Construction Opportunities in the GULF COOPERATION COUNCIL GCC

1
Construction Opportunities in the GULF
COOPERATION COUNCIL (GCC)

• August 23, 2007
• 100 200 p.m. (EDT)

2
Agenda

• Introduction
• Infrastructure Construction Sector
• EDC Chief Representative, GCC Jean-François
  Croft
• Canadas Strategy
• DFAIT Trade Commissioner, Africa and Middle
  East Paul Bears
• Questions
• Conclusion

3
Overview - Economic

• Total GCC GDP amounts to USD 725 billion in 2006
  and is forecasted to reach USD 790 billion in
  2007
• Oil windfalls have strengthened performance,
  encouraged government spending, grown confidence
  and resulted in investment boom
• Large external assets (USD1.1 trillion), falling
  debts (USD135 billion)
• Planned and underway projects amounting to USD
  1.47 trillion

4
Announced Projects
5
Overview - Economic

• The six GCC countries are all rated investment
  grade by Moodys and are all in OECD/EDC risk
  category 2
• Ease of doing business in the GCC ranks better
  than India, China and Russia (IFC World Bank
  ranking)
• Oil windfalls have produced robust economic
  growth, fiscal external surpluses and large
  external financial assets
• Diversification from the OG sector Finance,
  Trade, Infrastructure Real Estate Construction,
  Tourism, Industrial sectors, Privatization
• Stock markets have experienced corrections in
  2006 due to speculation

6
Ease of Doing Business
Investment Grades
7
Political Business Environment

• Shared interest and ambitions for a common market
  but in a go slow approach
• Expected to remain stable in the short to medium
  term
• Growing and demanding young population
• Will have to deliver sufficient levels of
  economic development and employment
• All countries are autocratic monarchies or
  sheikdoms with limited political participation
• UAE acts as the leader in reforms
• Region not very well understood in general and
  attracts bad publicity from headlines

8
Saudi Arabia

• Highest level of proven oil reserves (22) ,and
  biggest oil producer (13,5)
• The Kingdom of Saudi Arabia (KSA) is a power of
  influence in the Arab world, a dominant and
  unique voice in the Islamic world and the Gulfs
  largest economy
• A tremendous challenge for aging leaders and
  managers will be the promotion of a younger
  generation into decision-making positions
• Planned investments in infrastructure, health,
  education and other areas of interest to Canadian
  business total over USD 1 trillion over the next
  10 years
• KSA joined the World Trade Organization in
  December 2005
• In 2006, KSA joined the new United Nations Human
  Rights Council and activated a national Human
  Rights Committee

9
United Arab Emirates

• The UAE is a small, stable, tolerant,
  well-governed, economically booming federation of
  seven Emirates
• UAEs economy is the most competitive among the
  Gulf states, ranking 32nd in the world in terms
  of global competitiveness, followed by Qatar,
  Kuwait and Bahrain in the Top 50
• The UAE has almost 10 of the worlds oil
  reserves and is a major oil producer. These
  reserves are almost entirely concentrated in the
  Federal Capital, the Emirate of Abu Dhabi
• Surrounded by large, unstable neighbors, the UAE
  plays a balancing act of building regional
  security through the GCC and global security by
  building key strategic alliances with the US, UK
  and France

10
Infrastructure / Construction Sector

• The Middle East is now an integral part of the
  global construction industry, fuelled by the GCC
• The Gulf construction boom enters its sixth year,
  and there is little sign of any slowdown
• Analysts forecast the boom to keep on for at
  least the next 2 years
• Construction is the main engine of growth of
  Dubai
• More than 20 of world cranes capacity is in
  Dubai
• Dubai ranks second in the world after Moscow in
  terms of construction activity, with over 24
  million square feet of commercial office space
  currently under development
• UAE, Saudi Arabia and Qatar are investing heavily
  in the construction sector (Real Estate and
  Infrastructure)
• New born cities and economic cities, mass housing
  schemes, urban development programs, mixed-used
  developments, etc
• Real estate developments require infrastructure
  (roads, sewerage, power, municipal services, etc)

11
Challenges for Developers Contractors

• Building materials and construction equipment
  shortages
• Limited labour force and labour laws security on
  site is a challenge
• Increase in building materials and specialist
  materials prices
• Demand outstrips supply capacity constraint of
  contractors and MEP services providers
• Nearly 30 of the construction costs of a project
  are MEP related
• Competitive bidding has almost been eliminated
  and has been replaced by partnering agreements
  between clients (developers) and suppliers
  (contractors)
• GCC is a relationship driven market
• Contractors are looking to enter longer-term
  agreement with material suppliers and equipment
  providers

12
Competition

• Strong international presence of contractors,
  EPCers and material suppliers Japan, Korea,
  France, UK, US, Germany, China, India, Australia,
  etc.
• Full book of orders (possibilities to pick and
  choose projects) and operate at full capacity

