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Construction SectorMENAJuly 2015



Table of Contents

I. Regional Sector Overview

1. Definition of MENA Region

2. Construction Sector in MENA

3. MENA Region: Share of Construction Sector in GDP

4. MENA Region: Share of Construction Sector in GDP (cont'd)



7. MENA Region: Construction Sector Growth, 2011-2014 CAGR

8. MENA Region: Ease of Dealing with Construction Permits

9. MENA Region: Ease of Dealing with Construction Permits (cont'd)

10. MENA Region: Ease of Dealing with Construction Permits (cont'd)

11. MENA Region: Ease of Dealing with Construction Permits in 2015, Ranking

II. Qatar

1. Sector Highlights

2. Economic Indicators

3. Construction Industry Data

4. Construction Industry Data (cont’d)

5. Construction Industry Forecast

6. Residential Building Data

7. Non-residential Building Data

8. Segmentation of the Non-residential and Infrastructure Subsectors, 2014

9. Major Construction Projects

10. Major Construction Projects (cont'd)




14. Investment Climate

15. Investment Climate (cont'd)

III. Saudi Arabia




4. Construction Industry Data


6. Major Construction Projects (cont’d)







13. Investment Climate (cont’d)



Table of Contents

IV. United Arab Emirates




4. Construction Regional Data

5. Construction Regional Data (cont'd)








13. Investment Climate (cont'd)

V. Main Players

1. Top M&A Deals

2. M&A Activity, 2013-2014

3. Arabtec Holding PJSC

4. Arabtec Holding PJSC (cont’d)

5. Drake & Scull International PJSC

6. Drake & Scull International PJSC (cont’d)

7. Combined Group Contracting Co.

8. Combined Group Contracting Co. (cont’d)

9. Galfar Engineering And Contracting SAOG PLC

10. Galfar Engineering And Contracting SAOG PLC (cont’d)

11. National Marine Dredging Company PSC

12. National Marine Dredging Company PSC (cont’d)



I. Regional Sector Overview



Source:

Comments

Definition of MENA Region

The current report outlines the development of the construction sector in the Middle East and North Africa (MENA) region, which is composed

of 17 countries: Algeria, Bahrain, Egypt, Iran, Iraq, Jordan, Kuwait, Lebanon, Libya, Morocco, Oman, Qatar, Saudi Arabia, Syria, Tunisia,

United Arab Emirates (UAE) and Yemen. The report focuses on three main countries, namely Qatar, Saudi Arabia, and the United Arab

Emirates. They were selected because of the huge project pipeline of each country related to ambitions to diversify the economy and also to

large scale international events like the World Expo 2020 in Dubai and the FIFA World Cup 2022 that will take place in Qatar.

Middle East and North Africa Region

EMIS



Source:

Construction Sector in MENA

High-income

Countries

Bahrain, Kuwait, Oman, Qatar, Saudi Arabia, United Arab Emirates

The economies of these oil-rich countries are highly dependent on the production and export of hydrocarbons. Over the

2011-2014 period, the construction sector accounted for around 5% of their national GDPs, with the exception of Kuwait,

where construction accounts for about 2% of GDP. It is worth noting that with a CAGR of 15.2% the Qatari construction

sector was the third fastest growing within MENA between 2011 and 2014.

In addition, four of countries in this group are in MENA’s Top 5 regarding the ease of dealing with construction permits in

2015. These are UAE, Bahrain, Saudi Arabia and Qatar.

Upper-

middle-

income

Countries

Algeria, Iran, Iraq, Jordan, Lebanon, Libya, Tunisia

The contribution of the construction sector to GDP within this group is highly variable. While the sector accounted for

around 9.7% of Algerian GDP between 2010 and 2013 and for 8.6% of Iranian GDP between 2011 and 2014, it stood at

4% to 5% of the economies of Jordan, Lebanon, and Tunisia in 2011 – 2014.

Remarkably, between 2011 and 2014 the construction sector in Iran and Lebanon saw a double-digit increase and grew

fastest within MENA at impressive CAGRs of 39% and 26%, respectively. However, due to high costs and extensive

waiting time, the two countries are also among those in the region, where it is hardest to deal with construction permits.

Lower-

middle-

income

Countries

Egypt, Morocco, Syria, Yemen

Yemen is the only economy in the region where the construction industry registered an average annual decline of 5.7% in 2010-2013. The downturn was driven by the 2011 recession, coupled with extensive corruption in the country. However, Yemen’s construction sector appears to be on its way to recovery, registering an average growth of 11.2% in 2012 and 2013.

During the 2011 – 2014 period, the construction sector contributed around 4.6% to the Egyptian economy and increased by a CAGR of 14%, ranking the 4th fastest growing in the region. However, the country is among the laggards in MENA as far as dealing with construction permits is concerned, mainly because of long waiting time to obtain all needed documentation.

EMIS, World Bank, National Statistics



Source:

MENA: Share of the Construction Sector in GDP*

Algeria

Egypt

Bahrain, GDP Value Added

Iran, GDP Basic Prices

CEIC, National Statistics, - * Unless specified otherwise, data present GDP and sector shares at current prices.

10.5% 9.2% 9.3% 9.8%

89.5% 90.8% 90.7% 90.2%

14.9%

6.0%

11.8%8.7%

2010 2011 2012 2013

Other sectors

Constructionsector

Constructionsector, YoYchange

6.1% 6.0% 5.9% 6.3%

93.9% 94.0% 94.1% 93.7%

-7.1% 3.6% 5.0% 9.8%

2011 2012 2013 2014

Other sectors

Constructionsector


4.6% 4.5% 4.6% 4.7%

95.4% 95.5% 95.4% 95.3%

14.2%12.2%

13.9%15.9%

2011 2012 2013 2014

Other sectors

Constructionsector


7.6%

7.9% 9.8% 9.2%

92.4% 92.1% 90.2% 90.8%

3.0%

36.4% 40.7%

24.9%

2011 2012 2013 2014

Other sectors

Constructionsector




Source:

MENA: Share of the Construction Sector in GDP* (cont’d)

Jordan

Lebanon, GDP Gross Value Added

Kuwait

Morocco, GDP Value Added

4.3% 4.4% 4.4% 4.5%

95.7% 95.6% 95.6% 95.5%

-0.9%8.3% 10.3% 7.5%

2011 2012 2013 2014

Other sectors

Constructionsector


2.3% 1.7% 1.8% 2.1%

97.7% 98.3% 98.2% 97.9%

32.7%

-14.1%

7.8% 8.0%

2011 2012 2013 2014

Other sectors

Constructionsector


4.3%

4.8% 5.6% 6.7%

95.7% 95.2% 94.4% 93.3%

-16.6%

20.5% 27.7% 29.2%

2011 2012 2013 2014

Other sectors

Constructionsector

Constructionsector, YoYchange 6.0% 6.2% 6.1% 6.3%

94.0% 93.8% 93.9% 93.7%

10.1% 6.7% 3.8% 4.0%

2011 2012 2013 2014

Other sectors

Constructionsector


CEIC, National Statistics, - * Unless specified otherwise, data present GDP and sector shares at current prices.



Source:


Oman, GDP Basic Prices

Saudi Arabia

Qatar

Tunisia GDP Factor Cost

5.2% 5.7% 5.2% 6.2%

94.8% 94.3% 94.8% 93.8%

14.5% 20.8%-5.8% 24.9%

2011 2012 2013 2014

Other sectors

Constructionsector


95.4% 95.6% 94.8% 94.3%

3.0% 8.7% 24.7% 12.9%

2011 2012 2013 2014

Other sectors

Constructionsector


4.3% 4.3% 4.8% 5.5%

95.7% 95.7% 95.2% 94.5%

17.9% 10.7% 13.6% 13.7%

2011 2012 2013 2014

Other sectors

Constructionsector


95.3% 95.4% 95.4% 95.4%

-1.3% 1.8% 1.5% 1.9%

2011 2012 2013 2014

Other sectors

Constructionsector


CEIC, National Statistics, - * Unless specified otherwise, data present GDP and sector shares in current prices.



Comments

Source:


Note: Data concerning the 2010-2013/14 period are not available for Iraq, Libya, and Syria.

United Arab Emirates Yemen

5.4% 3.7% 3.9% 4.1%

94.6% 96.3% 96.1% 95.9%

10.0% -32.1% 6.9% 15.4%

2010 2011 2012 2013

Other sectors

Constructionsector

Constructionsector, YoYchange9.5% 8.8% 8.8% 9.0%

90.5% 91.2% 91.2% 91.0%

-0.1% -1.4% 3.4% 6.2%

2011 2012 2013 2014

Other sectors

Constructionsector


CEIC, National Statistics, - * Unless specified otherwise, data present GDP and sector shares in current prices.



Source:

MENA: Construction Sector Growth, 2011-2014 CAGR

Country Ranking*

CEIC, National Statistics, - * CAGR of Algeria and Yemen is calculated over the 2010-2013 period due to unavailable data for 2014.

33.8%

25.7%

15.2%

14.0%

12.6%

12.4%

8.8%

8.7%

7.8%

6.1%

4.9%

2.6%

1.7%

-5.7%

Iran Lebanon Qatar Egypt Saudi Arabia

Oman Algeria Jordan Kuwait Bahrain

Morocco United Arab Emirates Tunisia Yemen



Source:

MENA: Ease of Dealing with Construction Permits

Procedures to legally build a warehouse, number Comments

The procedures to legally build a warehouse are fewest in

Iraq, UAE, Bahrain, Saudi Arabia, and Oman.

On the contrary, construction developers need to pass

through the most complex procedures if they are building

in Syria, Kuwait, Egypt, and Lebanon.

However, the number of procedures is not completely

relevant to the ease of dealing with construction permits

as it remains unknown how much time they take. For

instance, Iran has about the average number of

procedures in the region but they take the longest among

all MENA economies. In Morocco there is one procedure

less than in Iran, but the time needed to complete the

bureaucratic work is three times less than that in Iran.

Note: Procedures to legally build a warehouse include

submitting all relevant documents and obtaining all

necessary clearances, licences, permits and certificates;

completing all required notifications and receiving all

necessary inspections; obtaining utility connections for

water, sewerage and a land telephone line, registering the

warehouse after its completion (if required for use as a

collateral or for transfer of the warehouse).

Doing Business 2010 -2014 Reports, - * MENA Average is calculated for the 17 countries under analysis and excludes economies, that might be part of the region in other classifications

2010 2011 2012 2013 2014

MENA Average* 19 19 16 17 16

Algeria 22 22 19 19 19

Bahrain 13 13 12 12 12

Egypt 25 25 22 22 21

Iran 17 17 16 16 16

Iraq 14 14 13 12 10

Jordan 19 19 17 17 17

Kuwait 25 25 24 24 24

Lebanon 20 21 19 19 20

Libya n/a n/a n/a n/a n/a

Morocco 19 19 15 15 15

Oman 16 15 14 13 13

Qatar 19 19 17 16 17

Saudi Arabia 17 12 9 14 12

Syria 26 26 23 23 n/a

Tunisia 20 20 17 17 19

United Arab Emirates 17 17 14 14 12

Yemen 15 12 12 12 14



Source:

MENA: Ease of Dealing with Construction Permits (cont’d)

Time required to complete each procedure, calendar days Comments

Economies in MENA vary sharply in terms of

calendar days needed to obtain all permits related to

the legal construction of a warehouse.

UAE, Bahrain, Qatar, and Jordan are the countries

where the procedures are the most streamlined and

facilitated, and thus take the shortest time.

On the other hand, the time required to complete

each procedure is the longest in Iran, where it takes

almost a year. Legally building a warehouse is a

lengthy process in Algeria, Lebanon, and Yemen as

well, where it takes considerably longer than the

average time needed in the region.

Note: Time required to complete each procedure does not

include time spent gathering information. Each procedure

starts on a separate day. Procedures that can be fully

completed online are an exception to this rule. The

procedure is considered completed once the final

document is received. No prior contact with officials is

assumed.

Doing Business 2010 -2014 Reports, - * MENA Average is calculated for the 17 countries under analysis and excludes economies, that might be part of the region in other classifications.

2010 2011 2012 2013 2014

MENA Average* 150 148 140 146 143

Algeria 240 240 281 281 241

Bahrain 43 43 43 43 60

Egypt 218 218 218 218 179

Iran 322 322 320 320 320

Iraq 215 215 187 187 139

Jordan 87 87 70 70 70

Kuwait 104 104 130 130 130

Lebanon 211 218 219 219 246


Morocco 163 163 97 97 97

Oman 242 186 174 174 174

Qatar 76 76 70 62 63

Saudi Arabia 94 89 75 103 102

Syria 128 128 104 104 n/a

Tunisia 84 97 88 88 94


Yemen 107 116 116 191 186



Source:

MENA: Ease of Dealing with Construction Permits (cont’d)

Cost required to complete each procedure, % of income per capita Comments

The cost required to complete each procedure is a

function of the income per capita within the

respective country. Therefore, income levels should

be carefully examined and taken into account as they

vary widely within MENA.

Based on World Bank data on GDP per capita in

current USD for 2014, Kuwait (USD 50,108),

Lebanon (USD 35,791), Jordan (USD 27,113) and

Saudi Arabia (USD 12,705) were the economies

where it was the most expensive to obtain all permits

to legally construct a warehouse in 2014.

The countries where it was the least expensive

during the last year were Yemen (USD 766), Qatar

(USD 934), Bahrain (USD 2,268), and Algeria (USD

3,217).

Note: The indicator measures official costs only and

excludes bribes.

Doing Business 2010 -2014 Reports, - * MENA Average is calculated for the 17 countries under analysis and excludes economies, that might be part of the region in other classifications

2010 2011 2012 2013 2014

MENA Average* 290 270 190 162 131

Algeria 40 44 23 55 60

Bahrain 55 78 11 10 9

Egypt 332 294 155 135 108

Iran 366 382 356 262 225

Iraq 398 507 470 110 17

Jordan 697 634 534 530 500

Kuwait 124 173 122 96 99

Lebanon 195 285 235 302 353


Morocco 264 252 235 220 218

Oman 428 106 46 38 35

Qatar 1 1 1 1 1

Saudi Arabia 33 44 19 25 25

Syria 540 568 504 484 n/a

Tunisia 998 859 261 256 256


Yemen 144 61 61 52 48



Source:

MENA: Ease of Dealing with Construction Permits in 2015

Country Ranking

Doing Business 2015 Report

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

16

United Arab Emirates Bahrain Iraq Saudi Arabia QatarOman Morocco Yemen Tunisia KuwaitJordan Algeria Egypt Lebanon IranSyria Libya



II. Selected Economies



Qatar: Sector Highlights

The Qatari construction sector, including infrastructure, residential and non-residential buildings, is the fastest growing sector in the country. In an effort to diversify

its oil-dominated economy and to prepare for the upcoming 2022 FIFA World Cup, Qatar has entered a phase of massive spending on all subsectors. The country

has pledged USD 140bn of investment between 2015 and 2020, as told by Qatar’s minister of transport, Jassim Saif Ahmed Al Sulaiti in September, 2014.

