Shares in property and construction stocks in the UAE surged yesterday on the back of news that Abu Dhabi’s Tourism Development and Investment Company (TDIC) had awarded a contract to build the Louvre Abu Dhabi.
Arabtec, the Dubai-based construction firm that won the Dh2.4 billion contract (US$653 million), rose 5.3 per cent in trading to Dh2.58 a share on the Dubai Financial Market General Index – the highest level since October – as investors celebrated what they hoped would be the start of a series of stalled projects in the capital.
TDIC and Arabtec said yesterday that construction of the 24,000 square metre museum complex designed by the Pritzker Prize-winning architect Jean Nouvel would start immediately.
The museum’s concrete frame is expected to be completed by the first quarter of next year with opening planned in 2015.
The design and construction specialists Oger Abu Dhabi and Constructora San Jose will also work on the project conceived by an intergovernmental agreement between France and the UAE in 2007.
The long-awaited venue will be built on Saadiyat Island’s cultural district alongside the Guggenheim Abu Dhabi, expected to open in 2017, and the Zayed National Museum, planned to open in 2016.
Shares in the Abu Dhabi based developers Aldar Properties and Sorouh Real Estate, already buoyed by speculation of an imminent merger, rocketed. The Dubai-based Emaar and Ras Al Khaimah-based RAK Properties also rose.
“For investors it means that the government will actually provide a real estate stimulus to the market and that is very positive news,” said Nabil Farhat, a partner at Al Fajer Securities. “Real estate stocks across the board have benefited from this announcement and improved sentiment in the sector, which was initiated by the partial recovery of Dubai property last year.”
“It’s a very positive announcement for Arabtec and for Abu Dhabi as a whole,” said Saleem Khokar, the head of equities at National Bank of Abu Dhabi. “It sets the stage for what we’re likely to see in the future, and it is very positive in terms of the amount of work which Abu Dhabi is likely to be undertaking in the future.”
“Arabtec has had a rough ride over the past couple of years but with the takeover of interiors specialist Depa and a couple of big contract wins recently, investors are feeling much more positive.Overall with this announcement we have seen a very strong start to 2013 and it seems like this will be the year for equities,” he added.
Sachin Kerur the head of the Dubai office of Pinsent Masons, an international law firm, said: “In our November survey of the regional construction sector, the market indicated a healthy dose of optimism for the Abu Dhabi market This announcement endorses the feel-good factor.
“Whether the reality is feel good or feel relieved, this is welcome news for many hard-pressed contractors, and the markets seem in an ebullient mood judging by their reaction to the proposed Aldar-Sorouh merger”.
Hasan Ismaik, the managing director of Arabtec, said: “The Louvre Abu Dhabi is undoubtedly the most anticipated cultural development in the region and truly reflects the Emirates’ ambition to strengthen its position on the global map as a cultural epicentre.”
Sheikh Sultan bin Tahnoon Al Nahyan, TDIC’s chairman, said: “The awarding of this contract confirms Abu Dhabi’s commitment in developing iconic museums in the Saadiyat cultural district.
Work on the Louvre and Guggenheim museum’s on Saadiyat began in 2009, and piling works on the Louvre and the Zayed National Museum were completed in 2011. But the construction projects faced long delays during the global financial downturn, leading to fears that the projects had been scrapped.
Last January, TDIC published a revised timetable for the developments, and in March, TDIC invited contractors to submit fresh bids for the projects, which were initially expected to cost $27bn.