Contractor fails to win phase two of plum job in Gulf state but consoles itself with expansion into UK housing.

Laing O’Rourke has lost out on the £500m second stage of the Dubai airport redevelopment in the Middle East, despite having built the first.

Dubai Civil Aviation has awarded the contract to a joint venture made up of local engineering firm Al Habtoor and South African firm Murray & Roberts, which has an alliance with Japanese company Takenaka.

Five workers died and 23 were injured in October in an accident during the first phase of the development. Dubai police are still investigating the accident, which occurred when steel used to reinforce a buttress wall fell onto workers.

Meanwhile, O’Rourke has announced plans to expand its UK operation. The company said this week that it will move into the UK housing market with the opening of a company called Explore Living.

This venture is to be led by Paul Healey, former managing director of Laing Homes, and Karl Pickering, previously managing director of Barratt Eastern Counties. The business will initially focus on development opportunities in the South-east but has a remit to create a national business.

A senior industry source said that it was a blow to Laing O’Rourke to lose the Dubai contract after working on the £350m first phase. The source said: “O’Rourke is now looking for another big job. T5 is still ticking along, but the firm is constantly looking for more.”

Laing O’Rourke declined to comment on the Dubai failure, but chairman Ray O’Rourke said in a statement that he believed that there were opportunities to be developed in the UK residential market. He said: “Through Explore Living we are going to create a residential venture that challenges industry norms in the same way that Laing O’Rourke has been challenging the construction sector.”

He added that the fundamentals of the UK housing market were robust, particularly if a firm came in with the right product at the right price.

The senior industry source said that O’Rourke would create a land bank to create a constant flow of work.

The source added that O’Rourke had been aggressive in the UK bidding at margins lower than the rest of the market. He said: “Ray O’Rourke would say he is able to do this because his business is more innovative than the rest making him more competitive, but there is also a school of thought that argues that he is racing to win work against the onslaught of Multiplex.”