However, the rapid growth comes with its numerous challenges - late payments, inflation, recurrent project delays, and bottlenecks in the supply of labour and

materials. Notably, bad labour conditions on the construction sites, in particular stadiums, have come under considerable international scrutiny.

Overview

Non-residential Construction

The residential construction in Qatar is fueled by a growing population and a growing economy. The Qatari population is expected to grow by 4%

y/y between 2014 and 2019. This demographic outlook, coupled with increased purchasing power will put pressure on housing. Technavio

Research experts project healthy demand for both luxury and affordable homes. The latter are mainly needed for the migrant manpower that is

working on the construction projects. For instance, a workers’ city in Barwa Al-Baraha, that will have capacity to house around 55,000 people, is

about to be completed.

Currently, the non-residential segment is fueled mainly by long-term complete city developments. Among them, Lusail and Barwa Al Khor cities are

standing out with respective values of USD 45bn and USD 9.9 bn. Naturally, some of the other major projects in the subsector are related to the

FIFA World Cup 2022. They include the USD 4bn expansion and construction of 12 stadiums which will host the games. Stadium construction is

coupled with extensive USD 20bn investments in hotel infrastructure by the Qatar Tourism Authority. BMI states that approx. 90,000 additional

hotel rooms are required to cater for the projected influx of 400,000 supporters.

Infrastructure is particularly influenced by the preparations for the World Cup 2022 as the country is building transport infrastructure to connect the

numerous World Cup sites to each other and to accommodate the huge tourist influx that is expected. The government is currently building its USD 28.8bn

national railway network and is implementing a USD 4.4bn expressway programme which provisions the construction of 900 km of first-class roads

throughout the country. The state has also allocated a huge investment of USD 36bn to build the Doha Metro. Already having serious traffic congestion

problems, the capital will need a working public transport system in order to cope with the tourist inflow coupled with the dense local population.

Infrastructure

Residential Construction



Source:

Comments

Qatar: Economic Indicators

Qatari economy grew at an impressive CAGR of 9.7% in 2009-2014. BMI Research experts maintain a positive forecast for 2015 with a real GDP y/y growth at 6.6%. Growth is

mainly attributed to investment spending, especially in transport projects, expansionary fiscal stance, and population growth, as explained by the Qatari ministry of development

planning and statistics. The falling oil prices are a key risk to the economic outlook of Qatar, the country being a major oil and gas exporter. However, the ministry considers state

finances as a sufficiently strong to shield the wider economy in 2015 with a fiscal surplus of 8.7% of GDP. According to BMI Research, inflation rate is expected to rise at 3.8% y/y

in 2015.

In 2011 to 2014, the construction sector increased by a CAGR of 15.2% - more than double the real growth rate of the economy which was 5.8% a year. The booming activity in the

sector has been coupled with a growing number of people employed in it. Last year, construction workers in Qatar made up 37.7% of the total active labour force in the country.

Selected Economic Indicators

CEIC, World Bank, Ministry of Development Planning and Statistics – Qatar, IMF, Reuters

2009 2010 2011 2012 2013 2014

GDP, constant prices 2005 (USD bn) 87 102 116 122 130 138

GDP, constant prices 2004 (QAR bn) 243 284 321 341 362 384

GDP, current prices (USD bn) 98 125 170 190 203 212

GDP, current prices (QAR bn) 356 455 618 693 735 765

GDP Real Growth Rate (%) 12.0 16.7 14.1 5.1 6.2 6.2

GDP, Non Oil: Construction (QAR bn) 26 28 28 31 38 43

GDP, Non Oil: Construction, Growth Rate (%) -6.2 7.8 3.0 8.7 24.7 12.9

People Employed in Construction, thou persons 545 559 498 499 569 636

Foreign Direct Investment, net inflows (USD bn, current) 8.1 4.7 -0.1 0.3 -0.8 n/a

Consumer Price Index (%) -4.9 -2.4 1.9 1.9 3.1 3.0



Source:

Comments

Qatar: Construction Industry Data

Over the 2015-2018 period, BMI Research experts project 11.2% annual average real growth rate in the sector. Thanks to robust private consumption and

rapidly growing population, residential and non-residential building will perform better than infrastructure as it will both create more value and grow faster.

Residential and non-residential building is expected to account for an average 58% of the sector’s activity in 2015-2018. It is also projected to grow by an

impressive 15% annual average real growth rate, while infrastructure will increase tangibly slower by 6.5% over the 2015-2018 horizon.

Construction Industry Data

BMI Research, EMIS Insight

2013 2014e 2015f 2016f 2017f 2018f

Construction Industry Value, USD bn 9.7 11.6 13.6 15.9 18.3 20.7

Construction Industry Value Real Growth, % y-o-y 13.60 15.40 13.07 12.35 10.30 9.04

Construction Industry Value, % of GDP 4.80 5.50 6.20 6.60 6.80 7.10

Residential and Non-Residential Building Industry Value, % of total construction 49.92 52.77 55.56 57.64 58.90 59.94

Residential and Non-Residential Building Industry Value, USD bn 4.86 6.11 7.57 9.17 10.76 12.43

Residential and Non-Residential Building Industry Value Real Growth, % 16.57 22.20 19.30 16.71 12.81 11.05

Residential and Non-Residential Building Industry Value, % of GDP 2.40 2.88 3.44 3.80 4.03 4.24

Infrastructure Industry Value, % of total construction 50.10 47.20 44.40 42.40 41.10 40.10

Infrastructure Industry Value, USD bn 4.87 5.47 6.05 6.74 7.51 8.31

Infrastructure Industry Value Real Growth, % y-o-y 7.70 8.60 6.10 6.90 6.90 6.20

Infrastructure Industry Value, % of GDP 2.40 2.60 2.80 2.80 2.80 2.80



Source:

Qatar: Construction Industry Data (cont’d)

Construction Industry Real Growth, % y-o-y

Construction Industry Value

BMI Research, EMIS Insight

13.615.4

13.1 12.4

10.39.0

16.6

22.2

19.3

16.7

12.811.1

7.78.6

6.16.9 6.9

6.2

2013 2014e 2015f 2016f 2017f 2018f

Construction industry real growth, % y-o-y Residential and non-residential building real growth, % y-o-y Infrastructure industry real growth, % y-o-y

4.86 6.117.57

9.1710.76

12.434.87

5.476.05

6.74

7.51

8.31

9.73

11.58

13.62

15.91

18.27

20.74

2013 2014e 2015f 2016f 2017f 2018f

Infrastructure, USD bn

Residential and non-residential building, USDbn

Total, USD bn



Source:

Comments

Qatar: Construction Industry Forecast

Qatar is set for a steep growth of its construction industry. Experts from Oxford Economics expect an almost twofold increase of the

construction output value-added index in 2030 compared to 2015, surpassing by far the projected values for Middle East and Africa. The

positive outlook is associated with huge government investments, a stable business environment and growing consumer demand. Residential

and non-residential construction, the major growth driver in the industry, is leveraged by the massive infrastructure improvements throughout

the country and by the World Cup 2022 preparations. Indeed, developers are building major residential projects and the adjacent social

infrastructure, coupled with numerous hotels and stadiums.

Construction, Output (value-added index, 2015=100)

CEIC, Oxford Economics, BMI Research

100

122

175

224

268

100

113

138

168

202

100107

120

148

182

2015 2017 2020 2025 2030

Qatar Middle East Africa



Source:

Qatar: Residential Building

Number of New Building Permits Issued

Area of Completed Residential Buildings

Completed Residential Buildings

Actual Cost of Completed Residential Buildings

CEIC, Ministry of Development Planning and Statistics - Qatar

4,09

3

4,94

5

4,43

0

4,73

3

3,96

2

-25.6%

20.8%

-10.4%

6.8%

-16.3%

2009 2010 2011 2012 2013

Permits issued YoY change, %

7,77

7

6,06

6

4,41

2

4,58

5

-22.8% -22.0%-27.3%

3.9%

2010 2011 2012 2013

Completed residential buildings, units YoY change, %

4,53

8

3,71

8

3,96

9

3,60

9

-18.1%

6.8%-9.1%

2010 2011 2012 2013

Completed residential buildings, thou sq.m. YoY change, %

11,2

96

10,2

64

11,8

66

5,42

0

-1.2%-9.1%

15.6%

-54.3%

2010 2011 2012 2013

Actual cost of completed residential buildings, QAR mn

YoY change, %



Source:

Qatar: Non-Residential Building

Number of New Building Permits Issued

Area of Completed Non-Residential Buildings

Completed Non-Residential Buildings

Actual Cost of Completed Non-Residential Buildings

441

298

476 52

8

296

-25.0%-32.4%

59.7%

10.9%

-43.9%

2009 2010 2011 2012 2013

Permits issued YoY change, %

339

239 26

6

152-6.4%

-29.5%

11.3%

-42.9%

2010 2011 2012 2013

Completed non-residential buildings, units YoY change, %

2,26

9

1,80

8

1,85

5

1,71

7-20.3%

2.6%-7.4%

2010 2011 2012 2013

Completed non-residential buildings, thou sq.m.

YoY change, %

9,08

2

9,34

4

8,37

3

3,24

2

46.5%

-9.1%

15.6%

-54.3%

2010 2011 2012 2013

Actual cost of completed non-residential buildings, QAR mn

YoY change, %

CEIC, Ministry of Development Planning and Statistics - Qatar



Source:

Qatar: Non-Residential Building and Infrastructure Segmentation

Non-Residential Building, 2014

Infrastructure, 2014

Technavio Research, EMIS

Industrial 59.3%

Commercial29.6%

Retail 5.8%

Cultural 5.4%

Oil & gas 36.9%

Power 19.5%

Transport 13.7%

Water 9.6%

Marine 7.0%

Mixed use 5.3%

Hospitality 2.6%

Education 2.3%Healthcare 2.3%Public 0.7%

Telecom 0.2%



Source:

Qatar: Major Construction Projects

Major Ongoing Projects

BMI, Lusail, Festival City Doha, Msheireb, Doha News, Construction Week Online, Qatar Construction News, Mazaya Holding, The Peninsula Qatar, Qatar Tenders, Barwa, MEED

Project Name Value, USD mn Capacity/Length Overview Timeframe

Commercial ConstructionLusail City, Al

Daayen

45,000 38,000,000 sq m Lusail City is located approx. 15 km north of Doha. Once completed, the city will include 4 exclusive islands

and 19 multi-purpose residential, mixed use, entertainment and commercial districts. The city is expected

to accommodate 450,000 people in total, including residents, employees, and visitors. Among the

numerous residential and commercial units, 22 hotels with different international star ratings will be built.

2011 - 2020

Barwa Al Khor City 9,900 5,500,000 sq m This is a complete city development, including more than 17,000 housing units, as well as shopping malls,

leisure facilities, luxury hotels and a golf course.

After three-year

delay, works have

started in H1 2013.

Estimated end in

2018.

Lusail Golf

Residential

Development

Project

4,900 3,659,736 sq m Upon completion, the development will feature an 18-hole golf course, a tennis centre, as well as a 6-hole

Academy Golf Course, a retail village, and a boutique hotel offering 80 rooms. Residential components will

account for 31% of the development, and sports facilities and green areas - for the remaining 69%.

2018

Education City:

Research Institute

(QEERI) Sidra

Medical and

Research Center

2,500 The project includes the construction of a 9-storey hospital (512 beds), 7-storey clinic and research

building, as well as accomodation building for 350 nurses with additional service buildings, parking space

and associated facilities.

2008 - Fall of 2015

Doha Festival City

project

1,600 433,847 sq m When completed, the Doha Festival City will have some 250,000 sq m of gross leasable area, offering

shopping, entertainment, leisure, and hospitality services to its visitors. A 5-star hotel will also be featured

within the city along with one of the largest conference centres in Qatar.

2011 - 2016

Six-phase

Redevelopment of

Doha's Old

Industrial Area

1,100 The first stage will focus on infrastructure modernisation and will cost approx. USD 357mn. At planning stage



Source:

Qatar: Major Construction Projects (cont’d)




Commercial Construction (cont’d)Phase II(B) of the

Doha Convention

Centre and Tower

657 DCCT is a 551 m tall skyscraper with over 100 storeys located in the West Bay area. It was scheduled for

completion in 2012 but construction works have been suspended following the discovery that the building

would impact flight paths to and from Doha International Airport. However, work has restarted after the New

Doha Hamad International Airport was completed in 2014. The tower, shaped like a tapering obelisk, will

offer both residential and office space. At the very top, a private club will occupy a 60 m high glass-only

cylinder surrounded by extensions of the tower’s facade and supported by a structural helix. DCCT will also

comprise a 100,000 sq m convention centre and a 175,000 sq m car parking facility.

To be completed by

end-2015

Msheireb

Downtown Doha

project-Phase III

PPP, Doha

686

Msheireb is a sustainable downtown regeneration project that aims to revive the old commercial district of

Doha. The project will adhere to high standards in green building in order to reverse the energy-intensive

pattern of construction in Qatar. Upon completion, it will offer office space, retail, leisure facilities,

townhouses, upscale apartments, hotels, museums, civic services, as well as cultural and entertainment

venues. Interestingly, cars and traditional services will be strategically placed underground in several

basement levels, ensuring a pedestrian - friendly atmosphere. The total cost of the project amounts to USD

5.5 bn and it should be completed in 2016.

Started in 2013

Doha Msheireb

Downtown, Phase 2

632 Started in 2012

Msheireb

Downtown Doha

Project (Phase 1C)

411.9 To be completed by

end-2015

Marina Mall 275 Marina Mall, to be built in Lusail City, will offer 57,605 sq m of gross leasable area, with an additional

10,000 sq m hypermarket at basement level. The building will consist of five interconnected retail ‘islands’

that link the mall to a body of water that runs through the centre of the scheme. It should be completed in

2018.

