Home / Business / First-half of 2018 will be ‘crunch’ period for UAE construction

First-half of 2018 will be ‘crunch’ period for UAE construction

The four to five months before summer next year — that’s when the flood of new projects will start hitting the UAE construction sector, according to a top official at Khansaheb Civil Engineering. And this momentum will be enough to carry the sector well into 2020.

“We all know the end date (in 2020) — the volume of work is there and orders will start flowing,” said Abdulrahman Khansaheb, Director. “This year, we were all expecting orders to flow through more smoothly. That didn’t happen — in fact, 2015 and 2016 had much better project flow.”

“This year, everybody were re-evaluating their projects … how to get more for their buck. The crunch period will be before next summer.”

Through this year, Khansaheb maintained a steady project portfolio. “We got the orders to maintain our size and grow organically,” said Khansaheb. “We don’t have to be in a position to chase exponential growth — we maintain control on the size of the business.”

Another thing Khansaheb does not want to do is chase growth outside of the UAE with its civil engineering division. “We focus investments on the home market,” he added. “The markets in the GCC are not our field, it needs the local knowhow how to enter. Each of those markets have their own players.

Instead, the group is bulking up on its light manufacturing interests. A new facility at Technopark in Jebel Ali will be commissioned in Q1-18 which will then replace an older — and smaller — plant in Deira. It will make non-metallic air ducts and will then be expanded to take in a “couple of other” product lines as well.

“For the air ducts, we acquired the IP and global rights from a UK firm — the main aim of the new plant will be to develop sustainable products,” said Khansaheb. “There’s a market out there for efficiencies in terms of energy savings.”

Unlike the civil engineering arm, the manufacturing subsidiary will also have a pan GCC focus, principally through a distribution network. “It was in April last year that we launched manufacturing, and since then we are supplying a project in Oman and been in contact with interested parties in Saudi Arabia,” the director said.

“Where manufacturing will help us is on the future bottomline impact.” (General contracting activities currently fetch 90 per cent of the group turnover.) Unlike in the wider contracting industry, Khansaheb says delayed project payments is not an issue with the company. The business works towards a steady 90-day credit period.

“The clients we deal with pay on time — there is a standard practice that we have put down,” he said. “We select our clients and they pay on time. We do not have an issue.

“You won’t find us working with everybody. I have an obligation to my supply chain and to people who work for me directly.

“We changed a lot of things changed during the 2009 crisis time. There was more focus on the costs and developed a robust system from those times.

“It’s always our focus not to have debt — we have a solid cash footing, we don’t chase topline growth and focus on the bottomline. Maybe others in this industry chase topline to fuel their growth. We don’t …”

VAT needn’t be a ‘worry’

Abdularahman Khansaheb is sure about one thing.

“I don’t think worry is quite the right word to describe what VAT means for the construction industry,” he said. “Concern is how well the industry can prepare for the implementation. Our in-house accountants are working with auditors to make sure we are following the law.

“There will certainly be a transition period over the coming months and companies will go through a learning curve. They may have to clarify certain issues on certain cases”.

Source: Gulf News

Check Also

Facebook closes ‘spam’ pages linked to Brazil poll

Social media platform Facebook has closed 68 pages and 43 accounts linked to a marketing …

Leave a Reply

Your email address will not be published. Required fields are marked *