New contractor for third concourse at Dubai Airport

Al Jaber Engineering and Contracting (ALEC), the subsidiary of Abu Dhabi's Al Jaber Group, will take over construction of a third concourse at Dubai International Airport, an informed source has confirmed. The contract comes a week after a consortium of builders, including Murray and Roberts of South Africa, Leighton of Australia, Dubai's Al Habtoor Engineering and Takenaka of Japan, formally announced they had pulled out of the Dh4.9 billion (US$1.33bn) deal after failing to reach an agreement with the Dubai Department of Civil Aviation (DCA). The two sides had been in talks since the contract was awarded in December, as DCA sought to take advantage of construction costs that have fallen by as much as 30 per cent since the start of the global financial crisis. "ALEC has been awarded the contract," said a source, without stating how much it was worth. The new concourse will include 20 aircraft stands, 18 of which will be for Airbus A380 aircraft. It will also include two hotels, first-class and business-class lounges and duty-free shops in a total area of 528,000 square metres. It is scheduled to be finished in the first half of 2011. In 2005, ALEC built terminals 1A and 2 at Abu Dhabi International Airport. Since then, it has mainly worked on hotels, residential buildings and malls. The company won the main construction contract for the Dh4bn first phase of the Dubai World Trade Centre redevelopment in May last year, although work on the project is likely to be delayed by at least nine months. Many contractors and developers across Dubai and Abu Dhabi are returning to the negotiating table as they try to make the most of building in a cheaper environment. John Bullough, the chief executive of Aldar Properties, said this week the company was cutting costs across the supply chain by renegotiating building contracts. "We are going to see a market that's grounded on a much more realistic value base," Mr Bullough said. The Abu Dhabi Tourism and Development Company (TDIC) has also renegotiated a number of its contracts, while Al Futtaim Group Real Estate, the company developing Dubai Festival City, said in January it had postponed work on parts of the development to try to take advantage of lower construction costs. Nick Carnell, a partner who deals with the construction sector at the law firm Kennedys, said the success of renegotiations depended on the type of contract agreed to in the first place, and the type of developer and contractor. "There are different situations and so it's quite difficult to generalise," Mr Carnell said. "But what is the case is that for both the contractor and developer it's going to mean that they will have to look far more carefully at the contracts they negotiate, because there simply aren't the margins there."