In tender/tender

launched

Residential ConstructionMsheireb

Development

(formerly Heart of

Doha), Qatar

5,500 370,000 sq m Msheireb is a sustainable downtown regeneration project that aims to revive the old commercial district of

Doha. The project will adhere to high standards in green building in order to reverse the energy-intensive

pattern of construction in Qatar. Upon completion, it will offer office space, retail, leisure facilities,

townhouses, upscale apartments, hotels, museums, civic services, as well as cultural and entertainment

venues. Interestingly, cars and traditional services will be strategically placed underground in several

basement levels, ensuring a pedestrian - friendly atmosphere.

2010 - 2016

Sidra residential

project/Sidra Village

137 1,165 units

(75,995 sq m)Adjacent to the new Sidra Hospital, Sidra Village will provide 1,165 flats for its nursing staff. The village will

consist of 658 one-bedroom apartments of app. 50 sq m each, and 507 two-bedroom apartments of app.

85 sq m each.

Under Construction



Source:





Residential Construction (cont'd)Barwa Al-Baraha

Workers' City

1,000 1,800,000 sq m Located in close proximity to the Industrial Area, Barwa Al Baraha development is designed to serve as an

integrated workers' city that will accommodate 53,000 low-income expats and employees, making it the

GCC's largest workers' accommodation. In January 2014 the first phase of the project was completed, thus

establishing Qatar's largest truck and vehicle parking space. As of February 2015, the second phase of the

development was still underway. It comprises the construction of 64 buildings with 132 rooms each, as well

as amenities like dining and laundry services, shops, a mosque, sports fields, used car showrooms and

office space.

Launched in 2008.

Under construction

as of February 2015

Transport InfrastructureDoha Metro 36,000 230 km and 107

stations

Running underground as well as at elevated and at-grade levels, it will consist of four lines – Red (Coast)

Line, Green (Education) Line, Gold (Historic) Line, and Blue (City) Line. During the first phase 37 stations

will be constructed and over 86.5 km of track will be laid by 2019. In the second phase (2020 – 2026), 70

stations and some 146 km of track will be added to the network.

National Railway

Network

28,800 350 km It will be built in four phases between 2015 and 2030. Phase 1 foresees the construction of approximately

143 km of operational railway track with 34 turnouts (main tracks), one station, three freight yards, one

intermodal yard, 59 bridges and 36 culverts (a tunnel for a road or drain going under a road or railroad). In

February 2015, Qatar Rail launched a new prequalification process for the civil works on the first phase.

Upon completion, the network will consist of five lines - freight line from Mesaieed Port to Ras Laffan, mixed

line (passenger and freight) from Doha to Dukhan, mixed line from Doha to Al Shamal, mixed line from

Doha to Saudi Arabia, and high speed passenger line from Doha to Bahrain.

2015

Sharq Road Project 12,000 The project consists of 12 km. series of tunnels and bridges connecting Hamad Intl Airport, Katara Cultural

Village and the Dafna/West Bay business district of Doha.

Postponed

New Doha Port 7,400 26,000,000 sq m The finished port site will have per annum capacity of 1.7 mn tonnes of general cargo, 1 mn tonnes of

grains, 500 000 vehicles, and 37 500 tonnes of livestock. The port basin will be approximately 3.8 km long,

700 m wide and 17 m deep. In addition, a new base for the Qatar Emiri Naval Forces (QENF) will be built

offshore of the new port to provide technical and logistic support. The Qatar Economic Zone 3 (QEZ3) will

also be located adjacent to the port. As of May 2015, the port site is 67% completed, while the QENF base

is 17% ready and the QEZ3 is 62% finished. A major contract award by Q2 2015 will be for the construction

of 225 buildings in the naval base. The contract for the construction of security facilities to serve the naval

base is also expected.



Source:


Major Ongoing Projects Road Infrastructure Projects

BMI, Lusail, Festival City Doha, Msheireb, Doha News, Construction Week Online, Qatar Construction News, Mazaya Holding, The Peninsula Qatar, Qatar Tenders, Barwa, MEED, Ashghal

Project

Name

Value,

USD

mn

Capacity/

Length

Overview

Transport Infrastructure (cont'd)

Light Rail

Network/

Lusail City -

Doha

2,500 45 km The rail network will have 4 lines and 38

stations at at-grade and underground levels.

The first line should be operational by 2018,

while the remaining three lines are to be

completed by 2020

Hamad

International

Airport

Extension

n/a 300,000

sq mThe extension will increase the size of the

passenger terminal to approximately 900,000 sq

m and will add 24 plane gates. Upon completion

of the extension project, HIA will have annual

capacity of 50 million passengers, 2 million

tonnes of cargo and 320,000 aircraft landings

and take-offs.

Project Name Value,

USD mnExpected

Completion

Date

New Orbital Highway and Truck route, 145 km

road section 3,760 2017

New Orbital Highway and Truck route , 44 km

road section

Contract to be awarded as of

May 2015

East West Corridor

1,070 2017

Dukhan Highway East, 9.7 km. of dual four-lane

road 1,020 2017

Lusail Expressway, 5.3 km. four-lane highway

962 2017

Rawdat Al Khail Street project, 10 km of new dual

carriageway 632

2016

Al Wakra Bypass, 11 km. of dual five-lane

carriageway 601 2017

North Road enhancements, 95.2 km. of route

594 2016

Dukhan Highway Central, 15 km. of double four-

lane road 385

2016

Al Rayaan Road, Phase 1, 2.9 km. of dual

carriageway 280 2016

Al Rayaan Road, Phase 2, 5.5 km four-lane dual

carriageway, 6 km of side roads and 11 km

associated service roads

944

2017

Local road projects 6,140

(approx. total

cost)

Q2 2016



Source:


Major Ongoing Projects - Utilities FIFA World Cup 2022 stadiums Construction, USD 4bn


Project Value,

USD mn

Capacity Expected

Completion

Status

Ras Laffan D IWPP, Ras Laffan

Industrial City

3,000 2,520 MW 2018 In tender/Tender

launched

Mega Reservoir Corridor Main 1

(Packages A&B), Doha

2,000 120 km 2016 Contract Awarded

North Doha Sewage Treatment Works

Project, Umm Slal Ali, Doha (Phase 1)

1,500 Contract Awarded

Ras Abu Fontas (RAF) A2 Seawater

Desalination Plant, Abu Fontas, Doha

502 58.4 mn m3

per year

2015 Under

construction

Al-Dhakhira city Sewerage system

project

374 Contract Awarded

Qatargas LNG Plant Wastewater plant,

Ras Laffan Industrial City

125 2016 Contract Awarded

Qatar Power Transmission System

Expansion Plan - Phase 11 (Stage 1)

948.6 km Contract Awarded

Qatar Power Transmission System

Expansion Plan - Phase 11 (Stage 2)

173 km 2016 Contract Awarded

Water and electricity plant, Umm Al-

Haul

2400 MW 2017 In tender/Tender

launched

Mesaimeer Surface and Ground Water

Tunnelling project

9.7 km 2017 Under

construction

Doha West Wastewater treatment

recycling plant Expansion

63.87 mn m3

per year

Contract Awarded

Stadium Planned Capacity Completion Date

Khalifa Intl Stadium (existing) Expansion by 15,000

seats to achiebve total

capacity of 60,000 seats

2017

Al Rayaan Stadium (existing) Demolition and

reconstruction leading to

40,000 seat capacity

2019

Qatar Foundation Stadium

(new - confirmed)

40,000 seats 2019

Al Wakrah Stadium

(new - confirmed)

45,000 seats 2018

Al Bayt Al Khor Stadium

(new - confirmed)

60,000 seats 2019

Lusail Iconic Stadium

(new - to be confirmed)

86,000 seats To be specified

Al Shamal Stadium



Doha Port Stadium



Qatar University Stadium



Al Gharafa Stadium



Sports City Stadium



Umm Salal Stadium





Source:

Qatar: Investment Climate

FDI

Regime

FDI regime is primarily regulated by Investment Law No. 13/2000. It generally limits foreign investments to 49% of the capital for most business

activities, with a Qatari partner(s) holding at least 51%. Gulf Cooperation Council nationals are treated as Qatari citizens in the ownership of

companies listed on the Qatar Exchange. However, the law allows, upon obtaining special government approval, up to 100% ownership by foreign

investors in certain sectors, including: agriculture, industry, health, education, tourism, development and exploitation of natural resources, energy,

mining, banking, insurance, business consultancy & technical services, information & communication services, cultural services, sports services,

entertainment services, and distribution services. Meanwhile, certain sectors are not open for domestic or foreign competition, including public

transportation, electricity and water, steel, cement, and fuel distribution and marketing. In these sectors, a single semi-public company has complete

or predominant market control.

A majority foreign stake in a project could be obtained only if the project fits into the country's development plans. In addition, preference is given to

projects that use raw materials available on the local market, manufacture products for export, produce a new product or use advanced technology,

facilitate the transfer of technology and know-how to the Qataris, and promote the development of national human resources.

In bids for government procurement the country treats preferentially suppliers that use local materials. As a rule, participation in tenders with a value

of QAR 1mn or less is confined to local contractors registered by the Qatar Chamber of Commerce, and tenders with a value of more than this

amount do not require any local commercial registration for participation, but in practice certain exceptions exist.

Right to

Private

Ownership

and

Establishment

The establishment of all private business entities in Qatar is regulated by the Commercial Companies Law, Law No. 5/2002.

Law No.15/1990 prohibits that foreign investors engage in a joint stock company with Qatari partners. As a consequence, joint ventures involving

foreign partners are usually established as limited liability partnerships. Foreign partners in ventures organised as limited liability partnerships must

pay the full amount of their contribution to capital in cash, or in kind, prior to the start of operations. Usually, such firms are required to set aside 10%

of profits each year in a statutory reserve until it equals 50% of the venture's authorised capital. This requirement is the only legal restriction to a

foreign company desiring to repatriate all of its annual profit after tax deduction.

Since August 2014, foreign investors can hold up to a combined total of 49% of the shares of Qatari companies listed on the Qatari Exchange.

Upon government approval, non-Qataris may have the right to land use over real estate for a renewable term of 99 years.

Depending on the case, foreign investors might be offered incentives that include natural gas priced at 0.6-0.75 USD per MBTU (Million British

Thermal Units); electricity offered at less than 0.02 USD per KWH; industrial land offered at 0.27 USD per sq m per year for a period of 50 years,

including options for renewing the lease; exemption from customs duties on imports of machinery, equipment and spare parts; exemption from

export duties; exemption from corporate taxes for up to 10 years and from income taxes; low cost financing through Qatar Development Bank

(QDB); and flexible immigration and employment rules to enable the import of foreign labour.

US Department of State, May 2015



Source:

Qatar: Investment Climate (cont’d)

Tax Rates

and

Access to

Credit

.

Dispute

Settlement

Being a signatory to the 1958 New York Convention and a member of the International Center for the Settlement of Investment Disputes (ICSID),

Qatar accepts binding international arbitration in case of investment disputes.

The local legal establishments that facilitate dispute settlement include the Alternative Dispute Resolution (ADR) Centre as well as the International

Court and Dispute Resolution Centre.

There is no set duration for dispute resolution and the time to obtain a resolution depends on the case. The Qatar International Court and Dispute

Resolution Centre publishes past judgments on its website, which may be used as a reference: http://www.qfccourt.com/Judgement.html.

Labour

Conditions

Qatar's labour force consists primarily of expatriate workers. As of February 2015, non-Qatari residents are estimated to be around 89% of the population in the

country, making up for one of the world’s highest ratios of migrant workers to population. The largest group of foreign workers comes from the Indian sub-continent.

All expatriate labour must have a Qatari sponsor. Therefore, foreign investors should start discussing labour visa issues with their sponsors/local agents/partners in

the early stages of contract negotiation. In order to bring an expatriate employee into the country, sponsors must submit a request to the labour ministry. It controls

the number of workers that may come to Qatar through a quota system. The country has labour agreements with some countries that stipulate a minimum wage for

certain types of work, but in general minimum wage is not regulated by the government. Since 2004, Qatari citizens have the right to form workers' committees in

private enterprises with more than 100 Qatari citizen workers. Non-citizens are not eligible to form worker committees. Workers in the government sector, regardless

of their nationality, are not allowed to join unions. Under the labour law, workers are granted the right to bargain collectively and to sign joint agreements. However,

collective bargaining is not freely practiced, and the US Department of State reports that there are no workers employed under collective bargaining contracts.


Since 2010, all non-Qatari companies and foreign partners in Qatari companies are subject to a 10% (corporate) flat rate. The only exception is in the

energy sector where there is a 35% tax rate on all oil and gas operations, unless exempted by Emiri Decree. Qatari nationals do not pay any kind of

corporate or income tax, except the “zakat” that amounts to around 2.5% of profits.

Under Law No. 13/2000, the finance ministry may grant a tax holiday of up to 10 years for new foreign investments in key sectors. Other exemptions

may be granted under Law No. 21/2009 on a case-by-case basis for a period of up to 6 years.

There is no restriction on the flow of capital and the US Department of State reports that foreign companies are essentially treated the same as local

ones. Almost all import transactions are controlled by standard letters of credit processed by local banks and their correspondent banks in the

exporting countries. Credit facilities are provided to local and foreign investors within the framework of standard international banking practices.

Foreign investors are usually required to have a guarantee from their local sponsor/local equity partner.



IV. Saudi Arabia



Saudi Arabia: Sector Highlights

Currently, construction in Saudi Arabia benefits from extensive government investments in the sector. Thanks to its strong oil reserves, the state provides robustsupport to the infrastructure segment (transport, energy & utilities, social) as it is building a strong industrial base to sustain its economy in the future when oilreserves will eventually shrink. Besides the diversification policy, some other key growth drivers are the rapidly growing demographics (implying increasedresidential and commercial building), the religious tourism to the Muslim world’s two holiest shrines of Makkah and Madinah (implying expansion of the Grandmosques and the cities around them), as well as beneficial government policies (expected relaxation of foreign investment laws that would permit 100% foreignownership).

