The crane count on the taxi ride from Abu Dhabi airport to my hotel at the other end of the city was a respectable nine. It was dark, so I might have missed a few, but the mood music coming out of this years’ Association for Consultancy and Engineering Gulf conference is a lot more positive, and a lot less panicky, than regulars say it was last year, just as Dubai was in meltdown. The mega-projects in Abu Dhabi – Saadiyat Island, Yas Island and Al Raha beach - are still more or less on track, save a bit of trimming here and slowing down there.
Yet the flight from Dubai by quantity surveyors and engineers means that there is more competition for work, particularly in Abu Dhabi. Ian Clarke, managing director of Mott MacDonald in the Middle East and this years’ conference chair, says that the impending cuts back home are also forcing UK firms to take another look at what they can win in the Gulf region, but the problem is that “everyone is trying to get to the Middle East.” Several delegates report lower consultancy margins than 12 months ago, in part squeezed by fiercer competition. The Middle East is not going to be a panacea for the Age of Austerity in Britain.
But forget new work for a moment: the most hotly anticipated speaker is Chris O’Donnell, CEO of Nakheel, the debt-laden Dubai developer estimated to still owe UK consultancies and engineers £250m in unpaid fees. Part of Nakheel’s plan is to pay 60% of these debts in an Islamic bond called a “sukuk”, which will yield a dividend of 10% a year for five years and can then, in theory, be cashed in full. Delegates, many of whom are still owed money by Nakheel, will be keen for reassurance that the bonds will be honoured in full at the end of that period, as stretched creditors are likely to want to sell them immediately for as much cash as they can get.
But even if Nakheel more or less pays up, British firms still have horror stories of intransigent smaller Dubai developers who owe them money. Their response, according to one delegate, amounts to “Who are you? Do we owe you money?” The rest of the Middle East stills holds promise, but the consensus so far is that Dubai’s “nuclear winter”, as one engineer put it, shows no sign of thawing.
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