Turkey’s Limak Construction has signed a contract to build the new terminal at Kuwait International Airport.
The development comes nine months after reports first emerged that it had won the work, and more than 18 months after reports said that all initial bids had been rejected.
The company, which is part of the 50,000-strong Limak Holding group, submitted a bid of US$4.34 billion to carry out the work and was told by Kuwait’s central tenders committee last August that its bid was the lowest.
Once complete, the new passenger terminal will have a capacity to handle 25 million passengers per year and be able to handle all aircraft types through 51 new gates and stands. The Foster + Partners-designed terminal is due to take six years to complete, but Limak’s contract also includes a further two-year maintenance contract.
The contract-signing ceremony was attended by Kuwait’s minister of public works, Ali Al Omair; the president of its civil aviation directorate, Fawaz Al Farah; and the Limak Group vice chairman, Sezai Bacaksız.
Limak and its Kuwaiti agent Kharafi National were initially revealed to have submitted the lowest bid to build the project – at $4.78bn – in November 2014. However, at the time, the ministry of works decided to reject all of the bids on the table and re-tendered the project, before eventually re-awarding it to Limak for the slightly lower sum. A project supervision package has also been tendered, but not yet awarded.
“The project is more than an airport, it’s a link between the two countries; – Kuwait and Turkey – between two economies, between two societies,” said Mr Bacaksız.
“As a result of this link, new technologies will be introduced and transferred, new jobs will be created locally, planned local procurement will be in the hundreds of millions of dollars, local businesses will flourish – all while we train and equip Kuwaiti men and women through various education and empowerment initiatives that we have planned for Kuwait over the next six years and beyond.”
More than 1 million cubic metres of concrete and more than 100,000 tonnes of structural steel will be used in the terminal’s construction, which has been designed with a single roof canopy containing glazed openings aimed at letting in light while deflecting heat.
It is hoped that once construction completes, the terminal will be awarded Leed Gold sustainability status.
The Arabian Gulf’s governments have continued to spend on developing airports despite challenges arising from lower oil prices constraining budgets, with Dubai’s recent award of a contract to Alec to expand Al Maktoum International’s terminal from a capacity of 5 million passengers to 26.5 million the most recent example.
Writing in Deloitte’s new GCC Powers of Construction report, the firm’s regional head of airports, Dorian Reece, said that several governments across the region are looking at alternative ways of funding airport development, including potential privatisations and public-private partnerships (PPP).
“Saudi Arabia has announced a pipeline of airport PPPs, building upon its recent announcement of granting an operate and maintain [O&M)]concession for Riyadh Airport,” said Mr Reece.
The kingdom’s first PPP airport project opened at Madinah in July last year and was built by a consortium including Turkey’s Tav Construction, Al Rajhi Group and Saudi Oger.
The O&M contract for King Khalid International Airport’s Terminal 5 building was awarded to Dublin Airports Authority International (DAAI) in February. DAAI’s sister firm ARI also secured a 10-year contract to run retail operations at Abu Dhabi International’s new Midfield Terminal Building last December.
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Mercer, the investment consulting arm of US services company Marsh & McLennan, expects its wealth division to at least double its assets under management (AUM) in the Middle East as wealth in the region continues to grow despite economic headwinds, a company official said.
Mercer Wealth, which globally has $160 billion in AUM, plans to boost its AUM in the region to $2-$3bn in the next 2-3 years from the present $1bn, said Yasir AbuShaban, a Dubai-based principal with Mercer Wealth.
“Within the next two to three years, we are looking at reaching $2 to $3 billion as a conservative estimate and we do see an opportunity to do so,” said Mr AbuShaban.
Mercer does not directly make investments, but allocates clients’ money they have discretion to, to professional asset managers. They also provide advice to clients.
“We have buying power. We can negotiate on their (client’s) behalf with asset managers to provide them lower fees than they otherwise would have to get on their own,” he added.
Mercer Wealth’s clients include sovereign wealth funds, family offices, and insurance companies among others.
From its office in Dubai, Mercer also looks after Africa, India and Turkey, where they also see opportunity for growth.
Wealth creation in Middle East and Africa (MEA) grew 8.5 per cent to $8.1 trillion last year from $7.5tn in 2015, higher than last year’s global average of 6 per cent and the second-highest growth in a region after Asia-Pacific which grew 9.9 per cent, according to consultancy Boston Consulting Group (BCG). In the region, where wealth grew just 1.9 per cent in 2015 compared with 2014, a pickup in oil prices has helped in wealth generation.
BCG is forecasting MEA wealth will rise to $12tn by 2021, growing at an annual average of 8 per cent.
Drivers of wealth generation in the region will be split evenly between new wealth creation and growth of performance of existing assets, according to BCG.
Another general trend in the region is clients’ looking for a comprehensive approach to investing, according to Mr AbuShaban.
“Institutional investors or some of the families are seeing a slowdown in the available capital they have to invest and in that sense they are looking at optimizing the way they manage their portfolios and making sure they are not investing haphazardly and different parts of their investment are working together,” said Mr AbuShaban.
Some clients also have a higher appetite for risk, given the low interest-rate environment that does not provide enough yield for some institutional investors. These clients are keen to invest in illiquid assets, such as private equity and infrastructure.
“What we have seen is a desire for higher returns in what has been a low-return environment specifically in various fixed income or bonds,” he said.
“In this environment, we have seen a de facto increase in the risk that clients are taking in things like illiquid investments, private equity investments, infrastructure and private debt, those kind of investments were higher illiquidity results in incrementally higher returns.”
The Abu Dhabi Investment Authority, one of the largest sovereign wealth funds, said in its 2016 report that has gradually increased its exposure in direct private equity and private credit transactions, mainly in Asian markets and especially in China and India. The authority’s private equity department focused on structured equities owing to “their defensive characteristics.”
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