Growth Drivers

Non-residential Construction

The residential segment is growing healthily as, among other projects, the government has launched a USD 68bn housing program, aiming to

address the housing shortage among lower income Saudis. The construction of 500,000 housing units with adjacent facilities started in 2011 and

will be completed in 2016. In addition, more than 17,000 residential villas will be constructed over the same period in order to house the Saudi

National Guard personnel and their families.

Some of the most impressive non-residential projects that are currently being undertaken in Saudi Arabia comprise the construction of four

economic cities at total cost of USD 163bn. Each of them, being designed around at least one globally competitive industry, would become a

vigorous driver of growth by attracting foreign and local investments, opening up the economy and ultimately making it less dependent on oil and

gas. Other mega projects in the segment include the USD 40bn business and industrial Sudair City, and the USD 7.5bn Waad Al Shamaal

Phosphate City.

The Saudi government has allocated enormous investments for transport infrastructure. The major project in the subsector is the construction of a 9,900 km longnational railway network – it is underway and should be finished by 2040 at a total cost of USD 97bn. Public transportation developments are also gainingmomentum with multibillion metro networks being built in Riyadh, Jeddah, and Makkah. The USD 28bn expansion of King Abdulaziz Intl Airport stands out amongthe multitude of airport infrastructure projects in the country.

The Saudi government is also heavily investing in social infrastructure. Currently, there are ongoing works on the rehabilitation of 500 schools, construction of 3universities, 27 new hospitals and health facilities, and 8 medical cities.

Infrastructure




Source:

Comments

Saudi Arabia: Economic Indicators

The Saudi economy grew at a robust CAGR of 5.2% over the 2009-2014 period. BMI Research experts project favorable 3.7% y/y growth in 2015, despitethe drop of oil prices. BMI Research claims that economic advancement will be driven by strong fiscal stimulus and high oil production but expects theireffect to lessen from 2016 onwards. Moderate inflation is anticipated in 2015 at 3.2% y/y change of the consumer price index. However, in the mid-terminflation may rise following the extended period of robust growth, coupled with loose fiscal and monetary policy.It is worth noting that between 2011 and 2014 construction grew intensively by a CAGR of 12.6% - at a much faster pace than the economy, whichincreased by 3.8% a year during the same period.


CEIC, World Bank, Ministry of Economy and Planning – Saudi Arabia, Oxford Economics, BMI

2009 2010 2011 2012 2013 2014


GDP, constant prices 2010 (SAR bn) n/a 1,976 2,172 2,289 2,350 2,432


GDP, current prices (SAR bn) 1,609 1,976 2,511 2,752 2,791 2,798

Real GDP Growth Rate (%) 1.8 4.8 10.0 5.4 2.7 3.5

GDP: Producer Values: Building and Construction, (SAR bn) 80 91 107 119 135 153

GDP: Producer Values: Building and Construction, Growth Rate

(%) 0.9 12.9 17.9 10.7 13.6 13.7

Foreign Direct Investment, net inflows (USD bn, current) 36.5 29.2 16.3 12.2 9.3 n/a

Consumer Price Index (%) 5.1 5.3 5.8 2.9 3.5 2.7



Source:

Comments

Saudi Arabia: Construction Industry Forecast

Experts from Oxford Economics project an almost twofold increase of the Saudi construction output value-added index in 2030 compared to

2015. The development of the sector in Saudi Arabia would thus closely follow the estimates for Africa and would be a bit below those for the

Middle East. Sector growth by 2020 will be driven mainly by the huge investments in the four economic cities, in rail and public transportation

infrastructure, and in energy and utilities infrastructure. However, BMI experts allow for possible cancellations of major infrastructure projects

due to redirection of funds and attention to the possible Saudi military intervention in Iraq or Yemen.


Oxford Economics, BMI Research, EMIS Insight

100108

122

148

180

100

113

138

168

202

100107

120

148

182

2015 2017 2020 2025 2030

Saudi Arabia Middle East Africa



Source:

Saudi Arabia: Construction Data

Building Permits Issued

Building Permits Issued by Region, 2014

Licensed Building Area

Licensed Building Area by Region, 2014

CEIC, Ministry of Municipal and Rural Affairs – Saudi Arabia

Riyadh 25.7%

Makkah 23.6%

Eastern Province16.0%

Qaseem 8.1%

Madinah 7.1%

Asir 5.6%

Hail 3.3%

Tabouk…

Jawf 2.1%Najran 1.8%

Other 4.0%

Riyadh 25.3%

Eastern Province19.7%

Makkah 17.7%Asir 9.2%

Qaseem 7.9%

Madinah 6.8%

Hail 2.8%

Tabouk…

Jazan 2.1%Northern Border 2.1%

Other 4.0%

89,7

87 112,

362

100,

756 11

7,07

8

113,

519

5.6%

25.1%

-10.3%

16.2%

-3.0%

2010 2011 2012 2013 2014

Building permits issued, units YoY change, %

40,4

02

46,7

72 53,5

88

49,4

27

47,5

49

-2.4%

15.8% 14.6%

-7.8% -3.8%

2010 2011 2012 2013 2014

Licenced building area, thou sq.m. YoY change, %



Source:

Saudi Arabia: Major Construction Projects

Alfanar, MEED, Construction Week Online, Oil & Gas Journal, Dar Al-Handasah, Gulf Business, Arab News, American Council of Engineering Companies, Arabtec, Yasref, Arabian Business, The National, Emaar, BBC, CNN, Ernst & Young, The GCC Power and Water Forum, Business Korea, Creamer Media’s Engineering News, Hajr Electricity Production Company, Arabian Bemco, Parsons, Bechtel, Oxford Business Group


Commercial Construction

King Abdullah

Economic City

(KAEC)

100,000 181,000,000 sq m Located some 100 km north of Jeddah, KAEC is being built from scratch on previously unoccupied desert

land. Once completed, the impressive mixed-use development will consist of 4 key components – King

Abdullah Port, Industrial Valley, Downtown, and Coastal Communities. KAEC will benefit from

sophisticated multi-modal connectivity by sea, rail, and road. According to BBC News, as of March 2015

only 15% of the project has been developed. As of May 2015 KAEC’s population was about 3,000 people;

it is expected to roughly double by the end of 2015 and hit 50,000 by end-2020, rising to the ultimate target

of 2mn around 2035.

Q2 2006 - Q1 2020

Sudair City

Development

40,000 The development comprises the construction of a business and industrial city in Sudair, 120 km north of

Riyadh. The future city, spreading over approx. 265 sq km, will accommodate about 1mn residents and is

designed to alleviate the growing congestion in Riyadh and reduce migration to the capital city.

It will include commercial, residential, technological, sports and leisure areas, and will be intersected by

several key services, including the north-south railway and the country’s main east-west oil pipeline. Now

in execution stage, the budget for the project has subsequently been revised upwards from USD 16bn to

USD 40bn, as announced by MEED.

Expected completion

Q4 2029

Jazan Economic

City (JEC)

27,000 100,000,000 sq m JEC is being built 60 km northwest of Jazan city on the Red Sea coast. It is being developed with a focus

on energy and labour-intensive industries. Once completed, the development will feature a port, an

industrial zone, commercial and cultural centres, residential areas, and academic and vocational training

institutions.

Expected completion

Q4 2036

Knowledge

Economic City

(KEC)

8,000 4,800,000 sq m site

area,

9,000,000 sq m

built-up area

KEC, which is being built on the outskirts of Medina, is focused on knowledge-based industries, including

information technology and life sciences. The project is a mixed-use development offering commercial,

residential, educational, and hospitality amenities as well.

Q2 2009 - Q4 2020

Prince Abdulaziz

Bin Mousaed

Economic City

(PABMEC)

8,000 156,000,000 sq m PABMEC will be built in the city of Hail with a focus on logistics & transportation, agriculture, minerals and

construction materials. Among its key components will be a logistic & transportation centre, an agro-

industrial zone, a knowledge centre, a petrochemical industries district, a residential area, an

entertainment area, and a mining centre.

2009 - 2025 As of

2015 the project is on

hold, after the design

stage has been

executed.



Source:

Saudi Arabia: Major Construction Projects (cont’d)


Commercial Construction (cont'd)

Abraj Kudai Towers

in Makkah

3,500 60,000 sq m site area

1,400,000 sq m built-

up area

The project is a mixed-use residential and commercial complex that consists of a large podium topped by

12 towers. In addition, it accommodates facilities like a shopping mall, restaurants and food courts, a

convention centre and car parking lots.

Q4 2013 - Q1 2019

Jabal Omar

Development in

Makkah

2,700 2,500,000 sq m The mixed-use project foresees the construction of a residential and commercial centre in an area close to

the Grand mosque in Makkah. The development, which would be built in 5 stages, consists of 39

commercial and residential towers. The area of the development has been divided into two areas, the

northern area which includes fourteen 6-storey buildings and a 6-storey prayer building, and the southern

area with includes the other towers.

Q3 2008 - Q1 2020

Jeddah Gate

Development

1,600 553,000 sq m site

area

Jeddah Gate is a massive development located in the heart of Jeddah. It is positioned on two sites -the

first is spread over 413,000 sq m and the second is spread over 140,000 sq m. Upon completion, the

project will become the new centre of the city, comprising 6,000 residential units, 230,000 sq m of

commercial space and 75,000 sq m of gross rentable area for retailers.

Q1 2008 - Q1 2020

Kingdom Tower in

Jeddah

approx. 1,230 Height of more than

1,000 m

As of June 2015 final height was not yet confirmed. Expected completion

by the end-2018


Saudi Housing

Project

68,000 500,000 residential

units

After the social discontent uprisings in the Arab world in 2011, the late King Abdullah announced a plan to

build 500,000 homes in Saudi Arabia over several years. Aiming to reduce home shortages and

depressed living standards, that are politically sensitive, the plan foresees the construction of homes

throughout the country - spreading out from Tabouk in the north to Khamis Mushayt in the south and from

Dammam in the east to Jeddah in the west. However, the project timeframe has been delayed due to

sluggish bureaucracies, difficulties in obtaining suitable land and the complexity of allocating aid. To

address these bottlenecks, the housing ministry has revised its strategy and in 2014 it adopted a new

program dubbed ESKAN - the Arabic word for housing. Under the new scheme, Saudi families seeking

assistance, in the form of state-subsidised home loans or subsidised sales of land or housing units, are

being given two months to register on a website. Once approved, applicants will pay for their subsidised

homes or land, or pay off their loans, in monthly instalments over 10 years through a 25% deduction of

their monthly income, as explained by Reuters.

Q3 2011 -Q3 2016

Completion date is

likely to be extended

due to bureaucratic

difficulties




Source:



Residential Construction (cont'd)

National Guards'

Housing Project:

Phase 2

3,600 The project aims to provide the Saudi National Guard personnel with comfortable living facilities and

services. Its second phase involves the construction of 17,200 residential villas and 15 schools in the

National Guard residential cities located in Riyadh, Jeddah, Dammam, Hail, Al-Qassim, Madinah, Hofuf,

Taif, and Yanbu.

2011 -2016

Construction of

5,000 Villas in

Eastern Province

1,350 6,000,000 sq m site

area 1,600,000 sq m

built-up area

The residential development consists of 5,000 Villas of Type “A and B” and includes complete

infrastructure works. The housing site is divided into 5 developments. The project should have been

finished in Q4 2014, but according to the contractor, Arabtec Construction LLC, the works are ongoing as

of July 2015.

Q4 2010 - ongoing

(according to the

website of Arabtec

Construction LLC)

Energy, Utilities and Mining

Yanbu Refinery

Project (Yasref)

10,000 400,000 bpd (barrel

per day)

Yanbu Refinery, also known as the Red Sea Refining Company RSRC Refinery or YASREF, is an

integrated petroleum refinery. It processes 100% Arabian Heavy Crude and produces gasoline, high

quality diesel, and liquefied petroleum gases (LPG) as well as byproduct sulfur and petroleum coke for

export. The refinery includes processing units for the separation and conversion of the feed crude into

finished products, utility and offsite systems to support the refinery operation, and associated feed,

intermediate and product storage facilities. The refinery is scheduled to reach its full capacity in Q2 2015.

However, it has gradually started shipping since January 2015.

Q3 2010 - Q1 2015

Waad Al Shamaal

Phosphate City

Development

7,500 440,000,000 sq m Once completed, the city will have a mining complex with seven world-scale phosphate processing

facilities. In addition, the city will be able to accommodate about 100,000 people - industrial workers and

their families.

2013 - 2022

Rabigh Power Plant

Extension: Phase 6

3,400 The plant expansion would boost the region’s generation capacity by 2,800 megawatts. The project

comprises production, installation and test of equipment and facilities at the plant, which will generate

power using four 700 megawatt units.

2010 - 2015

Shuqaiq Steam

Power Plant

3,300 2,640 MW Shuqaiq Thermal Power Plant is scheduled to be built at around 135 km north of Jazan. It is designed as a

2,640 MW heavy oil-fired supercritical pressure power plant.

Q3 2013 - Q3 2018




Source:



Energy, Utilities and Mining (cont'd)Jeddah South

Thermal Power

Plant

3,120 2,640 MW Once completed, the oil-fired thermal power plant will be able to produce enough electricity for about two

million people, or 5% of Saudi Arabia’s entire power generation capacity.

Expected completion

by the end of 2017

Wasit Gas Plant 1,900 3,000,000,000 cfd

(cu feet/day)

The construction of the Wasit gas plant, located north of Jubail, is commissioned by Saudi Aramco. Upon

completion, it will be one of the largest gas plants not linked to oil wells ever built by the company. The

plant will have capacity to process up to three billion cubic feet per day of non-associated gas from the

offshore fields Hasbah and Arabiyah. Saudi Aramco claims that Wasit and another project, Karan, that has

been in operation since 2012, will likely boost Saudi Arabian natural gas output by an estimated 40%.

Although construction of the main Wasit plant was almost finished in April, 2015, the complex will not be

fully operational before the end of 2015 or the first quarter of 2016, according to Gulf Business and Arab

News sources.

Q1 2011 - Q4

2015/Q1 2016

Jazan IGCC

(integrated

gasification

combined-cycle)

Power Plant

1,700 Upon completion, the Jazan IGCC complex’s gasification unit will have a capacity to convert vacuum

residue produced in the adjacent Jazan refinery into 2.11 million normal cu m/hr of syngas that will be

evenly used to produce purified hydrogen for the refinery and to fuel the IGCC plant. The total output of the

plant is expected to be app. 2,400 MW.

