ABU DHABI // Arabtec, the country's largest construction company, hopes to bid for the 100 billion riyal (Dh98.06bn) Kingdom City and 1,100-metre tower project in Jeddah, a top company official says.
Arabtec's chances of playing a role in the Saudi project have risen now that Emaar Properties, Arabtec's main building contractor in the Burj Dubai, has signed a deal to supervise the Kingdom City and Kingdom Tower project.
"The project is one that we hope to be bidding on," said Riad Kamal, the chief executive of Arabtec, in an interview from Jeddah.
"There is quite a lot happening here," he said, adding that the company was "absolutely" trying to drum up more business in Saudi Arabia as the property slowdown hurt companies across the region.
Arabtec recently won a 2bn riyal contract to build Lamar Towers in Jeddah. The company now has 11 per cent of its Dh30.2bn contract backlog in Saudi Arabia, according to Al Mal Capital.
"Emaar has prior expertise with the Burj Dubai, so it's a good fit," said Bobby Sarkar, a property analyst at Al Mal Capital. "It's possible Arabtec also benefits from this deal down the road."
Kingdom Holding could not be reached for comment.
Goldman Sachs last week raised its target price for Arabtec by 6 per cent to Dh3.77 on what the bank said was an improving regional outlook and higher oil prices. Arabtec's share price has risen by 34.9 per cent since the beginning of the year, closing at Dh3.05 yesterday.
"We remain positive on the outlook for construction activity in the region as recent firmness in oil prices should provide further support to the construction activity," the bank said. "We believe Arabtec is well positioned to benefit from this trend, given its strong market position and track record."
There is a shortage of two million homes in Saudi Arabia and a need for another 1.4 million over the next 10 years, according to a report from the property consultancy CB Richard Ellis. The country's population is expected to grow by another 33 million by 2020.
Arabtec has lost some business in the wake of the global financial crisis as developers struggle to keep cash flowing. Dubai Meydan cancelled a Dh4.6bn construction contract with Arabtec and WCT Engineering to build a racecourse, claiming that the two companies failed to "abide by the time schedule for the completion". The companies are in arbitration over the issue.
But Arabtec has secured several large projects in the past two months, including the US$436 million (Dh1.6bn) Nation Towers project from International Capital Trading in Abu Dhabi.
bhope@thenational.ae
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Will the pound fall to parity with the dollar?
The idea of pound parity now seems less far-fetched as the risk grows that Britain may split away from the European Union without a deal.
Rupert Harrison, a fund manager at BlackRock, sees the risk of it falling to trade level with the dollar on a no-deal Brexit. The view echoes Morgan Stanley’s recent forecast that the currency can plunge toward $1 (Dh3.67) on such an outcome. That isn’t the majority view yet – a Bloomberg survey this month estimated the pound will slide to $1.10 should the UK exit the bloc without an agreement.
New Prime Minister Boris Johnson has repeatedly said that Britain will leave the EU on the October 31 deadline with or without an agreement, fuelling concern the nation is headed for a disorderly departure and fanning pessimism toward the pound. Sterling has fallen more than 7 per cent in the past three months, the worst performance among major developed-market currencies.
“The pound is at a much lower level now but I still think a no-deal exit would lead to significant volatility and we could be testing parity on a really bad outcome,” said Mr Harrison, who manages more than $10 billion in assets at BlackRock. “We will see this game of chicken continue through August and that’s likely negative for sterling,” he said about the deadlocked Brexit talks.
The pound fell 0.8 per cent to $1.2033 on Friday, its weakest closing level since the 1980s, after a report on the second quarter showed the UK economy shrank for the first time in six years. The data means it is likely the Bank of England will cut interest rates, according to Mizuho Bank.
The BOE said in November that the currency could fall even below $1 in an analysis on possible worst-case Brexit scenarios. Options-based calculations showed around a 6.4 per cent chance of pound-dollar parity in the next one year, markedly higher than 0.2 per cent in early March when prospects of a no-deal outcome were seemingly off the table.
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