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Gulf boom spurs engineers and architects

von William Wallis, Cairo, and Jim Pickard, London

Since 2004 the United Arab Emirates has announced building projects worth $312bn. Saudi Arabia has announced about $250 bn of projects in the same period.

For 20 years the 39-floor World Trade Centre, built in 1979, was Dubai's tallest tower. It still features on the 100-dirham banknote. But, cased in off-white concrete to shade it from the desert sun, it now looks the stunted relic of a previous oil boom. Since oil started its ascent from $9 a barrel in 1999 to about $70 today, developers have been planting skyscrapers along the Sheikh Zayed superhighway with the alacrity with which the French once lined their routes nationales with poplar trees.

The construction boom in the Gulf is putting zeros on the earnings of the world's architects and engineering and project management companies. Interior designers are also cashing in as the owners of new hotels, shopping malls and private mansions compete to set theirs apart. There is so much business that many foreign companies are turning smaller contracts away and struggling to find and keep staff.

Stewart Tyler, global property director at Hyder Consulting, says that, because of the number of construction companies with a toehold in the market, fees are relatively low. "All sorts of people are seeing opportunities here," he says. "So although the price of hotels is going up, for example, you are not seeing the margins for contractors or builders going up in the same way."

The boom is intense in Dubai, where oil revenues are dwindling but a diversification strategy has set the pace for the region, attracting investments from oil-rich neighbours. Mohamed Kamal, analyst at Dubai-based Shuaa Capital, says the United Arab Emirates has announced $312bn of projects since 2004, with more than 100 towers planned or under construction in Dubai alone. Saudi Arabia has announced about $250bn of projects in the same period.

With its design for the Burj Dubai, Skidmore Owings and Merrill, the US firm, won the bid to reclaim the world's tallest building for the Middle East. The tower is set for completion in 2008. George Esstathiou, managing partner at Skidmore, says the region accounts for 14 per cent of the company's global revenues. And Gulf investment in construction is beginning to generate business as far afield as Morocco, India and the US.

WS Atkins, the UK's largest engineering company, expanded its Middle East and China business by 55 per cent in the past year, reporting turnover of £67.1m in the year to March 31 out of total group revenues of £1.4bn. Atkins employs 1,450 people in the Gulf, says Tim Askew, regional managing director. He says the group is working on 31 projects ranging from highways in Qatar, oil platforms in Saudi Arabia and residential and office towers in Dubai. "When the oil price is high, the Middle East is busy. When it's low, it's quiet," says Mr Askew. "At between $22 and $28 a barrel, there was already a boom. At $60, $70 a barrel, the surplus is enough to keep the boom going for some time."

Sylvie Gagnon at consultants Hirsch Badner Associates recalls the days when local tastes favoured interiors with gold leaf and silk brocade. "This hotel", she says, sitting in Dubai's Emirates Towers hotel "made the difference. More people since have asked for more modern." She says there is a growing trend to bring in signature designers and architects. Giorgio Armani was among those who stepped in to provide design and branding for separate Dubai hotels. And Richard Meier of Guggenheim fame is rumoured to be in discussions with Dubai's ruler Sheikh Mohamed bin Rashid al Maktoum's office.

But on ecological sustainability, the region is more of a laggard. The Gulf's reliance on air conditioners and its propensity for glass exteriors has helped place it among the highest per capita consumers of fuel. The trend is exacerbated by the construction boom. While it does not look so great today, the old World Trade Centre, with its concrete sun-shield, is among the more energy-efficient buildings in Dubai.

Courtesy: Financial Times




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