UDC and QDC: Big guns of construction in Qatar

Khalil Sholy, managing director of United Development Company (UDC), explains to Construction Week how the company is benefitting from Qatar’s booming construction industry, and how the flagship Pearl-Qatar project off the coast of Doha, is progressing.

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By  Colin Foreman Published  October 1, 2005

|~|Khalil-Sholy-Pix-LATEST350.gif|~||~|How does the current level of construction activity in Qatar impact your project?

There is unprecedented growth in the Qatar construction sector. This has resulted in an overall increase in the demand for all building materials; it
has also resulted in most contractors working at full capacity.

These factors have resulted in an overall increase in construction costs.

How is the Qatar Dredging Company and the United Development Company benefiting from the current boom?

Qatar Dredging Company (QDC) is an international, specialised reclamation contractor and will always benefit from any economic boom. It has the Pearl-Qatar and the New Doha International Airport reclamation contracts, and is expanding its equipment for other projects.

United Development Company (UDC) benefits from the current boom because it is creating an unprecedented demand for high quality housing, retail and hotel accommodation; these are exactly the products being created on the Pearl-Qatar. Consequently all released development phases on the Pearl-Qatar have been sold out.

Also to be considered is UDC’s district cooling business — Qatar Cool. This business is providing the right service at the right time. As a major shareholder in both QDC and Qatar Cool, UDC benefits accordingly from the current boom.

Does either company have major expansion plans?

QDC has major expansion plans. It is looking to substantially expand its marine and land equipment fleets, in order to support its active bidding process for future contracts. New cutters and trailers, as well as earth moving equipment, will be added soon.

UDC will benefit from the expansion of its subsidiary and associate companies as well as from direct pursuit of new ventures.

How much has UDC grown over recent years?

In July 1999, UDC was a start-up company with no projects and a paid-in capital of QR110 million. In July 2005, following its successful rights issue, the paid-in capital of the company exceeded QR 1.6 billion.

The company has enjoyed tremendous growth over the past few years, with financial results for 2004 showing a very healthy increase on 2003, with a net profit increase of more than 300%.

Likewise, net profit for the first quarter of 2005 showed an incredible jump of more than 1200% on the 2004 financial year.

What have been the company’s major achievements?

During this period, the company has started up and invested in five major projects. Four are JV projects with internationally renowned partners, and the largest — real estate development project, The Pearl-Qatar, is entirely self-developed.

The four projects in which UDC is in successful partnerships are: QDC with the State of Qatar & DEME of Belgium (UDC share 46%); Qatar Cool with Tabreed, UAE (UDC share 50.5%); Al Sief Linear Alkyl Benzene Company with QP (UDC share 20%); Gulf Formaldehyde Company with QP and other investors (UDC share 10%).

Does Qatar need more input from foreign contractors?

International contractors have been established and working in Qatar for some time, but in the present boom there is enough work to attract more.

What challenges lie ahead in the development of Qatar, from both a contractor’s and developer’s point of view?

Qatar is experiencing an unprecedented growth in all its economic sectors, and providing the necessary infrastructure to cater for their growth will be a major challenge. The Government and the private sector are aware of this and it is probably fair to say that as of now all seems to be fairly well under control.

Contractors need to cope with increasing demand by applying the highest standards of quality control, adequate planning of their resources, and structured growth.

Developers need to assess the feasibility of their developments, taking into consideration the various constraints that may negatively effect their investment e.g. exchange rates and procurement. They also need to pay attention to employing efficient building methods that will ensure longer project life span and economical operational costs.

How much of Qatar’s construction can be done by local companies?

For industrial projects perhaps 30% of the work; but for other construction projects, perhaps 75%.

Does Qatar challenge or complement other destinations in the Gulf?

I believe that Qatar is challenging other destinations in the region, but it is doing so in a complimentary manner.

How is work on the Pearl-Qatar progressing?

The project is progressing very well on all fronts. In terms of reclamation, almost half of the island has now been formed, and this work will be completed in July 2006.

The infrastructure tenders will all be in by mid-September.

Piling for Porto Arabia, the first major district on the island, has started and the first building tenders were evaluated
during July.

Well in advance of the construction activities, property sales have proceeded rapidly, and all Porto Arabia sites have been sold, as have all
the individual villa plots released so far.

As a result, UDC is moving on to fast track development of the other Pearl-Qatar districts, and the three hotel sites.

The design competition for Viva Bahriya, the next major district, has just been completed, and detailed design is underway.

Does UDC have any other development projects in the pipeline?

Yes, UDC has a number of other projects in the pipeline at the present time, and several of these are under very active consideration and review.||**||

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