Dubai: Ajman-headquartered Tech Group wants to extend its firm grip on the contracting market in northern emirates to Dubai and to accomplish this, the group believes a fine mix of steel, concrete and interior fitout works should do the trick.
The group’s steel division picked up a contract to supply the Dubai Metro Expo 2020 route.
“With all of the action set to happen in Dubai, the group has a chance to generate more from contracts here,” said George Gerges, head of Business Development. “Sure, Ajman and the northern emirates make up the bulk of our project billings now. But we do see Dubai contributing 40 per cent at some point.”
Currently, Tech Group is engaged in projects where its share of the work is estimated at just under Dh1.2 billion. The main contracting division accounts for Dh452 million of this, while MEP works add another Dh205 million. The concrete readymix arm has billings of Dh157 million. In the last three years, group entities completed work on Dh3.2 billion worth of projects.
“These numbers indicate we have maintained a steady pace of growth,” said Gerges. “But between 2018 and 2020 will be the decisive years for construction activity in the UAE. A bigger exposure to work in Dubai is important, and it will be supported by the expansion the group is currently on.”
It was in 2014 that the group launched its $100 million (Dh367.3 million) asset expansion programme. Just recently, as part of this, a fifth (concrete) readymix batch plant was commissioned.
Readymix production has now doubled in these four years.
“Ready-mix concrete over the last five years have been through some changes,” said Gerges. “There had been a drop in demand of 8 per cent in 2013, it was then followed by one year of relative stability and then the market saw three years of increases, by an average 3 per cent a year.”
Industry sources say that cement prices in the UAE have been on stable ground for some time now.
“But we can expect some changes as and when Expo 2020 build demand starts having an impact on demand,” said Gerges. “Currently, in Dubai, you can source at Dh220-Dh250 a cubic metre [depending on the aggregate mix], and these price levels have persisted because of the intense competition. My guess is that mid to end 2018, prices should start to pick up.”
The Tech Group’s chief promoter also owns Star Cements, also based in Ajman, and with quarry holdings in the northern emirates.
“We supply 80 per cent of the Ajman market’s readymix needs,” said Gerges. “It’s not something that supplier from a distant emirate can try and break into. You have to be in full control of the water content, the temperature and the humidity. To deliver concrete to project sites over great distances is not easy.
“What we have done best is expand across related sectors. Unlike other contracting companies, we are not into travel or automotive dealerships. We built assets in allied areas and that’s what will pay off as we get busier in Dubai.”
But isn’t there a constant concern that once the market cycle changes, there could be a risk of over capacity in some categories?
“The UAE’s construction sector has been so diversified over so many years... I don’t think overcapacity is a concern any time soon.”