Dubai: Dubai builder Arabtec announced on Sunday that it had signed a memorandum of understanding (MoU) with Abu Dhabi-based Aabar Properties for its subsidiary Arabtec Construction to build 37 towers in Abu Dhabi and Dubai worth Dh22.44 billion.
Arabtec is in the “final stages of signing definitive agreements” with Aabar Properties, a unit of Aabar Investments, the company said in a statement on the Dubai Financial Market (DFM).
Arabtec’s stock closed on Sunday at Dh4.40, up 2.80 per cent from the previous closing, according to the DFM website.
The MoU represents Arabtec’s biggest project by value, as per the statement.
Arabtec said construction will begin in the first quarter of this year, and that projects are expected to be completed before 2020.
Nishit Lakhotia, head of research at Securities and Investment Company (Sico), told Gulf News that profit margins for Arabtec’s MoU “might be tight because Abu Dhabi is a competitive market and this is a major order.”
Predicting profit margins depends on a project’s type, which country it is in and the competitiveness of the market.
Lakhotia added that Arabtec “has to scale up substantially to execute projects [on its backlog], which also adds a different and additional risk dimension.”
Projects in Dubai, Abu Dhabi
In Dubai, Arabtec expects to build three mixed-use towers in Business Bay and six hotels and serviced apartment towers in Al Jadaf district. These include a five-star hotel managed by Swissotel, a four-star hotel managed by Hilton, a three-star hotel managed by Park Inn and three serviced apartment buildings operated by Fraser Suites.
Arabtec is behind some of the UAE’s major hospitality projects, such as Abu Dhabi’s Emirates Palace Hotel.
Meanwhile in Abu Dhabi, Arabtec is set to build nine mixed-use towers in the Tomouh City of Lights development and four mixed-use towers in Reem Island.
On the residential side, Arabtec expects to construct 14 towers, including two in Rawdhat Abu Dhabi, seven in Al Raha Beach, three in Maysan and two in Shams.
In addition, the company expects to construct a five-star hotel under the management of Hard Rock International in Abu Dhabi Corniche.
In a bourse statement on Sunday, Aabar Properties chairman Khadem Al Qubaisi said Aabar will assign all construction work in its $20 billion real estate portfolio around the world, including the UAE, USA, Morocco, Jordan and Serbia, to Arabtec.
Arabtec announced last month that it was awarded a Dh5.7 billion contract to build the Red Sea Astrarium resort in Aqaba, Jordan. Its project backlog advanced to nearly Dh40 billion.
Arabtec’s project backlog stands at more than Dh60 billion today, Lakhotia said.
“We think that with this kind of project backlog, there will be a significant revenue jump for Arabtec over the next two to three years,” he said.