£1.8bn of Australian firm's Dubai contracts believed to be 'at high risk' of delay or cancellation
Investment bank Merrill Lynch has warned that Australian contractor Leighton has a “high risk” exposure in Dubai.
A broker's note said the firm, which carries out work in Dubai in partnership with local contractor Al Habtoor, should be concerned about contracts in the emirate being delayed or cancelled.
Leighton is Australia's biggest contractor and along with South African firm Murray & Roberts was stood down from the Trump Tower residential and commercial development by developer Nakheel when it put the Dubai scheme on hold towards the end of last year.
Leighton shrugged off the news by picking up the Dubai Pearl scheme - which includes building four towers of 73 storeys each - and a deal to build a new concourse at Dubai airport.
But despite these wins, Merrill Lynch analyst Kevin O'Connor said: “We believe that around A$4bn [£1.8bn] of Leighton's existing contracts are at high risk of some sort of delay/regeneration or cancellation.”
He added: “Dubai is the most exposed part of the Middle East as it relied heavily on debt and pre-sales and also has the largest stock overhang. We expect activity and order books will continue falling as contracts are put on hold and the emphasis shifts from residential development to government-backed infrastructure projects.”
Leighton chief executive Wal King has previously said there are still plenty of opportunities in the Gulf despite the signs that the property boom in Dubai is now over.