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The impact of Qatari crisis on UAE companies - Analysis

The impact of Qatari crisis on UAE companies - Analysis
Drake and Scull, Damac and Arabtec have many investments in Qatar
Drake & Scull
DSI
-2.63% 0.37 -0.01
Arabtec Holding
ARTC
-3.29% 0.53 -0.02
Damac
DAMAC
0.00% 1.40 0.00

By: Amr Adel and Mahmoud Gamal

Dubai - Mubasher: The crises between gulf countries and Qatar has put some Emirati companies in danger, as the crisis has intensified with more pressure being poured on Doha.

Saudi Arabia, the UAE, and Bahrain, among other Arab states, announced last week that they have decided to cut diplomatic relations, and close all borders with Qatar.

Drake and Scull comes in the lead with contracts worth around AED 500 million ($136 million) for projects in Qatar.

The company also has an AED 343 million contract to build phase one of Doha Metro, which is set to be completed by 2020, and it was also hoping to obtain more deals as part of the 2022 Fifa World Cup projects.

Arabtec is a partner in two projects in Qatar that await legal and financial issues.

Meanwhile, Damac recently launched Burj DAMAC Seaviews in Lusail, and it is currently developing two more towers, Burj DAMAC Marina and Burj DAMAC Waterfront.

Tariq Qaqish, asset manager at MENACorp said that real estate companies with investments in Qatar will, without a doubt, be affected by the political conflict, the effects will vary based on its volume and its importance for the company’s position.

Qaqish also told Mubasher that Drake and Scull, currently suffering from a crisis, will be affected by the Qatari problem since 5% of its investments are in Doha, this could hugely impact the company’s cash flows, not to mention the probability for the UAE government to withdraw all investments from Qatar, and force the private sector to close its units in Qatar.

As for the effect of the crisis on Damac, Qaqish believes that it will be mild due to the relatively small investments in comparison to the company’s total that reached AED 24.6 billion by the end of last year, but some contracts related to the World Cup projects could be terminated.