CEO of UAE’s National Piling outlines 15% revenue growth plan
When it comes to laying the groundwork for success, there is a reason National Piling is picked by the likes of Azizi Developments and Damac Properties – CEO Cheriyan Alex shares the secret
Dubai is getting taller. Skyscrapers and high-rise buildings spring up from the ground as rapid urbanisation drills home the need to accommodate more people in increasingly populated residential hubs. Developers are building higher to meet this challenge, which is driving groundwork contractor National Piling to dig deeper than it has ever done before.
The company was formed in 2006 and is a UAE business owned by Saud Al Humaidan. The company operates exclusively in the UAE, although it has made brief forays into Saudi Arabia and Oman. While the firm is a little more than decade old, chief executive officer (CEO), Cheriyan Alex, tells Construction Week that the market has become “very competitive”. Growing competition in the foundation industry will see National Piling invest significantly in new machinery that helps to give it an edge as demand for deeper multi-storey basements increases.
“What we will concentrate on in the coming years is [the growing demand] for deeper basements in buildings,” Alex says. In the early days of National Piling, the company did not see much appetite for multi-storey basements in residential or commercial buildings. Now, however, clients regularly ask for foundations works comprising “up to four or five basements”, he says.
Increasing demand for deeper basements is driving an organisational change at National Piling, because the heavy machinery it currently owns cannot meet the “verticality and water tightness” needs of deeper basements. To ensure the mid-sized contractor can deliver the foundation works being demanded by Dubai’s developers, National Piling intends to buy more machinery. Approximately $4m (AED15m) has been set aside to purchase two diaphragm wall cutters and four vibro hammers. While $4m may not seem like a major expense to some, the figure represents around 15% of the company’s annual turnover, so relatively speaking, it is a sizeable investment. The six items of heavy machinery will complement National Pilling’s existing equipment portfolio, which already includes 16 drilling rigs and 12 cranes.
Buying more machines is important, because the longevity of a foundation contractor is “directly [linked] to the amount of equipment” it owns, Alex says. This is for a simple reason: if a company owns more machines with a broader range of capabilities, it can deliver a broader mix of foundation works, and thus bid for – and win – more projects than its competitors. Expanding the heavy construction equipment portfolio is also important for piling contractors because the demands of developers are rapidly evolving.
“As a general rule, construction requirements in the UAE have been changing from medium-sized buildings, with 10 to 15 floors, to towers spanning 25 to 80 floors. These towers require deeper foundations, with larger-diameter piles,” Alex says.
The Burj Khalifa stands as an example of how quickly developer requirements have changed in Dubai. Foundation work for the building started in the year 2000, according to Alex, who says piles with a dimeter of 1.5m were built roughly 50m deep. It is nearly two decades since foundations work on the $1.5bn (AED5.5bn) Burj Khalifa started, and piling work 50m below the tallest building in the world makes sense. But what was the exception back then is fast becoming the norm today, as National Piling’s contracts regularly cover piling works with an average depth of 50-55m, despite the fact that none of these buildings are planned to be supertalls.
This shift comes against a backdrop of what Alex calls “overwhelming change” in the piling industry. During the past decade, regulations have been introduced in the Middle East to streamline performance, and companies now face greater monitoring and testing of foundation works as a result. Compounding this, fiercer competition poses “a threat” to established ground contractors, such as National Piling. Alex says the contractor is “facing competition” from new players in the market that “do not have enough infrastructure to operate, but still pose a threat to medium-sized companies in the tendering stage”.
However, Alex says the company’s consistent revenue over the past three years reflects National Piling’s ability to mitigate the threat of low-quality competition. “We have done fairly well during the financial year, with a turnover of close to $27.2m (AED100m). I think we may be looking at increasing this by another 15% this year because of the way we are going at the moment.”
National Piling has already wrapped up several projects this year, despite the market being what Alex calls “stagnant” earlier in the year. National Piling has completed shoring works for two towers at Damac Properties’ master development, Aykon City. Foundation works for Abu Dhabi property developer Bloom Holdings’ Bloom Tower in Dubai’s Jumeirah Village Circle have been completed. And on 4 April, National Piling completed its $2.6m (AED9.8m) enabling works contract for the Leader Sports Mall in Midriff, two weeks ahead of the 120-day contract schedule. Alongside this, National Piling has 20 foundation piling projects for Azizi Developments’ $3.2bn (AED12bn) megaproject, Azizi Riviera.
Moreover, the firm has secured a string of projects worth close to $10.8m (AED40m) over the next three months. These include work on Ras Al Khaimah’s man-made archipelago, Al Marjan Island. National Piling has a contract for foundation works for the $50m (AED183m), four-star Avani hotel being developed by UK property company, Crowngate.
Al Marjan Island suggests that appetite for reclamation projects the UAE remains high, following projects such as the Palm Jumeirah in Dubai, and Yas Island in Abu Dhabi. “Reclamation work is going on all over the UAE and there is a major requirement now for ground improvement to densify the soil. For this, we are looking at ground improvement vibro hammers as one way for us to expand the services we can offer,” Alex says, adding that the company has recently been pre-qualified to carry out enabling works for Emaar, which is beneficial as the developer has the Dubai Creek Harbour to create as well. The development features numerous towers, including Dubai Creek Tower, which according to some reports, will be the world’s tallest building upon its launch.
Add to this the residential apartments, shopping malls, and other facilities that will spring up in the harbour, and Alex says the company expects to have a steady volume of work in the near future. However, despite the industry’s competitive nature, Alex believes National Piling’s future is secure, and is optimistic about investing in machinery to expand its capabilities amid strong interest in land reclamation projects and demand for deeper basements.