Market holds its breath
Phil Edmondson, general manager, Edara, offers a comparison between the growth of Dubai and Abu Dhabi.
How successful has your Abu Dhabi venture been?
We expanded into Abu Dhabi to look for new work but found that things there are a lot slower than we anticipated.
We've got a couple of projects - the Al Jazeera football club and Emirates Bank - but we can't bid for very much at the moment. And that's because a lot of the projects planned are in the feasibility stage and marketing stage, so they're not ready for project managers yet. All we can do is be there and let them know that we're there and that we're ready to bid for any work that comes up. Compared to Dubai, it's a little different. Dubai has lots of projects that have come off the drawing board, which are ready for involving project managers.
I think development in Abu Dhabi is generally more careful though - the emirate has started off with very big projects, whereas Dubai started off with smaller projects and the bigger ones built up.
But Abu Dhabi has focused on projects that are worth US $2.72 billion (AED10 billion) from day one, and the smaller projects are few and far between, so it's going very slowly. The clients in Abu Dhabi are considering things very carefully as they have to think of the infrastructure when they're building such projects.
Dubai's growth hasn't been slow at all, so why do you think Abu Dhabi's is different?
In Abu Dhabi they have to deal with things a bit differently than they do in Dubai.
In Dubai it's more about external investment, and there is not as much local money invested. Whereas in Abu Dhabi it's the opposite - more local than external money is being invested. You could say that around 80% of the funding comes from local investors, while 20% comes from the outside, so they're being very careful about the way they spend their money. When you live in a country you tend to assess the marketplace and the returns more.
Also, with so much money being invested in Dubai, maybe Abu Dhabi is finding it difficult to attract new clients.
The land is there, as is the potential, but development is being approached more carefully because what they don't want to do is build something only for it to end up empty. So they're taking their time to see what happens in Dubai.
Is Edara looking for work in the other emirates in the UAE?
We're working in Sharjah, Ras Al Khaimah, and Fujairah, which are booming in their own way. But these places are quite a closed shop. They deal with their own people and the only work we get is through companies from Dubai. The biggest problem in this country is finding resources, and I don't just mean finding people, I mean finding the right people. And when you do find the right people they demand far too much money. And when outrageous salaries are being demanded it's difficult to work in smaller emirates, as they simply can't afford to pay those prices.
Do you think the construction industry is slowing down?
We know of clients who have taken a second look at their portfolios. Don't get me wrong - there is still a lot of money out there and there are a lot of projects that will be built, but it's being pondered over. In 2008, who's going to live in all the new apartments coming onto the market? When you look at Discovery Gardens, they're being sold, but these people are going to have to rent out these units. The people that have bought on this site are not rich and famous, they're middle of the road people and if they're not going to be able to live in them themselves, they're going to be very lucky to find people to rent them.
How do you see the market progressing over the next year?
I think the market is holding its breath at the moment, without a doubt. It will wait to see what's going to happen in the next 12 months.