Economic slowdown in UAE blamed for breakdown of JV collaboration
A joint venture has broken down between a top Abu Dhabi developer and Australia’s largest contractor Leighton Holdings, as the client seeks cheaper prices.
Leighton, owned by Germany’s Hochtief, formed the JV with Tourism Development & Investment Co (TDIC) in December 2007 and is currently working on 3bn dirhams of projects for the client. Leighton will continue working on theses schemes but the JV has been scrapped due to the economic climate in the UAE, which has slowdown significantly since it was formed.
Lee Tabler, TDIC’s chief executive, told Bloomberg: “After a strategic review of TDIC’s business model and due to the changing economic climate, it became more commercially viable for TDIC to retain the flexibility to work with different contractors.” A TDIC spokesman added: “The market has changed. The prices of materials are lower and contractors are more desperate for work, so TDIC and other developers are reacting to that and looking for the best return on investment.”
TDIC is the development arm of the Abu Dhabi tourism authority. Schemes Leighton is working on with TDIC include the Angsana and Eastern Mangroves project and the Saadiyat Island Link.