Q2 2014 - Q4 2017

Rabigh 2 IPP 1,600 2,060 MW The Rabigh II Independent Power Plant will use natural gas as its main fuel and Arabian super light as its

backup fuel, with the application of a combined-cycle power plant in a configuration of three groups, each

comprising two gas turbines of enhanced efficiency, two heat recovery steam generators and one triple-

pressure steam turbine, as explained by Engineering News.

Commercial operation

should begin in 2017

Riyadh PP10

Steam Turbines

Power Plant

1,434 1,300 MW The project scope is to convert the Simple Cycle Gas Turbine (SCGT) Plant in Riyadh to Combined Cycle

Gas Turbine Plant for blocks A1, A2, B1, B2 and C1 including supply of common balance of plant for all

blocks. The configuration of each combined cycle block will include 4 Gas Turbine Generators + 4 Heat

Recovery Steam Generating (HRSG) units + 1 Steam Turbine Generator + 1 Air Cooled Condenser with

a total of 10 Blocks with provision for installation of TIAC System in the future.

Q4 2011 - Q3 2015

Riyadh PP12

Combined Cycle

Power Plant

1,260 2,175 MW (1,740

MW after deducting

all plant auxiliary

consumption at

ambient condition)

The plant site is located 100 km west of Riyadh. It will use sales gas as primary fuel and Distillate and

Arabian Super Light as secondary. The configuration of each combined cycle block will include 4 Gas

Turbine Generators + 4 Heat Recovery Steam Generating (HRSG) units + 1 Steam Turbine Generators +

1 Air Cooled Condensers.

Q2 2012 - Q2 2015

Alfanar, MEED, Construction Week Online, Oil & Gas Journal, Dar Al-Handasah, Gulf Business, Arab News, American Council of Engineering Companies, Arabtec, Yasref, Arabian Business, The National, Emaar, BBC, CNN, Ernst & Young, The GCC Power and Water Forum, Business Korea, Creamer Media’s Engineering News, HajrElectricity Production Company, Arabian Bemco, Parsons, Bechtel, Oxford Business Group



Source:



Social InfrastructureExpansion of the

Grand Mosque in

Makkah

Over 26,000 1,470,000 sq m The Grand Mosque is currently undergoing a third expansion following the expansion works commenced

by late King Abdullah in 2011. By far, they are estimated to amount at around USD 26 bn, and the third

expansion plan is set to surpass that. It consists of five large projects, including the King Abdullah

Expansion Structure, courtyards, tunnels, buildings for service facilities and the first ring road. The plan

foresees the construction of 1.47mn sq m of development, capable of hosting 1.6mn worshipers, with 78

gates at the ground floor surrounding the expansion building.

Q1 2010 - Q1 2016

King Abdullah bin

Abdulaziz Medical

City

6,800 2,600,000 sq m built-

up area

King Abdullah bin Abdulaziz Medical City Project encompasses two medical complexes situated in Riyadh

and Jeddah. Each one of them costs USD 3.4bn and comprises the construction and fit-out of two medical

complexes with built-up area of 1.3mn sq m each and individual capacity of 1,000 beds for security forces

and their families.

2015 - 2020

Rehabilitation

Centres for

Prisoners

3,400 2011 - 2017

King Khalid Medical

City in Dammam

1,200 700,000 sq m King Khalid Medical City (KKMC) will be built some 20 km southwest of Dhahran. The campus will consist

of a 1,500-bed hospital, as well as residential buildings, a hotel, a commercial complex, educational

facilities, a research centre, and recreational facilities.

Expected completion

in 2018

King Abdullah

Medical City,

Makkah

1,067 Among other facilities, the medical city would include a 150-bed cardiac centre, a 100-bed centre

specialising in surgery and organ transplants, and a 200-bed cancer treatment and surgery unit, as

specified by Oxford Economics.

The project is in

prequalification phase

King Faisal Medical

City in Asir, Phases

1 & 2

507 157,862 sq m (Phase

2)

The medical city is being built in two phases. Phase 1 that comprises the construction of a 500-bed

hospital, is scheduled for completion by May 2015 The remainder of the contract should be finished until

April 2017. It will consist of an 850-bed hospital building with 5 centres for cardiac, oncology,

neuroscience, ophthalmology and rehabilitation activities

Expected completion

by April 2017.

King Fhad Medical

City (KFMC)

Expansion, Riyadh

426 The expansion of KFMC foresees the construction of a 510-bed medical city, a 50,000 sq m Neuroscience

Centre, a 55,000 sq m Cancer Centre, a 4-storey Cardiac Centre, a 4-storey Service Building, and

associated facilities.

Expected completion

by the end of 2016

Prince Mohammad

Bin Abdul Aziz

Medical City in Al

Jouf, Phases 1 & 2

312 2,000,000 sq m site

area

The project foresees the construction of two 500-bed hospital buildings in two phases. Expected completion

for Phase 1 by

October 2015/ Phase

2 by October 2017




Source:



Transport InfrastructureNational Railway

Network

97,000 9,900 km During the first USD 16.8 bn stage, continuing from 2010 to 2025, 5,500 km are to be built. In the second

USD 55.7 bn phase 3,000 km are to be built between 2026 and 2033. In the last USD 24.8 bn stage, 1 400

km of railway will be constructed between 2034 and 2040. Among other improvements and construction

works, the first stage foresees the construction of the connection to the GCC railway network with lines

between Batha at the UAE border - Hofuf and Jubail - Ras Al Khair - Kuwait border, as well to Qatar and

Bahrain. In addition, some other major projects that are part of the first 2010-2025 phase are the railway

landbridge between Riyadh and Jeddah, the Haramain high speed railway connecting Makkah – Jeddah –

Madinah, and the north-south mineral line between the northern regions, Ras Al Khair/Jubail and the

capital Riyadh.

Expected completion

for Phase 1 by

2025/Phase 2 by

2033/Phase 3 by 2040

Jeddah Public

Transportation

Program (JPTP)

approx. 35,000 approx. 1,300 km The Masterplan of Jeddah Public Transportation foresees the construction of a 1,356 km multi modal

public transport system. It will consist of a metro network of 149 km, a 16 km tram and 74 km light rail

transit system, a 308 km rapid bus network and 210 km major bus routes, 350 km of local bus feeder, and

195 km of commuter rail.

The Project should be

completed by 2033

King Abdulaziz

International Airport

(KAIA) Expansion

approx. 28,000 KAIA is undergoing a massive expansion that is organised in three phases. Upon completion, the

expansion would lead to ultimate capacity of around 80mn passengers a year. While Phase 1, costing

about USD 7bn, is being finalised in 2014-2015, Phases 2 & 3 are in study stage.

Q4 2010 - Q4 2035

Riyadh Metro Rail

Project

23,000 178 km Once completed, the metro network will comprise six lines and 85 stations including underground,

elevated and at-grade sections. In addition, an 85 km three-line Bus Rapid Network (BRT) will be built and

integrated with the metro stations

Q3 2013 - Q4 2018

Makkah Metro Rail

Project

16,000 182 km The Makkah metro will consist of 4 lines and 88 stations, whose construction will be spread over 3 phases.

Phase 1 will take 3 years and cost USD 6.8bn. Phase 2 should be completed for 5 years at a cost of USD

5bn, and the final USD 4.5bn stage will take 2 years.

2015 - 2025 estimated

Asir - Jazan Road

Connection

1,600 135 km The road would stretch from Al-Far'a recreation park in the south of Abha to Beesh in the north of Jazan

area. Tender documentation concerning the construction of the road was accepted until April 5th, 2015.

Makkah - Jazan

Road Connection

1,100 The tender documentation concerning the construction of the road was accepted until April 20th, 2015.

Alfanar,MEED, Construction Week Online, Oil & Gas Journal, Dar Al-Handasah, Gulf Business, Arab News, American Council of Engineering Companies, Arabtec, Yasref, Arabian Business, The National, Emaar, BBC, CNN, Ernst & Young, The GCC Power and Water Forum, Business Korea, Creamer Media’s Engineering News, Hajr Electricity Production Company, Arabian Bemco, Parsons, Bechtel, Oxford Business Group



Source:


Ongoing Airport Expansion Projects Road Infrastructure Projects, Saudi Arabia

Saudi Tenders, Alfanar, Arab News, NACO - Netherlands Airport Consultants, SUSRIS – Saudi-US relations information service, Zawya

Projects via KFHR

Project City Value, USD

mn

Expansion Scope

Abha Regional Airport Abha 1,000From 9,400 sq m to 78,000

sq m and annual capacity of

5mn passengersKing Abdullah bin Abdulaziz

Airport

Jizan 900 Construction of a new 55,000

sq m airport with annual

capacity of 3.6mn

passengers.King Khalid International

Airport

Riyadh 500Capacity expansion from 15

to 20-25mn passengers a

yearAl Qassim Domestic Airport Buraydah 270

From 5,500 sq m to 36,000


1.5mn passengersAl Baha Domestic Airport Al Baha 160

Annual capacity expansion

from 200,000 to 500,000

passengersAl Jouf Domestic Airport Al Jouf 100

From 2,900 sq m to 13,000


1mn passengersArar Domestic Airport Arar 84

From 1,810 sq m to 7,560 sq

m and annual capacity of

518,000 passengersNew International Airport Taif Tender is in

progress as of

June 2015

Upon completion, the 57 sq

km airport will have annual

capacity of 400,000

passengers.

Project Value,

USD mn

Expected

Completion Date

Rennovation of Qulaiba-Abu Ajram road 757.0 Q2 2015

Jubail - Al Qassim expressway 97.0 July 2016

Hail - Madina dual carriageway extension 48.0 July 2016

Riyadh Roads - Group 20 48.0 Q1 2017

Abu Hadriyah/ Hafr Al Batin/ Rafha road refurbishment 37.3 H2 2015

Madina to Tabouk expressway road 37.3 Project in progress as

of May 2015

Northern Borders roads rehabilitation 37.1 January 2016

Al Jamjom to Al Zema highway 37.0 2017

Jazan coastal highway extension 37.0 Project in progress as

of May 2015

Yanbu to Al Sharaf roads repair 35.0 December 2015

Al Kharj to Al Gwayiyyah dual carriageway 33.4 July 2016

King Fahed and Rawda road intersection 28.8 Q2 2015

Al Jawf Main Roads - Group 1 27.5 H1 2016

Jazan agricultural roads - Group 26 27.2 July 2016

Madina roads extension - Group 17 24.0 July 2016

Riyadh roads extension 27.2 July 2016

Jazan roads extension 22.5 July 2015

Makkah Road Group 21 22.5 September 2016

Al Kharj to Riyadh/Dammam highway dualisation

diversion 21.5 July 2016

Smaller projects 288.0

(total value)

Projects in progress as

of May 2015



Source:

Saudi Arabia: Investment Climate

FDI

Regime

The US Department of State considers Saudi Arabia as an attractive and relatively stable market for investment. The Saudi foreign direct investment law permits

foreigners to invest in almost all sectors of the economy with priority being given to investments in industry, transportation, education, health, communications

technology, life sciences, and energy; as well as in the four "Economic Cities" that are at various stages of development. However, there is a “negative list” that

currently prohibits FDI in 2 industrial sectors and 13 service sectors, among them real estate investment in Mecca and Medina, some subsectors in printing and

publishing, audiovisual services, land transportation services excluding inter-city transport by trains, and upstream petroleum. All foreign investment projects in

Saudi Arabia must obtain a license from the Saudi Arabian General Investment Authority (SAGIA). Investments in specific sectors may require additional licences

from other government authorities, including, but not limited to, the Saudi Arabian Monetary Agency (SAMA), the Capital Market Authority (CMA), or the

Communications and Information Technology Commission (CITC). SAGIA licences should be granted or refused within 30 days of receiving an application and

supporting documentation from the prospective investor. In an attempt to ensure that investors do not just acquire and hold licenses without investing, SAGIA

performs periodic licence reviews. However, these reviews might be seen as disincentive to longer-term investment commitments as the possibility of cancellation

adds uncertainty for investors. While SAGIA has set up the infrastructure to support foreign investment, the US Department of State notes that many companies

consider the process cumbersome and time-consuming.

Importantly, SAGIA is responsible to maintain and review periodically the activities included in the “negative list” of sectors with prohibited FDI regime.

Right to

Private

Ownership

and

Establishment

Foreign investors are not required to take local partners in many sectors and may own real estate for company activities. However, offices practicing law, accounting and auditing, design, architecture, engineering, or civil planning or providing healthcare, dental, or veterinary services must have a Saudi partner with holding at least 25% stake of the total investment.

Foreign investors are allowed to transfer money from their Saudi-based enterprises outside of the country and can also sponsor foreign employees. The minimum capital requirements to establish business entities range from zero to SAR 30mn (USD 8mn) depending on the sector and the type of investment.

Foreign partners in service and contracting ventures organised as limited-liability partnerships must pay, in cash or in kind, 100% of their contribution to the authorised capital. Despite the bureaucracy and red tape that accompany the establishment of such an entity, foreign investment is generally welcome in Saudi Arabia as long as it promotes economic development, transfers foreign expertise to Saudi Arabia, creates jobs for Saudis, and/or expands Saudi exports. There are no legal requirements for foreign investors topurchase from local sources or export a certain percentage of output, and their access to foreign exchange is unlimited. While not required to procure from local sources, investors may avoid import duties on raw materials only if they can prove that these are not available locally. There is no requirement that the share of foreign equity be reduced over time. Investors are not required to disclose proprietary information as part of the regulatory approval process, except where issues of health and safety are concerned.




Source:

Saudi Arabia: Investment Climate (cont’d)

Tax Rates

and

Access to

Credit

In July 2003, the corporate tax rate on foreign investors was lowered to a flat 20%. It replaced a tiered system with tax rates as high as 45%. While

this has been a step towards a more balanced treatment of foreign and Saudi-owned capital, the government tax policy still favours Saudi

companies and joint ventures with Saudi participation. Hence, Saudi investors do not pay corporate income tax, but are subject to a 2.5% tax, or

“zakat,” on net current assets.

After the financial crisis of 2008, followed by the default on USD 20bn in debt by two Saudi business concerns and the debt restructuring in Dubai,

credit availability has been limited to all parties. Credit became somewhat more available in 2011 and 2012, but extraordinary public spending has

limited the demand for private lending. In addition to large-scale supplemental programmes, credit is available from several government institutions,

such as the Saudi Industrial Development Fund, which allocate credit based on government-set criteria rather than market conditions. In order to

qualify for credit, companies must have a legal presence in Saudi Arabia. The private sector has access to term loans, and there have been a

number of issuances of sharia-compliant bonds, known as "sukuk," but there is no fully developed corporate bond market.

