Hungry builders chase Gulf school jobs

Schools are the hot growth sector for the region's construction industry

Schools are now a hot market for construction companies that once shunned these projects. Above, the British School in Abu Dhabi undergoes a Dh65 million expansion. Lee Hoagland / The National

The construction site for the Dh65 million (US$17.7m) expansion of the British School in Abu Dhabi was a hive of activity. Dozens of workers in blue jumpsuits and white safety helmets scurried over the development, while a giant crane swung materials to the upper floors.

Factbox: Building the future:

UAE More than 200 schools are in the planning stages, according to construction industry estimates. The biggest needs are for students between the ages of 6 and 18, with an emphasis on offering British, Indian, American and Arabic curricula. The Abu Dhabi Education Council has already approved plans for 47 private schools to handle 60,000 students.

Saudi Arabia The kingdom has replaced the UAE as the biggest construction market in the region, with more than US$607 billion (Dh2.22 trillion) of projects in the pipeline. Spending on education has more than tripled in the past decade, with $40bn targeting education programmes, Meed reports. Ten thousand new schools are planned.

Qatar Efforts to develop a "knowledge-based society" centre on development of an Education City for higher learning. Six international universities are scheduled to open satellite campuses. They include Northwestern, Carnegie Mellon and Texas A&M. But the country first needs to fill a gap in its own population. Only 54.7 per cent of the male population has finished secondary school, compared with 62.1 per cent of the women.

"It's the largest crane operating in Abu Dhabi," says Bernard Hunt, the project manager for Wates Construction International, as he shows visitors around the site.

Schools are a hot growth market these days for construction outfits such as Wates, a UK company that opened an office in Abu Dhabi two years ago.

More than 200 campuses, costing billions of dirhams, are under development in the UAE, drawing interest from builders around the world.

"Five years [ago], there may have been three companies interested [in school contracts], now there are about 40," says Steve Yazdabadi, the director of Wates.

In the past, construction companies viewed schools as a mundane niche market for the industry.

Large corporations busy with housing developments and skyscrapers did not feel schools were worth their time.

But the global slowdown has construction companies aggressively pursuing any available work.

Next week, at the Building Future Education Mena conference at the Abu Dhabi National Exhibition Centre, several construction companies will be exhibiting.

"We see a huge opportunity in the Middle East," says Miceál Sammon, the chief executive of the Sammon Group, an Irish builder that will be exhibiting at the show.

Sammon, which set up an office in Abu Dhabi two years ago to focus on schools, has generated more than Dh500m of contracts, building five schools for the Abu Dhabi Future School programme.

The Abu Dhabi Education Council has already approved requests to open 47 new schools to serve more than 60,000 students in the next two years.

Sammon Group is one several companies bidding on the next phase of 10 schools. The competition among bidders is likely to lower construction costs somewhere between 7 and 15 per cent, according to Mr Sammon.

"[The next phase] will be cheaper than phase 1 because the market has dropped," he says.

The UAE is the most competitive of the Middle East and North Africa (Mena) construction markets, says Heidy Rehman, an analyst with Citi. The result is lower prices for projects and tighter margins for construction companies as clients negotiate for better deals.

"The Mena construction market is no longer a contractor's market," says Ms Rehman. "Rather, it has reversed since the global financial crisis to become a clear clients' market."

Education construction is focused on building schools for children aged six to 18, rather than universities. The Dh2.9 billion Zayed University in Abu Dhabi, built by a joint venture of Habtoor Leighton Group and Murray & Roberts,is likely to be one of the last large-scale campus projects for several years.

After a building boom in recent years, the university market is saturated, at least from the construction industry's perspective.

"You're not going to see construction of large new campuses the way you did," says Jason Fournier, the education practice leader in the Mena region for Aecom, a design, management and engineering company. "It's a more mature market now."

Many of Abu Dhabi's infrastructure projects have been on hold this year while the Government reviews the building programme, according to construction company executives. But the school programme has escaped the review and moved forward.

"There is no doubt the government is committed to improving the social infrastructure," says Wates's Mr Yazdabadi.

Alternative forms of financing are likely to become more prevalent to help build the ambitious school programme. Public-private partnerships, known as PPPs, and design-to-build deals will increase the financial incentive for construction companies and lower the cash outlay for these new educational projects.

Wates, which is building the British School expansion in conjunction with local partner Al Fara'a, has generated Dh200m of contracts in Abu Dhabi, including the recently opened Al Bateen Secondary School for Aldar Properties.

While competition for contracts is increasing, school construction is a specialised trade. Facilities are often built with children studying and playing nearby, heightening concerns about safety, noise and debris during the building process.

Schools are also high-tech facilities these days, including the latest data and security systems. They often must be built to meet rigid accreditation standards, as well as Abu Dhabi's environmental codes.

Schools must also be built to tight deadlines, as schools often start marketing their new facilities a year in advance. Miss the deadline and hundreds of students would have to be relocated.

"If you say the school is going to open on the first of September, it has to open the first of September," says Mr Yazdabadi.

On the British School site, workers pour concrete and finish off the foundation for a new pool and a gymnasium, which will eventually be used by the community when students are on holiday.