Dh2.5bn La Hoya Bay deal one of biggest for months
Arabtec builds growth with new contracts
Construction activity may still be on the slow side but Arabtec Holding is showing some upside in its share price thanks to new contracts. The company's shares rose 1.1 per cent to Dh1.76 yesterday following the announcement that it had signed a memorandum of understanding to build La Hoya Bay in Ras al Khaimah. The total value of the contract, which will take more than four years to execute, is Dh2.5 billion, making it one of the biggest contracts to be awarded in the UAE for almost two years.
"The length of the project means there will be continuity and ? there is no pressure on them to finish it immediately," said Nour al Zoubi, the general manager of the brokerage house MAC Sharaf Securities in Dubai. "It's good for the company at the moment because in the UAE there aren't many projects, except in Abu Dhabi." Arabtec and its subsidiaries have picked up a number of contracts this year which, along with the La Hoya Bay contract, are worth more than Dh6bn.
Shuaa Capital, the investment bank, said last month it expected the value of the company's new projects to reach Dh7.4bn by the end of the year. Most of the work so far has come from Abu Dhabi. "But I guess over the next two years projects for Arabtec will be in Saudi Arabia, Qatar or Libya," added Mr al Zoubi. He said the news earlier this month that Arabtec had received 40 per cent of what it was owed from the Dubai World-owned property developer Nakheel had also boosted sentiment among investors.
The company has not revealed how much it was paid but the agreement means it will be able to resume work on its Dh2.99bn contract to build 1,500 villas at Nakheel's Al Furjan community, which it was awarded in June 2008. "They have protection from cash problems at the moment," said Mr al Zoubi. firstname.lastname@example.org