Move to support construction in Dubai

Dubai: The Federal Government's decision to support Dubai will boost sentiment in the construction sector as contractors to Dubai World projects are paid.

The Abu Dhabi government funded $10 billion (Dh36.7 billion) to the Dubai Financial Support Fund, out of which the Dubai government allocated funds to meet Nakheel's sukuk obligations worth $4.1 billion.

Some of the remainder of the funds will be used to clear obligations to contractors.

"Funds provided will be used for the satisfaction of obligations to existing trade creditors and contractors. Discussions with affected contractors will begin in short order," said Shaikh Ahmad Bin Saeed Al Maktoum, Chairman of the Dubai Supreme Fiscal Committee.

Long-term health

"We are confident in our economic model, and we are confident in the long-term health and outlook for our economy," Shaikh Ahmad said.

"The developers faced some difficulty for the time being, but in the long-term they will honour their debts. They just needed some support," said Dr Ahmad Saif Belhasa, Chairman of the UAE Contractors Association and head of the Belhasa Engineering and Contracting Co.

"This is very good news for the construction sector, especially for our contracting company. They had some money due from Nakheel's projects. So it is good that the contractors will be paid," Hassan said, adding that the UAE government would work to solve any of its problems. "That is what the announcement was about today. Dubai is part of the UAE economy, which is financially strong," he said.

Nicholas Maclean, managing director of CB Richard Ellis Middle East, a commercial real estate firm, said: "The interests of contractors and advisors are openly recognised as being vital to the future success of the country.

Riad Kamal, chairman of Arabtec Holdings LLC, said: "A lot of contractors have been waiting for this news and the release of the payments could help the industry in moving forward with the construction activities."

Kamal, whose company is involved in major construction projects in Dubai, is currently building Al Furjan — a Nakheel project, with a contract worth Dh600 million. He admitted having payment delays.

"But we managed works and Nakheel has been making part payments," he said.

"We have executed a number of projects for Nakheel. Currently we are constructing villas at Al Furjan."

Morale

The building materials industry is expecting the news to lift the morale in the market as positive reaction to the announcement would be seen from the contractors. "It is going to help all of us and I'm sure things are going to fall back into place after the turbulence we had in the past weeks," said Rizwan Sajan, Chairman of Danube, a building materials supplier.

While business was improving in the third quarter, he said that things came to a standstill after Dubai government announced a debt restructuring.

"There was a lot of uncertainly and there was chaos in the market. All the lost confidence will now be gained back after the support of the Abu Dhabi government to the Dubai government. We are very relieved with the announcement and kudos to the Abu Dhabi government for helping us out," Sajan said.