidiaries include Zamil Steel, told shareholders in a statement that “Egypt's operations represents almost 7.6% of Zamil Industrial overall revenues and that the facilities have not been affected”.