Prospects for the UAE construction sector
Samir Saidi, Head - Contracting Finance, NBF
Over the years, the UAE has become home to the most advanced and developed infrastructure in the region. KPMG's 2019 Growth Promise Indicators (GPI) report said the UAE jumped three places to 22nd position among 180 countries, thanks to its infrastructure development.
Despite the challenging market environment, we are positive with regard to the UAE construction sector as it is built on strong foundations and has the support of the country’s visionary leadership. In the past weeks, the government announced the launch of the Dubai real estate planning committee that will be key to creating a vision for all projects for the next decade. With a focus on ensuring the balance between supply and demand, we see this as a positive step towards strengthening the sector and increasing investor confidence.
As we approach 2020 with Expo on the horizon, potential growth is underway in infrastructure, urban development, UAE housing schemes and other infrastructural projects across the electrical, oil and gas sectors. As for the Northern Emirates, projects across oil terminals, port expansion, infrastructure development and hospitality-related ventures are also set to kick-off. As a bank who has been born and bred in the UAE for the past three decades, National Bank of Fujairah has established itself as a resilient financial partner to corporates across the country in supporting UAE’s development of world-class infrastructure. And as such, we are excited about tapping into the opportunities in the market and working closely with our partners.
Over the past years, the contracting business unit has established NBF as a major player in the construction finance sector by supporting stakeholders with financing and professional counsel. As a result, the bank grew its portfolio of funded assets by 14.5% in 2017, secured 20% of its unit’s business through referrals and maintained client relationships for an average of 10 years. When construction companies are navigating the best way to finance their projects, it is crucial to partner up with a bank that understands the scope of the project, its cash flow, payment terms and contractual obligations.
Our contracting team supports our clients by structuring project financing facilities end-to-end by merging employers, contractors and sub-contractors. Our team boasts an unmatched understanding of the project scope, cash flow and payment terms and as such, we are best placed to act as the best financial partner for our clients and their fully-fledged solution provider. The bank’s offering covers Tender bonds, performance bonds, advance payment guarantees, maintenance guarantees, financial guarantees, short-term loans, mobilisation – overdraft loans, among others. As such, we have spearheaded delivering world-class projects.
To date, NBF is involved in projects worth AED 8.8 billion across different sectors in the UAE. For example, in Fujairah, the bank is involved in the project financing of the construction of Dh1.7 billion housing project that will become home to up to 10,000 people. In Abu Dhabi, the bank has also been active in financing governmental projects specifically in the education space as well as a major project with RTA for Expo 2020 in Dubai.
With the UAE’s ambitious aspirations for the infrastructure sector, especially with Expo 2020 and UAE Vision 2021 in the pipeline, it is important for financial partners to play their part in supporting this nation-wide growth through their advisory and lending efforts. Throughout the years, NBF has remained resilient and consistent in its partnership to key corporates across an array of industries including the construction sector. With partnerships spanning an average of 10 years and above, NBF continues to invest in its nurturing long-lasting relationships by dedicating time to understand the needs of its clients and the industry in which they operate in.