Top 10 GCC projects in Q1
Construction Week rounds up the top 10 developments from Q1 2016 which could impact your business this quarter
Earlier this month, Dubai Land Department (DLD) recorded $15bn (AED55bn) of real estate transactions in the first quarter of 2016, through 12,568 transactions.
However, Saudi Arabia witnessed a decline in real estate transactions at the end of the first quarter of 2016 to the weakest figure recorded since 2011, Saudi daily Al Iqtisadiah reported.
The first quarter of 2016 has clearly been a busy period for the GCC's construction industry, as dwindling oil prices lead construction firms to reconsider their planned pipeline of projects and activities for the year.
Construction Week rounds up the top 10 announcements and developments that emerged during the period which could go on to impact your business operations this quarter.
Please note this list is not ranked in any particular order.
1. Oil hit Saudi companies delay salary payments
Payment delays have been a recurring theme in Saudi Arabia this quarter.
In February, Saudi's King Salman was asked to stage an intervention in a bid to ensure the government makes delayed payments to construction companies.
The request was made by Abdulrahman al-Zamil, president of the Council of Saudi Chambers business associaton.
Saudi contracting firms have attributed these payment delays to a slowdown in the Kingdom's construction market, and have promised to resolve them at the soonest.
The Kingdom's labour ministry reportedly reached an agreement to resolve the salary delays faced by employees of Saudi Binladin Group.
The decision was taken after representatives of the ministry, Binladin Group, and the police in Makkah met in February.
In March, a Saudi Oger executive said his company, like numerous others in the Kingdom, has been affected "by the current circumstances which resulted in some delays in fulfilling our commitments to our employees".
According to Reuters, the executive from Saudi Oger said the company had adopted a recovery plan which would enable it to resume payments from March.
Construction Week invited Binladin Group and Saudi Oger to comment on the matter, but is yet to receive a response from the contractors.
2. UAE confirms 2018 implementation of GCC-wide VAT
The introduction of a region-wide value added tax (VAT) policy, confirmed by UAE officials late last month, is unlikely to damage the GCC's skills market, experts said.
In February, the UAE’s Minister of State for Financial Affairs confirmed the country would partake in the GCC-wide initiative to introduce VAT on certain goods and services by 2019.
The UAE is reportedly set to implement 5% VAT from 1 January, 2018, with 150 food items, health, and education exempted, Obaid Humaid Al Tayer, said.
However, this tax, while likely to alter the supply chain dynamics of GCC's construction sector, will only have a "minimal" impact on employers looking to hire talent from outside the region.
"Most skilled workers from abroad will have grown up paying income tax and VAT on goods," Niall Hughes, senior consultant for construction at human resources consultancy, Morgan McKinley, told Construction Week.
"Whilst the 'no tax' policy has played a big part in attracting people to work in the region, a small VAT levy will have much less of an impact in attracting people to move here than a levy on income tax would.
"Ultimately, people would prefer to pay no taxes. However, the financial benefits [of working in the GCC], along with the lifestyle on offer, should ensure that motivated and skilled workers still see the UAE and GCC region as an attractive place to move to.
"Therefore, the effect on attracting people to the region should be minimal," Hughes added.
3. Tokyo unveils tower to beat Burj Khalifa
In February, it was announced that plans have been floated for a mile-high skyscraper in Tokyo that would not only become the world’s tallest building, but be twice the height of the Burj Khalifa in Dubai.
This super-tall building is set to reach a height of 1,700m and host up to 55,000 people in Tokyo bay, an inlet southeast of the Japanese capital.
If the plans are accepted – ‘Sky Mile Tower’ would be surrounded by a series of man-made hexagonal islands, Architectural Digest reported.
These islands are designed to protect Tokyo from flooding and act as foundation for homes for around half a million people.
4. Riyadh Metro reports progress despite oil slowdown
Saudi Arabia’s Riyadh Metro could complete slightly ahead of schedule in late-2018, according to Eng Anas Hamad Almousa, project manager at Arriyadh Development Authority (ADA).
Almousa, who is ADA’s project manager for Package 2, Line 3 at Riyadh Metro, told Construction Week that the low oil price has not affected progress at the project.
Recent reports cited a 2019 completion date for the $23bn metro network, but Almousa said he believes Riyadh Metro is on course to complete before the end of 2018.
“Basically, we are trying to work as a team: the contractors, the engineers, the consultants, and us [ADA] as the employer,” he said.
“We assist with day-to-day activities and push the contractors to meet the project’s schedule.”
5. Filipino jobs jeopardised in Qatar
A Qatari law threatened up to 12,000 Filipino jobs in the country.
Officials from the Philippines' state education departments met with their Qatari counterparts in January to discuss a law which threatens the jobs of up to 12,000 Filipino engineers and architects in the Gulf state.
Discussions will focus on Qatar's strict implementation of a law which requires all expat professionals in the country to register their education and work experiences with the government's Urban Planning and Development Authority (UPDA).
According to Rosalinda Baldoz, labour secretary for the Philippines, Pinoy workers in the country are "unfortunately unable to do so" due to the Qatari Supreme Education Council's requirement of 12 years of basic education, or 16 years of education for registration.
"The Supreme Education Council considers the 12-year basic education program as equivalent to a high school diploma," she continued.