13
Local Real Estate Projects

• EMAAR Properties
• 20,000 million Burj Dubai Downtown development
  Burj Dubai is soon to become the world tallest
  building
• Nakheel
• 40,000 million Waterfront project and 20,000
  million Jebel Ali International Airport in Dubai
• ALDAR Properties (Abu-Dhabi largest developer)
• 14,700 million Al-Raha Beach development
• Qatari Diar Real Estate Investment Company
• Pearl Qatar, New Doha International Airport,
  5,000 million Lusail project (400 million
  Infrastructure package)
• Dubai Properties
• 1,600 million Jumeirah Beach Residence
  development the largest single-phase
  residential and commercial project in the world

14
Local Contractors

• Al-Hamad Contracting (UAE (Sharjah)-based)
• Arab Technical Construction Company - Arabtec
  (Dubai-based)
• Al-Khaleej Development Company Tameer
  (Bahrain-based)
• Mushrif Trading Contracting company
• Dubai Civil Engineering (UAE-based)
• Al-Oula Development Company (UAE-based)
• Saudi Bin Laden Group (Saudi-based)
• International Contractors (other)
• There are low technical barriers to entry into
  the general contracting sector

15
Major Investments
ITB Invitation to bid Source MEED Projects
Value of projects includes planned, feasibility
and ITB stages
16
Top Local Developers Major Projects (UAE)
Source MEED Magazine, MEED Projetcs
17
Canada GCC

• CDN merchandise export volume to the GCC has been
  more than 1.1 billion in both 2004 and 2005
• UAE and Saudi Arabia 79 in 2005
• GCC has placed 3rd among all developing markets
  for the last 3 consecutive years in terms of
  total Canadian merchandise exports
• In 2005, Canadian exports to the GCC are higher
  than CDN exports to Brazil, India and Russia
• Ontario (CDN387mln), Quebec (CDN380mln) and
  Alberta (CDN197mln), have captured 84 of
  Canadas merchandise exports to the GCC in 2005
• The number of Canadian entities doing business in
  the GCC has grown at a average of 10 yoy for the
  last 5 years
• Of the BRICM countries, only China ranks higher
  than the GCC in terms of number of Canadian
  exporters doing business in the market
• More than 100 Canadian companies have a physical
  presence in the UAE
• There is almost a perfect match between Canadian
  capabilities and GCC needs

18
EDC Volume in the GCC - 2006
EDC's total business volume support in the GCC in
2006 is valued at CAD 622 million
CIB, 100,
FIN, 146 ,
16
23
Insurance,
376, 61
In 2006, EDC supported over CAD 171 mln of
transactions in the Infrastructure Environment
sector in the GCC
19
Canadian Exports to GCC (2005) Construction Sector
20
Canadian Companies in the UAE Infrastructure
Construction
21
Targeted Companies - GCC
22
Key Construction Dates - GCC

• Cityscape Dubai (16-18 October 2007)
• Attracts regional and international investors,
  property developers, governmental and development
  authorities, leading architects, designers,
  consultants and all senior professionals involved
  in the property industry. It provides an annual
  forum that celebrates the very best in real
  estate, architecture, urban planning and design
  from around the world.
• Big 5 (25-29 November 2007)
• The largest trade show for the Construction
  industry in the Arabian Gulf. A unique event,
  combining five major exhibitions under one roof
  (Building Construction Water technologies Air
  conditioning Cleaning Maintenance Glass
  Metal) . Featuring more than 2,000 companies from
  67 countries. 41,058 key buyers and
  decision-makers from the public and private
  sector attended the 2006 event, as well as
  architects, engineers, contractors and other
  specifiers.
• http//www.thebig5exhibition.com/

23
Trade Mission

• Organize a targeted Trade Mission in the
  Infrastructure Construction sector to the
  market
• Targeted dates are November 25 to 29, 2007
• A select number of Canadian companies
• Agenda of the Mission
• Participation at the Big 5 Trade Show
• Meetings with 3 top Real Estate developers
• Emaar Properties
• Nakheel
• Aldar Properties
• Technical Seminar with Contractors
• Reception

We invite you to contact EDC if you are
interested in the Trade Mission and if you
require additional information
24
Thank you
25
Contact Information

• International Business Development Group GCC
• Jean-Francois Croft, Chief Representative
• Tel [phone] Fax [phone]
• Email jcroft_at_edc.ca
• Anne-Marie Gagnon, Associate
• Tel [phone]/ Fax [phone]
• Email angagnon_at_edc.ca
• Infrastructure Environment Business
  Development
• Marie-Claude Erian, Sector Advisor
• Tel [phone] Fax [phone]
• Email erian_at_edc.ca
• Natasha Lymburner, Associate