The construction companies Tameer and Sorouh have finalised a Dh6 billion (US$1.63bn) agreement with three contractors to jointly build the Tameer Towers project in Abu Dhabi in the largest co-operation of this type in the region. The agreement is known in the industry as an alliance, which is different than other partnerships and uncommon in the GCC for property developments.
"It is the first alliance of this kind in the UAE and definitely the largest in the world in terms of volume. This type of alliance is generally seen for infrastructure projects, in Australia or New Zealand for instance, not for whole developments," said Abdallah Shaaban, the managing director of Tameer Abu Dhabi. The company recently came under fire from investors for project delays. "[The] resources of only one contractor are not sufficient," Mr Shaaban explained. "Construction costs have spilt out of control, and given the difficulties of finding resources, we decided to do an alliance."
"It's quite an innovative approach, which I welcome as a way forward," said Rod Steward, the managing director of Hyder Consulting, which advises on properties. "It's a much more open collaborative approach between all parties and it removes a lot of a waste that is otherwise involved in firstly negotiating and then allocating risk. It's a shared approach towards management of risk." Tameer and Sorouh, which have already been working on the project together, signed an alliance to join their efforts with the three new contractors: Al Habtoor Engineering, Murray & Roberts and Al Rajhi Projects. The three contractors have been working together for more than a month on the project under an informal agreement. "It's a new concept for the region," Mr Shaaban said. "In an alliance the contractor becomes part of the project, like the client. There is a board in which everybody votes equally. The contractors act in the interest of the project because there is a price target that is agreed upon from the beginning. When prices go down, earnings are equally shared, when they go up, the cost is also shared."
The alliance will have 450 employees and require about 4,000 workers, Mr Shaaban said. The Tameer Towers is a joint venture between Tameer Holding Investment, which is based in Dubai, and Sorouh Real Estate, the second-largest developer in Abu Dhabi by market value, and was launched in October last year. Sorouh, the master developer, oversees the design, conception and technical aspects, while Tameer is in charge of marketing, procurement of resources and selling the project.
Located at Shams Abu Dhabi, a development on Reem Island, the project will consist of six towers - a 74-floor office tower, a 21-floor hotel and apartment tower, and four residential towers. The foundation work is being undertaken by Arabian Foundations, and is almost complete, said Mr Shaaban. The delivery date for the project's residential component is scheduled for June 2011, while the commercial aspect is scheduled to be ready by December the same year.
The project's construction is estimated to cost Dh6bn, bringing the total cost including land to $8bn. Tameer, which is 75 per cent owned by Al Rajhi Investment, a Saudi company, is developing a second project on Reem Island with Sorouh - the Gate Towers in the Shams Abu Dhabi development, which its developers are marketing as a self-sustaining city of 45,000 residents that will include canals and parks.
"We anticipate that this alliance will be combined in several other projects in the future. It could be done with other contractors," Mr Shaaban said. @Email:ngillet@thenational