Dispute

Settlement

The US Department of State notes that Saudi Arabia does not offer a transparent and comprehensive legal framework for resolving commercial

disputes although the government is making progress in this direction. The indicator that affects most negatively the country’s ranking in the World

Bank’s “Doing Business” report is resolving insolvency, on which it ranks 163rd out of 189 economies (data from June, 2014).

Disputes with the government and over commercial issues generally fall under the jurisdiction of the Saudi Board of Grievances. The Board also

reviews all foreign arbitral awards and foreign court decisions to ensure that they comply with Sharia law. This review process can take years, and

outcomes are unpredictable. Even after a decision is reached in a dispute, enforcement of a judgment can take years. Therefore it is highly

advisable to consult with local counsel prior to investing in order to review legal options and appropriate contractual provisions for dispute resolution.

Labour

Conditions

Recruitment of expatriate labour in Saudi Arabia is regulated by the labour ministry and the interior ministry. The large majority of the private sector workforce

consists of workers coming from Bangladesh, Egypt, India, Pakistan, the Philippines, and Yemen with Westerners making up less than 2% of the labour force.

However, the labour ministry aims to reduce the expatriate population from approximately 30% currently to 20% of the total population. Hence, the government

encourages the so-called “saudisation” - recruitment of Saudi employees - through a series of incentives and limits placed on the number of visas for foreign

workers available to companies. The “Nitaqat” plan, which was rolled out in 2011, has divided companies into sectors, each with a different set of quotas for Saudi

employment based on company size. In 2013, the labour and interior ministries launched a campaign to deport illegal and improperly documented workers, which

has resulted in higher labour costs for many businesses. In addition, all companies operating in Saudi Arabia, regardless of sector or size, are currently obliged to

pay USD 640 per year for each expatriate employee in excess of the number of the company’s Saudi employees. Saudi labour law forbids union activity, strikes,

and collective bargaining. However, the government allows companies that employ more than 100 Saudis to form "labour committees". The minimum age for

employment is 14.




V. United Arab Emirates



Source:

United Arab Emirates: Sector Highlights

Construction

Activity

in the

Emirate of

Dubai

Within the UAE, the emirate of Dubai is the undisputed leader in terms of construction activity. The emirate is far ahead of the other emirates in

terms of buildings that are completed or are under construction. In 2014, some 7,400 buildings were finished there with 57% of them being

residential villas (built both for private and investment purposes) and 32% being commercial space. The number of completed buildings in 2014 grew

by 5.6% y/y and continued the trend of recovery after the 2009 crash of the real estate market in Dubai. Within the 2010–2014 period, the residential

and commercial segments were the most volatile ones. The number of completed buildings dropped sharply in 2011-2012 but also led the 2013-

2014 recovery, reflecting directly the market instability.

The value of completed buildings in 2014 was AED 27.1bn – a 25% increase compared to the previous year. Value was mainly contributed by multi

storey developments – tall mixed-use buildings accounted for 39% of the total value in the sector in 2014.

Over the 2010–2014 period, construction in Dubai hit rock bottom in 2012. The value of completed buildings, which was around AED 16bn that year,

was grossly half the value realised in 2010. However, the sector has recovered rapidly and is now on its way to reach its 2010 value levels thanks to

tighter regulations, coupled with strong fundamental demand.

In 2014, approximately 21,000 buildings were under construction in the emirate of Dubai. Their number decreased by 24.1% y/y mainly due to the

sharp decrease of stores under development, which dropped by almost 63% y/y. On the other hand, investment villas under construction have

partially offset the decline of commercial space. Notably, their number almost tripled in 2014 compared to 2013.

Construction

Activity

In

Other

Emirates

The construction activity in the emirates of Abu Dhabi, Ajman, and Fujairah was weaker than that in Dubai. For instance, in

2014 around 3,300 buildings were completed in the emirate of Abu Dhabi – less than half of the number for the same year

in Dubai. Marking a substantial 51% y/y decline, the drop in Abu Dhabi is mainly attributed to the residential segment.

Indeed, the completed residential buildings in 2014 were 53% less than in 2013.

BMI experts note that the biggest risk in the Emirati construction sector over the 2015-2020 period stems namely from

private investment in Abu Dhabi - it could be adversely affected by lower oil prices as the economy of the emirate is

strongly dependent on oil.

In 2014, some 2,600 building permits were issued in the emirate of Fujairah, almost half of them concerning residential

developments. Although over the 2010-2014 period the number of permits issued per annum remained relatively stable,

the emirate saw a major increase of the licensed area in 2014. More than 1.6mn sq m were licensed for construction,

almost double the previous year.

EMIS Insight



Source:

Comments

United Arab Emirates: Economic Indicators

The Emirati economy grew steadily at a CAGR of 4% over the 2009-2014 period. BMI experts anticipate 4% y/y real GDP growth in 2015. Dubai will continue to account fora larger share of the growth compared to Abu Dhabi thanks to increased activity in trade, tourism and real estate. The private sector’s access to credit in 2015 will beconstrained as commercial banks increase provisioning to safeguard against potential loan losses due to the debt funding cliff.According to BMI, inflation is set to rise to 4% y/y.Over the 2011-2014 period, construction grew quite slowly by a mere 2.6% a year. Indeed, UAE was among the three MENA countries with slowest growth during the time,together with Tunisia and Yemen. The country is recovering slowly after the real estate crisis that hit it in 2009. During the 6-year period under analysis, the Emiraticonstruction sector registered a growth of over 5% only in the last year. Nevertheless, the high growth trend will continue as the UAE is hosting the World Expo 2020 event– a sure boost for the industry in the upcoming years.


CEIC, World Bank, BMI, Euromonitor

2009 2010 2011 2012 2013 2014


GDP, constant prices 2007 (AED bn) 1,155 1,104 1,059 990 941 926


GDP, current prices (AED bn) 931 1,051 1,280 1,371 1,422 1,467

Real GDP Growth Rate (%) (5.2) 1.6 4.9 4.7 5.2 3.6

GDP: Construction, (AED bn) 121 122 122 120 125 132

GDP: Construction, Growth Rate (%) (1.3) 1.4 (0.1) (1.4) 3.4 6.1

Foreign Direct Investment, net inflows (USD bn, current) 4.0 5.5 7.7 9.6 10.5 n/a

Consumer Price Index (%) 1.6 0.9 0.9 0.7 1.1 2.3



Source:

Comments

United Arab Emirates: Construction Industry Forecast

Experts from Oxford Economics forecast an almost twofold increase of the Emirati construction output value-added index in 2030 compared to 2015. Like in Saudi

Arabia, the development of the construction sector in the United Arab Emirates follows closely the dynamics in Africa and lags slightly behind the Middle East.

Within the UAE, Dubai is forecast to be the outperforming market over the 2015-2020 period as the city will be the host of the World Expo 2020 – a major driver for

the construction industry. However, healthy growth is generally expected throughout the UAE, according to BMI experts. Indeed, in an attempt to offset the drop in

oil prices, the UAE would continue to see major investments in tourism related projects, infrastructure and non-residential building segments. For instance, some of

the major growth drivers between 2015 and 2020 would be projects related to airport expansions, rail and public transport infrastructure, energy and utilities

infrastructure, as well as mixed-use cities and man-made islands designed to become huge tourist attractions.


Oxford Economics, BMI Research, EMIS Insight

100111

126

151177

100

113

138

168

202

100 107

120

148

182

2015 2017 2020 2025 2030

United Arab Emirates Middle East Africa



Source:

United Arab Emirates: Construction Regional Data

Number and Type of Completed Buildings, units – Emirate of Dubai Value of Completed Buildings, AED mn – Emirate of Dubai

Municipality of Dubai, CEIC

2,656

1,529 1,661

2,8422,557

836

1,017309

1,817

1,654

2,119

1,176

1,230

1,7432,362

183

167

129

183

358

243

163

116

219

165

309

195

171

146

220

48

62

35

57

816,394

4,309

3,651

7,0077,397

2010 2011 2012 2013 2014

Floor arearatios

Multi storey

Publicfacilities

Industrial

Stores

Investmentvillas

Private villas

Total

4,9703,436 3,239

4,353 3,857

699

1,522 5391,358

2,320

1,7701,639

800839

3,276

5,543

5,006

2,2151,974

2,434

13,291

8,244

6,797

8,941

10,643

4,548

7,660

2,394

4,267

4,616

30,821

27,507

15,984

21,732

27,146

2010 2011 2012 2013 2014

Floorarearatios

Multistorey

Publicfacilities

Industrial

Investment villas

Privatevillas

Total



Source:

United Arab Emirates: Construction Regional Data (cont’d)

Number and Type of Buildings Under Construction, units – Emirate of Dubai Number and Type of Completed Buildings, units - Emirate of Ajman

Municipality of Dubai, Licensing and Engineering Control Section - Building Department in Ajman, CEIC

6,483 6,671 7,0466,163 5,733

2,256 1,4482,412

2,298

6,307

13,80613,573

15,477 16,884

6,298

445 410

453 641

721

705 632

745 590

651

870 779

793867

937

296 258

274297

409

24,861

23,771

27,20027,740

21,056

2010 2011 2012 2013 2014

Floor arearatios

Multi storey

Publicfacilities

Industrial

Stores

Investmentvillas

Private villas

Total

608

416

624 618

742

64

50

29

26

4653

50

37

29

3421

29

28

23

438

18

33

47

43

454

180

230

808

181

1,208

743

981

1,551

1,089

2009 2010 2011 2012 2013

Others

Commercial

Publicfacilities

Industrial

Residential/commercial

Residential

Total



Source:


Number and Type of Completed Buildings, units – Emirate of Abu Dhabi Average Estimated Cost per sq m, AED - Emirate of Abu Dhabi

Statistics Center – Abu Dhabi

3,96

6

3,14

8

3,62

0

3,47

5

4,12

6

3,90

7

3,73

5

3,69

6

3,50

9

3,42

7

3,41

1

3,14

83,37

8

3,27

1 3,58

5

2,94

4

3,36

5

3,70

2

3,48

3

3,62

4

3,669

3,4913,567

3,377

2011 2012 2013 2014

Below 300 sq m 300-599

600-899 900-1200

More than 1200 sq m Average

4,601

7,505

6,067

2,839

889

754

43

46

256

214

197

191

132

170

212

105

240

161

274

117

6,118

8,804

6,793

3,298

2011 2012 2013 2014

Commercial

Publicfacilities

Industrial


Residential

Total



Source:


Number and Type of Building Permits Issued, units - Emirate of Fujairah Licensed Area for Construction - Emirate of Fujairah

Fujairah Municipality, Dibba Municipality

1,208 1,260 1,180 1,1371,262

125 77 8773

119

107192

132178

117

9198

185260

296

732 360272 249

289

319

483 731

606

494

2,582

2,4702,587

2,503 2,577

2010 2011 2012 2013 2014

Others

Commercial

Publicfacilities

Industrial


Residential

Total

2,18

6

1,75

1

1,07

6 1,07

5

1,65

6

96.6%

-19.9%

-38.6%

0.0%

54.0%

2010 2011 2012 2013 2014

Licenced Area, thou sq m YoY change, %



Source:

United Arab Emirates: Major Construction Projects


Construction Week Online, MEED, The National, Reuters, Al Habtoor City Brochure, World Nuclear Association, Aldar, Arabian Business, Gulf Today, Arab News, Zawya Projects, Trade Arabia, Gulf Construction Online, Business Insider, Emirates 24/7 News, Dubai World Central

Project Name Value, USD mn Size/Length/Capacity Timeframe

Commercial ConstructionYas Island Development 37,000 25,000,000 sq m land area Expected completion in Q4 2018

Al Reem Island 37,000 6,300,000 sq m land area Expected completion in Q1 2023

Saadiyat Island Development 27,000 27,000,000 sq m land area Expected completion in Q4 2018

Masdar City 22,000 6,000,000 sq m site area Expected completion in Q4 2025

Downtown Burj Khalifa 20,000 2,000,000 sq m land area Expected completion in Q1 2020

Al Raha Beach Development 15,000 5,000,000 sq m Estimated completion date in Q4 2021

Ghantoot Green City 15,000 60,000,000 sq m site area Estimated completion date in Q1 2020

Dubai Marina 12,300 6,100,000 sq m land area Expected completion in Q4 2015

Meydan City 10,000 Expected completion in Q4 2019

Desert Rose City, Dubai 9,500 140,000,000 sq m Construction works are expected to start in 2016 and

could take around 10 years.

Mohammed bin Rashid City 8,168 5,016,764 sq m of land area Q1 2013 - Q1 2027 (estimated)

Al-Marjan Island Development 8,000 A cluster of five islands covering 2,700,000 sq m Expected completion in Q4 2017

Construction of 37 Towers in Abu Dhabi and Dubai 6,000 84,000 sq m total plot area

1,300,000 sq m total built-up area

Q1 2014 - Q1 2018

Dubai Pearl 6,000 1,858,060 sq m total built-up area After the project has been delayed, it is due for

completion by 2018

Arzanah Development 6,000 1,400,000 sq m land area Expected completion in Q4 2016



Source:

United Arab Emirates: Major Construction Projects (cont’d)



Commercial Construction (cont'd)Port of Arabia (Mina al-Arab) 5,500 1,500,000 sq m land area Expected completion in Q1 2017

International City, Dubai 5,000 22,000 residences 5,000 retail units Expected completion in Q1 2020

Nujoom Islands, Sharjah 5,000 5,574,182 sq m Expected completion in Q4 2015

Al Habtoor City, Dubai 3,000 Over 3,000 hotel and residential units Q3 2012 - Q3 2016

Al Mamzar Beachfront Development, Dubai 2,723 4,000 residential units, 300 hotel rooms, and

250,000 sq m of retail outlets

As of April 2015, design works were underway.

Expected completion in Q4 2018

Dubai Parks and Resorts Complex 2,722 Complex of five theme parks Q1 2014 -2016 (Phase 1)

Al Manhal Development, Abu Dhabi 2,000 600,000 sq m of land area Q1 2012 - Q1 2017 (estimated)

Bluewaters Island 1,600 Man-made island located off the Jumeirah Beach

Residence (JBR) coastline.

