After numerous setbacks and difficulties in getting paid for construction work in Dubai, Arabtec saw a spot of good news yesterday when a Moscow newspaper reported that the Okhta Centre project in St Petersburg had been given final approval. Shares of Arabtec Holding rose 5 per cent yesterday, closing at Dh2.29 on the Dubai Financial Market. In April 2008, Arabtec won the bid to build the centre, which is to include a 403-metre tower, from the state natural-gas producer Gazprom Neft. However, the project has since been held up by a dispute between the developer and opponents who say the tower will spoil St Petersburg's skyline.
The proposed building even drew opposition from UNESCO, the UN cultural organisation, which warned that the structure could cost St Petersburg its designation as a world heritage site. The project delayillustrates a type of political risk that does not exist in the Gulf, where Arabtec has focused its business in previous years. Whereas in Dubai new tall buildings can be approved with the flick of a pen, such grand structures elsewhere are subject to much more scrutiny and community feedback.
Arabtec was seen as a good fit for the project in 2008 because of the company's experience with the Burj Khalifa, the world's tallest building. The Okhta Centre tower could be Europe's tallest building. Thomas Barry, the chief executive of Arabtec Construction, said the company had "nothing to add to the announcements reported in a Russian newspaper". While construction had been delayed, executives from Arabtec had maintained recently that the project was still going ahead. If building gets under way soon, it could provide a major boost to the company, which is still feeling the effects of the Dubai property crisis. Chet Riley, an analyst at Nomura Securities in Dubai, said in a third-quarter earnings preview that Arabtec had Dh100 million more in provisions to take but revenue would begin inching up by the end of the year.
