By Angela Giuffrida www.thenational.ae
Arabtec Construction and its partner Samsung are no longer vying for an estimated US$1.5 billion (Dh5.5bn) deal to build what could become the tallest tower in the world.
The joint venture had planned to submit its price this month for the 1.1km-tall Kingdom Tower in Saudi Arabia but pulled out because of “various reasons associated with the requirements”, said Tom Barry, the chief executive of Arabtec Construction, a unit of Arabtec Holding.
“We couldn’t comply so we decided not to bid.”
The tower, which if built would eclipse Dubai’s 818-metre Burj Khalifa, is being planned by Kingdom Holding, the business conglomerate owned by the Saudi Prince Alwaleed bin Talal bin Abdulaziz Al Saud.
The skyscraper has been mooted for a number of years although progress has been slow, prompting speculation on whether it would see the light of day.
The Arabtec and Samsung joint venture originally submitted a bid last year but was later asked to revise its pricing because of the financial crisis and subsequent fall in construction costs.
Emaar Properties, with which both companies worked on the Burj Khalifa, was appointed as the project’s consultant last summer.
The bid deadline was originally set for last Wednesday but has been extended by two weeks, said Philippe Dessoy, the general manager of Six Construct, which is still planning to compete for the contract in partnership with El Seif Engineering, a Saudi Arabian company. The partners also submitted a bid last year.
“I would say the project has a 50-50 chance of going ahead,” Mr Dessoy said.
Saudi Oger and Saudi Binladin Group are also competing for the project, which forms part of Kingdom City, a development that has an estimated construction cost of $26.6bn.
Contractors from the UAE are looking to boost their order books with work in Saudi Arabia, where strong population growth continues to fuel demand for property.
There is a shortage of 2 million homes in the kingdom and the need for another 1.4 million over the next 10 years, according to a report from the property consultancy CB Richard Ellis.
The country’s population is expected to grow by another 33 million by 2020.
The Saudi Arabian government is also investing heavily in the country’s infrastructure. Arabtec set up a unit in the kingdom in March last year in a move aimed at helping it to weather the slowdown in the UAE.
With land values increasing in Saudi Arabia, tall towers are one way of easing the housing shortage. But projects the size of Kingdom Tower can be very demanding on contractors in terms of initial funding and logistics, said Saud Masud, a property analyst at UBS bank. “Plus, Saudi is not known for being a high-margin region, especially when certain contractors are introduced into the market via local players,” Mr Masud said.