Q2 2013 - Q1 2018

Saraya District of Abu Dhabi 1,400 136,000 sq m land area Expected completion by the end of 2015

Jewel of the Creek Development 1,360 123,955 sq m site area Q1 2012 - Q1 2017

Address Residence Fountain Views 1,000 A three-60-storey-tower complex. Q1 2014 - Q1 2017 (estimated)

Damac Towers 1,000 Over 1,800 residential units and 800-room 5-star

hotel

Expected completion in 2016

Taj Arabia at Falcon City of Wonders in Dubai 1,000 743,000 sq m land area, 213,677 sq m built-up

area


Expo 2020 Venue, Dubai Complete project cost

undisclosed

Site area of 4.38 sq km, including residential,

hospitality and logistics zones.

In January 2015, a consortium was appointed to manage

all construction-related activities

Deira Islands Complete project cost

undisclosed

Land area of 15.3 sq km, comprising four islands,

21-kilometre beachfront and accommodating over

357,000 people upon completion.

Tender bids were being accepted by January 2015.

Aladin City, Dubai Project cost undisclosed as

of February 2015

Six towers, linked by air-conditioned bridges. Construction works are expected to start in 2016




Source:




Residential Construction 2,300 homes situated on Yas Island, in Al Falah, and in

Al Ain

1,552 Expected completion in 2016

Social InfrastructureAl Ain New Hospital 1,170 358,000 sq m, 719-bed capacity Q1 2014 - Q1 2018

Energy, Utilities and MiningFour Nuclear Reactors, Barakah 20,000 5,600 MW total capacity Q1 2012 - Q1 2020

Al Gharbia Chemicals Industrial City 20,000 12 plants Expected completion in Q2 2017

Upper Zakum Full Field Development 15,600 Expansion should lead to capacity increase of

250,000 bpd


Fujairah Oil Refinery 3,500 Processing capacity of about 200,000 bpd of crude

oil.

According to Zawya Projects, the EPC contract should

be awarded by June 2015 and the project should be

completed by end-2018.

Nasr Full Field Development Project, Packages 1,2,3 2,936 EPC contracts were awarded in November 2014. The

start-up of the project is scheduled to be achieved by

end-2018 and final commissioning by Q2 2019.

North East Bab Field Development, Phase 3: Al

Dabbiya Field

2,250 2014 - 2018

Abu Dhabi Alumina Refinery, Shaheen 2,000 Capacity of 2 mn tonnes of alumina annually in an

initial phase and additional 2 mn tonnes in a

second phase.

2014-2020

Hassyan Power Plant, Dubai Estimated cost of over

2,000

1,200 MW Q1 2014 - Q1 2021 (estimated)




Source:




Transport InfrastructureAl Maktoum Intl Airport, Dubai 32,000 Annual capacity of 220 mn passengers and 16 mn

tonnes of cargo once the expansion is completed.

The expansion will be carried out in two phases over a

six to eight year period.

Dubai Metro 14,352 Includes the construction of the Red, Green, Blue,

Purple, Gold, and the Pink lines.

Expected completion by 2030.

National Rail Network, Phases 2 & 3 9,620 907 km long Tendering for final design and build contracts for Phase

2 is in progress.

Dubai Intl Airport, Dubai 7,800 Annual capacity increase of 30 mn passengers

upon completion.

Expected completion in 2018.

Abu Dhabi Metro 7,000 130 km two-way track metro network Expected completion in Q4 2018

Midfield Terminal, Abu Dhabi Intl Airport 2,960 Construction of 700,000 sq m main terminal

building with initial annual capacity of 27-30 million

passengers.

Expected completion in Q3 2017.

Dubai Water Canal 2,000 3 km long, 80 - 120 m wide, 80,000 sq m public

space


Mafraq-Ghweifat Main Road 1,400 327 km long Expected completion in 2017.

Al Ain International Airport Expansion Undisclosed Q1 2014 - Q1 2017

Construction Week Online, MEED, The National, Reuters, Al Habtoor City Brochure, World Nuclear Association, Aldar, Arabian Business, Gulf Today, Arab News, Zawya Projects, Trade Arabia, Gulf Construction Online, Business Insider, Emirates 24/7 News, Dubai World Central, Airport Technology, Airport Data



Source:

United Arab Emirates: Investment Climate

FDI

Regime

At present, the Emirati regulatory and legal framework favours local over foreign investors. The UAE maintains non-tariff barriers to investment in the form of

restrictive agency, sponsorship, and distributorship requirements. In order to do business in the UAE outside one of the free zones, a foreign business in most cases

must have a UAE national sponsor, agent or distributor, with at least 51% ownership of the business.

The US Department of State reports that government tendering in UAE is not conducted according to generally accepted international standards, and re-tendering is

the norm. Federal tenders must be accompanied by a bid bond in the form of an unconditional bank guarantee for 5% of the value of the bid. However, UAE federal

government entities can tender internationally since foreign companies sometimes are the only suppliers of specialised goods or services that are not widely

available. Incentives are given to foreign investors in the free zones. Outside the free zones, no incentives are given, although the ability to purchase property as

freehold in certain favoured projects in Dubai would appear to be an incentive aimed at attracting foreign investment, as noted by the US Department of State.

Four major laws affect foreign investment in the UAE: the Federal Companies Law, the Commercial Agencies Law, the Federal Industry Law, and the Government

Tenders Law. These laws, especially the Federal Companies Law, are seen as the largest obstacles to foreign direct investment in the UAE. In addition to the

mandatory Emirati majority stake in businesses involving foreign partners, these laws stipulate that branch offices of foreign companies must have a national agent,

that distribution of foreign companies’ products in the UAE is only possible through exclusive commercial agents that are either UAE nationals or companies wholly

owned by UAE nationals, that industrial projects must either be managed by a UAE national or have a board of directors with a majority of UAE nationals, among

others.

Right to

Private

Ownership

and

Free Zones

The UAE restricts foreign ownership of land, with rules varying from emirate to emirate. Individual emirate policies allow non-GCC nationals to have

freehold or leasehold rights in designated areas, but as codifying and procedures for title documentation remain to be established, it remains unclear

whether the "freehold" title means the same as it does in Europe or the United States. In December 2010, Abu Dhabi Executive Council (ADEC)

issued Resolution No. 64 of 2010 on Regulations of Property Ownership stipulating that non-UAE individuals or legal entitites have the right to own,

buy, sell, rent, mortgage and invest in investment areas. Non-UAE nationals may hold “mustaha” rights for up to 50 years (subject to renewal for a

similar duration) and sign “usufruct” contracts for up to 99 years in properties located inside the investment areas.

The major attraction of the free trade zones (FTZ) is the waiver of the requirement for majority local ownership. Hence, in the free zones, foreigners

may own up to 100% of the equity in an enterprise. In addition, all free zones provide 100% import and export tax exemption, 100% exemption from

commercial levies, 100% repatriation of capital and profits, multi-year leases, assistance in labour recruitment, and advanced infrastructure and

logistic environment including easy access to sea and airports, buildings for lease, and energy connections (often at subsidised prices). Moreover,

the free zone authorities provide significant support services, such as sponsorship, worker housing, dining facilities, and security. According to the

UAE Embassy in the UK, there are 21 FTZ around the UAE, the biggest ones among them being Jebel Ali Free Zone, Sharjah Airport Intl Free Zone,

Dubai Airport Free Zone, Dubai Media City, Dubai Internet City, and RAK Free Trade Zone.

US Department of State, June 2014



Source:

United Arab Emirates: Investment Climate (cont’d)

Tax Rates

and

Access to

Credit

There is no personal income tax in the UAE. Foreign banks, outside of the free zones, pay 20% tax on their profits. Foreign oil companies

with equity in concessions pay taxes and royalties on their proceeds. There are no consumption taxes, and the GCC states formally

implemented a single import tariff of 5% on most goods. Companies located in the numerous "free zones" across the UAE are exempt from

the tariff on imports and re-exports that do not leave the zones. However, some exceptions do exist.

Dubai imposes a rental housing tax on expatriates equaling 5% of the rental charges.

UAE’s financial system is highly integrated and concentrated, thus remaining exposed to global vulnerabilities. However, in 2013 the IMF

noted that “the banking system maintains significant capital and liquidity buffers, and non-performing loans may finally have peaked at 8.7% in

December 2012,” suggesting a significant turnaround in the UAE banking sector’s post-2008-2009 crisis health.

Dispute

Settlement

In 2006, UAE entered effectively the UN Convention on the Recognition and Enforcement of Foreign Arbitral Awards. As a result, arbitration awards

issued in the UAE are enforceable in all 138 states that have acceded to the Convention, and any award issued in another member state is directly

enforceable in the UAE. In general, disputes are resolved by direct negotiation and settlement between the parties themselves, by recourse in the

legal system, or arbitration. In order to enforce arbitration judgments rendered in the UAE, a court certification that may take a long time is required.

Commonly, commercial disputes involving foreign parties are heard in the civil courts in the federal system in front of a three-judge panel. However,

commercial disputes might also come before the criminal courts, if one of the parties alleges criminal fraud or theft arising from a contractual dispute.

All cases involving banks and financial institutions are required to be heard by civil courts. Interestingly, the Court of Dubai International Financial

Center (DIFC) is also instrumental in commercial disputes resolution. The DIFC Court system operates independently of the UAE legal system on

commercial disputes as part of the DIFC free zone. In October 2011, the Vice President and Prime Minister of the UAE and Ruler of Dubai signed a

law allowing any Dubai-based business to use the English language DIFC Courts to resolve commercial disputes.

Labour

Conditions

The US Department of State reports that around 85% of UAE residents are non-Emiratis and approx. 98% of private sector labour are foreign

workforce. To alter this ratio, the government has set a goal to increase UAE nationals’ participation in the workforce, dubbed “Emiratisation”. As of

December 2010, all private corporations were required to reserve at least 15% of positions for UAE nationals. At banks, Emiratis must comprise at

least 40% of the workforce. The UAE National Human Resource Development and Employment Authority (Tanmia), is the federal body responsible

for fostering Emiratisation. In May 2009, the cabinet approved the establishment of the UAE Emiratisation Council (UEC), which is responsible for

formulating policies and standards to promote Emiratisation and for supporting the development of skills and competitiveness among nationals.

Given Emiratis’ strong preference for public sector employment, in 2013, the UAE labour ministry proposed changes to its labour law to attract more

citizens into the private sector. The changes include proposals to bring private and public sector salaries in line; adjust working hours and days, and

increase the number of private sector holidays.

Visas, residence permits, and work permits are required of all foreigners in the UAE except nationals of the GCC countries.

US Department of State, June 2014



VI. Main Players



Source:

Top M&A Deals

Top 15 M&A Deals in the Construction Sector in MENA, 2013 and 2014

DealWatch

Date Target Company Deal Type Buyer Country of BuyerDeal Value Stake

USD (mn) (%)

18-Jan-13 Orascom Construction Industries SAE Acquisition OCI NV Netherlands 7300.00 97.44

(Official data)

29-Sep-14 Emaar Malls Group PJSC IPO Undisclosed buyer(s) n/a 1579.61 15.37

(Official data)

11-Nov-14 Arabtec Holding PJSC Minority stake Aabar Investments PJS UAE 962.67 15.99

purchase (Market estimate)

8-Jan-13 Sorouh Real Estate PJSC Acquisition Aldar Properties PJSC UAE 920.00 100.00

(Official data)

8-Jul-13 Arabtec Holding PJSC SPO Undisclosed buyer(s) n/a 641.10 50.00

(Official data)

11-Jul-13 Archirodon Group NV Minority stake Undisclosed buyer(s)

n/a 190.00 40.00

purchase (Official data)

18-Feb-13 Aldar Properties PJSC Minority stake Mubadala Development Co PJSC

UAE 188.92 8.84


13-Jul-14 Rooya Group Acquisition Pioneers Holding Co Egypt 171.95 60.00

(Official data)

17-Jun-14 Al Hammadi Company for Development and

InvestmentIPO Undisclosed buyer(s)

n/a 168.00 30.00

(Official data)

12-Jun-14 Arabtec Holding PJSC Minority stake Undisclosed buyer(s) n/a 160.60 2.75

purchase (DW estimate)

3-Dec-14 Residences Dar Saada SA IPO Undisclosed buyer(s) n/a 127.45 20.00

(Official data)

26-Nov-13 Target Engineering Construction Co. LLC Minority stake Arabtec Holding PJSC

UAE 73.50 38.00


18-Jul-13 Petrofac Emirates LLC Acquisition Nama Development Enterprises;

Petrofac Ltd

UAE; United

Kingdom70.00 51.00

(DW estimate)

13-Nov-14 Eshraq Properties Co

Buy-back of sharesEshraq Properties Co

UAE 58.72 10.00

(DW estimate)

14-Aug-14 Arabtec Holding PJSC Open market Undisclosed buyer(s)

n/a 48.00 0.95

purchase (Market estimate)



Source:

M&A Activity, 2013-2014

Number and Value of Top Deals in MENA’s Construction Sector

Distribution of Top Deals by Deal Type (%)

Distribution of Top Deals by Deal Value, USD (%)

Distribution of Top Deals by Region of Investors (%)

DealWatch

8,40

9

0901

74 0 329

1,8001,149

3

0

3

1

0

2

3 3

Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4

2013 2014

Total value of deals (USD mn) Number of Deals

Minority stake purchase

33.3%

Acquisition26.7%

IPO 20.0%

SPO 6.7%

Buy-back of shares 6.7%

Open market purchase 6.7%

Undisclosed43.8%

UAE 37.5%

Netherlands6.3%

Egypt 6.3%

United Kingdom 6.3%

50.1-100mn; 33.3%

500.1-1000; 33.3%

> 1000mn; 22.2%

0-50mn; 11.1%



Source:

Arabtec Holding PJSC

Income Statement (Consolidated, USD mn)

Arabtec Holding PJSC is a United Arab Emirates-based

company that was established in 1975 and acts as a holding

company to its subsidiaries, primarily investing in the

construction sector through the acquisition of contracting and

related companies. Listed on the Dubai Financial Market

since 2004, the company is one of the largest heavy

construction players in MENA.

Its projects vary greatly and include offshore and onshore oil

and gas installations, airport development, aircraft

maintenance hangars, passenger terminals, departure

lounges, fuel tank farms, drainage & electrical high and low

voltage, contracting services to residential projects, luxury

villas, hotel interiors, cinema complexes, hypermarket fit

outs, food courts.