"As such, Filipino engineers could not register with the UPDA because all of them underwent only 10 years of basic education, and the Qatari authorities have only issued a two-year diploma equivalency for engineering degrees earned in Philippine higher education institutions (HEIs)."
6. $1.1bn Bahrain Airport takes off
Building activity officially commenced on the $1.1bn (BHD414.1m) expansion of Bahrain International Airport in February.
Prince Khalifa bin Salman Al Khalifa, Prime Minister of Bahrain, laid the foundation stone for the massive expansion project.
Also in attendance at the ceremony was Mohammed Saif Al Suwaidi, director general of Abu Dhabi Fund for Development (ADFD).
ADFD has contributed $918m (AED3.73bn) to the expansion project, Al-Suwaidi revealed.
Accordingly, ADFD will cover the last share of the project's total cost.
The contribution comes as a part of the GCC development programme, agreed upon in 2013.
Contracts to carry out the Airport Modernisation Programme at Bahrain International Airport were signed in January.
These included the appointment of a main contractor for the construction of a new terminal building, the main services building, and aircraft bay, to a joint venture between the UAE's Arabtec and Turkey's TAV Construction.
7. UAE labour law introduces new languages
In January, the UAE's Ministry of Labour approved 11 languages to be included in new worker contracts to ensure employees understand their rights better.
Arabic and English are the two main languages in each job offer and labour contract.
A third language was added so the applicant can better understand the documents.
According to state agency WAM, Humaid bin Deemas, Assistant Under-Secretary for Labour Affairs, said: "This applies both to workers coming from outside and those residing in the UAE that seek a new job or are required to move from one company to another.
"The other approved nine languages are Bengali, Chinese, Dari, Hindi and Malayalam, Nepalese, Sri Lankan, Tamil and Urdu; [these are] languages which have been picked according to statistics highlighting the highest number of workers using them," Deemas added.
He added: "Adding these new languages confirms the ministry's keenness to promote transparency between all parties on the terms and conditions of employment and their rights and obligations, before coming to the country to resume their duties."
The UAE's labour ministry overhauled its laws and guidelines earlier this year in a move which included the removal of a six-month worker ban rule.
8. GCC firms make job cuts
In February, UK-based design, engineering and project management consultancy Atkins confirmed that it has laid off 100 staff across its Middle East property and infrastructure teams.
The slump in oil prices coupled with slowing economic growth in the region has had a knock on effect on infrastructure projects.
An Atkins spokesperson said in a statement: "We have been continually assessing the regional market carefully over the last few months and have seen an ongoing slowdown in awards of new projects across the property and infrastructire sectors
"Unfortunately, due to these worsening economic conditions, in recent weeks we have therefore taken the difficult decision to make almost 100 people redundant in our Middle East property and infrastructure teams."
In the same month, Saudi Arabian contractor Abdullah A M Al Khodari & Sons, said it is going the route of private sector contracts following a tough 2015, slashing up to 9,000 jobs after losing almost 50% of government contracts.
The company whose income stream is derived mainly from government contracts was awarded $373m (SAR1.4bn) less in 2015 than the year before, reaching only $400m (SAR1.5bn).
Kailash Sadangi, Al Khodari’s chief financial officer told The National during the Saudi Arabia Equity Forum in Riyadh: “We are going through volatility, as is any other business, and it is not just contractors.”
Sadangi added that part of their strategy was to cut staff from 19,000 at the start of 2015, to 11,000 by the end of the year.
9. March rains damage GCC infrastructure
The GCC's construction sector encountered unforeseen complications in March as a fortnight-long spell of heavy rains took the region by surprise.
Several parts of Abu Dhabi and Dubai incurred damage to their buildings and infrastructure.
GEMS American Academy – Abu Dhabi, located in the city’s Khalifa A area, was just one of the sites to bear the full brunt of the extreme weather; heavy rain and winds dislodged the decorative façade that covered the school’s front entrance on Tuesday, 8 March.
Furthermore, Dubai's Danube metro station was also flooded after rains lashed the country on 9 March.
The metro station, located around Jebel Ali Industrial area, was branded under construction conglomerate Danube Group's banner in 2012.
Rain occurred in several parts of the UAE on 9 March, leading to significant closures the following day.
However, Qatari infrastructure incurred less damaged than expected, officials said.
Qatar's Public Works Authority (Ashghal) said that its readiness to handle the unexpected heavy rains experienced in Doha over the past few weeks paid off.
Ashghal outlined that rainwater overflow and logging in numerous areas between 7 and 9 March were tackled in a record time.
It stated that during the three days of rains, 130 places sent in requests to clear rainwater overflow and logging.
10. UAE fire code readies for revamp
Dubai Civil Defense’s updated fire codes will place increased emphasis on the role of building owners and consultants, a senior official revealed in January.
UAE Fire and Life Safety Codes of Practice 2016 will be the second edition of the standards and regulations, which were first launched in 2011 in a bid to improve fire safety in the country.
Pramod Challa, chief of engineering at Dubai Civil Defence, said these codes were launched by incorporating the best international fire standards, such as NFPA, BS, and Singaporean codes.
The fast pace of construction in the country has necessitated an update in the UAE’s fire codes, he added.
“The 2016 code features more tables and figures for better understanding,” Challa explained.
While initially expected to be released in March, the code has been delayed to allow for further revisions, officials confirmed on 8 March.