By Kevin Brass www.thenational.ae
UAE builders that aggressively moved to diversify outside of Dubai during the global downturn now face exposure to the political turmoil in the region, and investors are getting nervous.
Dubai-based developer Emaar, best known for building the Burj Khalifa, has Dh4.2 billion worth of projects in Egypt, about 15 per cent of its book value. UAE developers and construction companies also moved into Libya, Tunisia, Saudi Arabia and Bahrain in recent years as they tried to move away from the struggles of the Dubai property market.
Emaar’s stock is down 35 per cent since October and construction giant Arabtec has seen its stock slide 43 per cent, in part due to their newly diverse portfolios, analysts say.
“Companies were using cash to expand into more defensive markets,” said Majed Azzam, analyst with Alembic HC Securities. “Now these companies are at risk of political unrest.”
Egypt has become a key market for several UAE development and construction companies.
Arabtec won a Dh195 million contract in October to build the Hanging Gardens, a 2.2 million sq metre development on the Red Sea.
“This award comes as part of the company’s strategy to diversify geographically outside of the UAE,” Arabtec Holding CEO Riad Kamal said at the time.
Arabtec also signed a joint venture with Musawa Holding in October to open an operation in Bahrain. An Arabtec spokeswoman declined to comment on Monday.
Drake & Scull International, the Dubai construction company, announced its first deal in Egypt days before demonstrations broke out on the streets of Cairo. The Dh465 million deal calls for DSI to help build the Nile Corniche Project in Cairo.
Drake & Scull also opened an office in Libya in 2009.
Damac Properties has five projects in development in Egypt, including Gamsha Bay, a 20 million sq metre project on the Red Sea, and two projects in the New Cairo development with 590 residential units.
The turmoil has had “limited impact” on the developments, a company spokesman said.
“Our construction sites are once again active and construction is progressing well across all our projects in Cairo,” said Niall MC Loughlin, senior vice president of DAMAC Properties. “DAMAC Properties remains optimistic about its future in Egypt, and we are confident that the country will continue to be a very important market for us.”