The company has organised its operations in the following

business lines:

o High Rise Development

o Residential Development

o Hotels and Hotel Interiors

o Airport Development

o Commercial Development

o Luxury villas

o Stadiums

o Mixed Use Development

o Industry Projects

o Oil & Gas

Balance Sheet (Consolidated, USD mn)

Highlights

Company Data, EMIS Insight

1,54

2

2,00

9 2,66

7

134

193

162

38 103

58

8.7%9.6%

6.1%

2012 2013 2014

Net Revenues EBITDA Net Profit EBITDA margin

2,44

1

3,49

0

3,91

1

912 1,57

1

1,62

5

152

(417

.82)

45

1.14

-2.17

0.28

2012 2013 2014

Total Assets Shareholders' Equity Net Debt Net Debt/EBITDA



Source:

Arabtec Holding PJSC (cont’d)

Share Price Statement, 2014

Arabtec is a key contractor in some of the largest airport

infrastructure projects in UAE. They include the

construction of:

o Midfield Terminal Building at Abu Dhabi Intl Airport – a

USD 2.9bn contract awarded to a JV between

Arabtec,TAV and CCC,

o Air Traffic Control Tower at Dubai World Central Intl

Airport (DWC) in 2007-2008 – a USD 40mn contract,

o Cargo Terminal Building at DWC – a USD 76mn contract,

o Passenger Terminal at DWC – a USD 26.7mn contract

awarded to Arabtec/Max Boëgl JV,

o Central Utility Plant at - a USD 7.1mn contract,

o TD-119 VIP Pavilion & Crew Access Building at Dubai Intl

Airport – a USD 1.9mn contract,

o Expansion of Terminal 2 at Dubai Intl Airport – a USD

163mn contract,

o Renovation and expansion of Dubai Intl Airport Terminal 1

– a USD 50.1mn contract.

Currently Arabtec employs over 40,000 people.

Allocation of Shareholders’ Equity by Geography, 2014

Highlights


5.26

8.71

4.96

4.32

3.91

4.73

3.513.18

5.03

6.09

4.56

3.61

Q1 Q2 Q3 Q4Highest price, quarter averageLowest price, quarter averageClosing price, quarter average

Local 68%

Arab 17%

GCC 6%

Others 9%



Source:

Drake & Scull International PJSC


Drake & Scull International PJSC, or DSI, became a publicly

listed company in 2008 when it rolled out its IPO on the

Dubai Financial Market.

The company specialises in mechanical, electrical and

plumbing services along with infrastructure, water and power

and civil construction services.

DSI has streamlined its operations in the following units:

o Drake and Scull Construction offers general construction

services for commercial, industrial, power and water as well

as heavy general contracting projects.

o Drake and Scull Engineering offers engineering (MEP and

Water and Power) services for large scale projects in

aviation, education, mixed use, residential, tourism, district

cooling, hotels, commercial offices and data centres.

o Drake and Scull Rail offers complete EPC solutions for all

systems and services for stations, depots and tunnels.

o Drake and Scull Oil and Gas offers construction and

construction management contracting services to the

petrochemical industry.

o Drake and Scull Development focuses on public-private

partnerships for large scale infrastructure projects in the

MENA region, South Asia and Europe.

o Passavant Energy and Environment develops technologies

and processes in municipal wastewater, sludge, water and

industrial wastewater treatment.


Highlights


905

1,33

0

1,29

8

60 98 81

26 45 27

6.7%

7.4%

6.2%

2012 2013 2014


1,75

3

1,95

3 2,33

3

755

811

839

188

181 41

8

3.12

1.84

5.18

2012 2013 2014




Source:

Drake & Scull International PJSC (cont’d)

Backlog by Business Stream, 2014

DSI has executed mechanical, electrical and plumbing

engineering works on airport infrastructure projects

including:

o International Airport Terminal phase II, Abu Dhabi – UAE,

o Extension for Military Airbase, Dubai – UAE,

o Kai Tak Airport - Hong Kong,

o Phase I Air Cargo Terminals - Hong Kong,

o New Doha International Airport CP15 – Qatar,

o Dar Es Salaam International Airport,Dar Es Salaam –

Tanzania.

• The company has also incorporated HVAC (heating,

ventilation, and air conditioning), smoke ventilation,

general air extraction, fire protection & alarm systems, exit

systems, and electrical distribution systems in railway

infrastructure projects that include:

o Channel Tunnel Rail Link Line Infrastructure - London UK,

o St. Pancras Station Redevelopment -London UK,

o Jubilee Line Extension Project - London, UK.

DSI has established offices in UAE, Saudi Arabia, Kuwait,

Oman, Qatar, Egypt, Jordan, Algeria, Iraq, Thailand,

Vietnam, India, China, Germany, Romania, and Turkey.

Backlog by Geography, 2014

Highlights


General contracting

42%

Engineering38%

Oil & gas 15%

Water treatment 5%

Saudi Arabia35%

Egypt 18%

Dubai 10%

Jordan 7%

Abu Dhabi 8%

Algeria 6%

Qatar 5%

Kuwait 2%Iraq 1%

Others 8%



Source:

Combined Group Contracting Co.


Combined Group Contracting Company, or CGC, was

established in 1965 in Kuwait as a limited liability

company. The company became a publicly traded

shareholding company in 2006, when it was listed on the

Kuwait Stock Exchange with a capital of approx. USD

40mn.

The company operates in the construction industry and its

activities include carrying out civil, mechanical and

contracting work, trading of loose and packaged cement,

manufacturing and selling building materials and related

products.

Through its branches and subsidiaries, CGC is present in

Kuwait, Saudi Arabia, UAE, Qatar, Syria, Iraq, Lebanon

and Oman.

Among the assets owned by the company are a concrete

mixing plant with a production capacity of 160 cubic

meters / hour, asphalt plants with production rate of 440

tonnes/hour, and an extensive fleet of earth moving, road

paving and construction vehicles, as well as pumping

equipment together with numerous other transportation

vehicles

Currently CGC employs around 10,000 people.


Highlights


847

694

44416

2

114

9392

56 24

19.1%

16.5%

21.0%

2012 2013 2014


1,32

9

1,39

0

1,32

6 838

911

915

69

169

108

0.43

1.48

1.15

2012 2013 2014




Source:

Combined Group Contracting Co. (cont’d)

Revenues by Division in 2014, KWD thou

In the Roads & Infrastructure sector, the company has

executed projects in countries like Kuwait, UAE, Qatar,

Indonesia, and Mongolia.

Some of the major road infrastructure projects that CGC

has worked on include:

o Design, construction and completion works on a sea

bridge connecting Kuwait City and Subiyah (project still in

progress). CGC’s share of total works on the bridge

amounts to approx. USD 570mn.

o Infrastructure development of small and medium scale

industrial area in Doha, Qatar. The USD 189.6mn project

was completed in March 2012.

o Infrastructure development for north residential and west

waterfront areas at Lusail City, Doha, Qatar, The USD

183.2mn project was completed in January 2013.

o Construction, completion and maintenance of the

interchanges of the main highways (Sixth Ring Road)

connecting to new housing area at South Jahra, Kuwait.

The USD 140.2mn project was completed in November,

2013.

Revenues by Geography in 2014

Highlights


52,357

38,486

19,026 17,489

5,532 5,015

1

Construction Highways Water & Electricity

Oil Maintenance & Services Others

Kuwait 66%

Qatar 21%

UAE 13%



Source:

Galfar Engineering And Contracting SAOG PLC


Founded in 1972, Galfar Engineering & Contracting

SAOG, also known as Galfar, is the largest construction

company in Oman with capabilities in the Oil & Gas,

Roads & Bridges, and Civil & Utilities sectors. It operates

in Oman, and in other GCC countries as well as in India.

The company is listed on the Muscat Securities Market.

It offers to its clients various services in the fields of

engineering, procurement, construction, operations &

maintenance, and project management.

Galfar’s Roads & Bridges Unit was established in 1989.

Since then, it has completed the construction/

rehabilitation of over 1,500 km of roads in Oman. The unit

has a central full-fledged materials testing laboratory for

soil, asphalt and concrete testing in addition to various

site laboratories. It is also self-sufficient in the production

of major road building materials such as aggregates and

asphalt.

Galfar owns 1,134 heavy machines, 794 light machines,

811 miscellaneous machines, 977 electrical machines, 69

stationary plants, 1,614 heavy vehicles and 2,178 light

vehicles.

It employs more than 23,000 people and is the largest

employer of Omani nationals in the private sector.


Highlights


855 1,

104

969

104

116

88

24 20.1

6

0.44

12.2%

10.5%

9.1%

2012 2013 2014


1,18

7

1,28

4

1,30

6

237

276

267

421 51

3

522

4.034.42

5.95

2012 2013 2014




Source:

Galfar Engineering And Contracting SAOG PLC (cont’d)

Segment Results, OMR thou

Some of the major roads & bridges projects that are

already completed include the dualisation of Wadi Adai Al

Amerat Road, Rushtaq-Miskin Road, the rehabilitation of

Batinah Highway, and the USD 340mn value Muscat

Expressway.

Transport infrastructure projects that are currently being

executed by Galfar include:

o Construction of Batina Expressway (Package 1), value of

contract USD 422mn,

o Development of Salalah International Airport Project,

value of contract USD 236mn,

o Rasl Al Hadd Airport Development Project (Package 2,

Airfield Development), value of contract USD 104mn,

o Construction of Hasik - Ash Shuwaymiyah Asphalt Road,

value of contract USD 288mn,

o Dualisation of Nizwa - Thumrait Road (Izz - Adam

Section), value of contract USD 132mn,

o Dualisation of Taqah - Mirbat Road, value of contract USD

105mn,

o Construction of Grade Separated Junctions along Batinah

Highway - Stage 3 (Part 1), value of contract USD 59mn,

o Procurement and construction of asphalt road in the

Khazzan area, value of contract USD 24.2mn.

Segment Assets, OMR thou

Highlights


9,009

1,550 1,083 1,054 107 61 5

(126)(2,620) (2,343)

December, 2013 December, 2014

Construction Manufacturing Hiring of equipment

Training Inter segments

496,539 514,568

4,641 6,387 3,138 2,893 178 133

(8,738) (21,696)December, 2013 December, 2014

Construction Manufacturing Hiring of equipment

Training Inter segments



Source:

National Marine Dredging Company PSC



The National Marine Dredging Company was established

in 1976 as a unit of Abu Dhabi National Petroleum

Company. It became an independent shareholding

company in 1979. The company is listed on the Abu

Dhabi Securities Exchange.

It is primarily engaged in the execution of dredging

contracts and associated land reclamation works in the

territorial waters of the United Arab Emirates and Qatar.

The dredging and reclamation works, the company’s main

business, comprise capital and maintenance dredging

(inclusive deepening of water passages); artificial island

construction; land reclamation using dredged material;

and creating water channels, intakes and outfalls.

Since 2009, the company has diversified its operations

into marine construction as well. It includes activities like

construction of breakwaters, revetments, groins and

related rock works; concrete armour protection;

construction of gravity quay walls, retaining and

diaphragm walls; boat ramps and slipways; beach

construction and nourishment; and marinas and pontoons.


Highlights


847

694

444

162

114

9392

56 24

19.1%

16.5%

21.0%

2012 2013 2014


1,32

9

1,39

0

1,32

6 838

911

915

69

169

108

0.43

1.48

1.15

2012 2013 2014




Source:

National Marine Dredging Company PSC (cont’d)

Growth in 2013 vs. 2010

Among the projects undertaken by the National Marine Dredging

Company are dredging works to construct a “Destination

Village” to host the Volvo Ocean Race in Abu Dhabi in 2011;

dredging works to nourish the beach of Yas Island; rehabilitation

and 2.7 km. extension of the Corniche public beach in Abu

Dhabi; land reclamation on Sir Baniyas Island; dredging and

sand reclamation to create the Nareel Island in 2007; site

preparation works on Al Maryah Island (Abu Dhabi); and

dredging and sand reclamation works to create Al Gurm Island

Resort.

Marine construction projects include dredging the channel and

basin of the Sulphur terminal at Ruwais Port and creation of 20

mn m³ artificial island; dredging a navigation channel at

Ghantoot Harbour; capital and maintenance dredging at berths

14 & 15 at Jebel Ali Port in Dubai; dredging and reclamation for

the new central areas of Fujairah Port, deepening of the then

existing port to a depth of -15 m. and dredging of a complete

new basin to a depth of -18 m.; dredging, reclamation and

marine works for the New Fishing Port at Abu Dhabi (2009-

2011); construction of the Mussafah Channel, Abu Dhabi, (63.5

km. long, 200 m. wide; 9 m. deep); and design and

construction of a private marina (Al Bateen Marina) for the

berthing of yachts with a design depth of – 8.5 m., New Abu

Dhabi Datum.

The company’s fleet consists of cutter suction dredgers (CSD)

with capacity from the small Beaver dredger Jananah (1,795

KW) to the most powerful automated dredger the Al Sadr

(20,725 KW). The dredgers are supported by tugs and multicat

crafts, and A-Frame barges wherever necessary.

Market Capitalisation vs. Equity to Market Value

Highlights


19%18%

11%

0.29%

1

Revenue growth Fixed assets growth

Equity growth Share price growth

2,27

6

2,08

7

2,27

8

1,95

9

1.05

1.36 1.35

1.70

2006 2007 2008 2009

Market capitalisation, AED mn Equity to market value



Contact:

Corporate Headquarters

6-8 Bouverie Street

London EC4Y 8DD

UK

Voice: +44 20 7779 8100

Fax: +44 20 7779 8224

Americas Headquarters

225 Park Avenue South

New York, New York 10003

US

Voice: +1 212 610 2900

Fax: +1 212 610 2950

Asia Headquarters

Eucharistic Congress Bldg. No.

III

4th Floor, 5 Convent Street

Mumbai 400 001

India

Voice: +91 22 22881123

Fax: +91 22 22881137

Disclaimer:

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of the information. The views expressed are our best judgment as of the date of issue and are subject to change without notice. EMIS and Euromoney Institutional

Investor PLC take no responsibility for decisions made on the basis of these opinions.

Any redistribution of this information is strictly prohibited. Copyright © 2015 EMIS, all rights reserved. A Euromoney Institutional Investor company.

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