Gulf Construction Online - KAR Group aims for expansion, diversification

Bahrain

The Exhibition World Bahrain project ... the main entrance steelwork required a 10-crane lift.

KAR Group aims for expansion, diversification

01 January 2023

Having established a niche in the contracting sector with its three decades of experience, the Bahrain-based KAR Group of companies is now looking at not only broadening its horizons and expanding within the construction sector but also diversifying beyond it, according to its Chairman.

“We will continue to expand within the construction sector whether this is by organic growth or by more diversification. We have plans ...” Dr Khalid Abdulrahim tells Gulf Construction’s Bina Goveas, without revealing details.

“We are also establishing in Saudi Arabia. Our goal is to provide an added value service to our brothers across the causeway. We believe that we possess certain technical skills that can be utilised on specialist projects in partnership with Saudi contractors, where we can add value. We are targeting several projects as we speak,” he states.

In Bahrain, the group’s flagship company Cebarco has added further landmarks to its impressive portfolio with the recent inauguration of the striking Exhibition World Bahrain (EWB) and the soon-to-open Marassi Galleria mall at Marassi Al Bahrain, a joint venture development by Abu Dhabi’s Eagle Hills and Bahrain developer Diyar Al Muharraq.

Work on Exhibition World Bahrain, which is the largest exhibition and conference centre of its kind in the region that opened in November, involved the construction of the state-of-the-art facility on a 309,000-sq-m plot of land. The 149,000-sq-m main building includes 10 exhibition halls, totalling 95,000 sq m, along with dedicated areas for retail and events.

Dr Abdulrahim ... “Our goal is to provide an added value service.”

Dr Abdulrahim attributes the company’s success in winning this project to its track record in delivering projects such as the Bahrain International Circuit and Yas Marina Circuit on time and to the high construction standards expected by its clients.

According to him, the client’s brief to the company was to set up the largest exhibition centre in the Gulf that offers great flexibility in terms of space and is easily maintained to reduce operational expenditure. Given that the complex would be required to accommodate a diverse range of events, it needed to be able to adapt to the cyclical loads – for instance, with air-conditioning (AC) systems that permit chillers to be on standby or ramp up quickly when loads change.

“Costs were an important factor to the developer and Cebarco provided significant savings through ‘value engineering’ the design,” says Dr Abdulrahim.

When Cebarco started work on the project at the onset of the Covid-19 pandemic, nobody realised at the time that the world would essentially come to a stop. “Whilst we managed to work through the difficult and challenging Covid times, we were certainly impacted by the global restriction to travel and factory closures around the world,” Dr Abdulrahim points out.

Given these challenges, Cebarco has been racing against the clock to meet schedules and in these efforts, it has made some incredible achievements.

Dr Abdulrahim explains: “What is probably the first such accomplishment of its kind in Bahrain was a 10-crane lift of the main entrance steelwork. This was carried out because our client wanted to open certain parts of the works ahead of the final completion date.

“Another major achievement was managing to have 12 million manhours worked without a single Lost Time Incident (LTI).”

Sellers ... currently handing over Marassi Galleria in a phased manner.

However, topping all achievements, according to Dr Abdulrahim, were the personal words of appreciation and recognition received from His Royal Highness Prince Salman bin Hamad Al Khalifa, the Crown Prince and Prime Minister, at the inauguration ceremony of the Exhibition World Bahrain on November 21. Dr Abdulrahim wished to sincerely thank His Royal Highness for the personal acknowledgment.

Over the past year, Cebarco has exerted a great deal of effort in getting its ongoing projects finished on or ahead of time, he states.

“Exhibition World Bahrain is a prime example of delivering a substantial part of the project ahead of schedule given the size of this project. It has focused a lot of senior management effort,” he adds.

Cebarco’s other major success is the Marassi Galeria project that is in the final stages of handover, he says. The contractor has completed its scope of works on the Marassi Galleria, a high-end shopping destination in Diyar Al Muharraq.

“We are currently going through a phased handover with our client Eagle Hills Diyar (EHD) as a project of such a large scale – nearly 600,000 sq m – would be impossible to hand over all in one go,” says Peter Sellers, CEO of Cebarco.

EHD has already commenced operations of the adjoining Vida Beach Resort Marassi Al Bahrain and has recently opened the Address Beach Resort Bahrain.

Sellers indicates that fit-out contractors have begun work on the interesting mix of retail units at the mall.

Exhibition World Bahrain ... 12 million manhours worked without a single Lost Time Incident

“We have an ultra-high-end luxury section of the mall with an exclusive drop-off area and at the other end is a supermarket and high-street shops. We are sure that this unique location will become a major destination not only for Bahrainis and expatriates but a significant draw for tourists,” he adds.

Among other ongoing projects, Cebarco continues to press ahead with the construction of the new Electricity and Water Authority’s (EWA) command and control centre in Hidd, the 15-storey District Tower office and Phase Four of the Tubli Sewage Treatment Plant (STP).

Meanwhile, Cebarco has recently secured the BD12-million ($31.6 million) main contract for Phase 1A of the new Cargo Express Village at Bahrain International Airport (BIA) on behalf of Bahrain Airport Company and has already commenced construction works on the project. Egis International is the engineering consultant for the project, which is scheduled for completion in October 2023.

Elaborating on the scope of works on the project, Sellers says: “The contract includes the construction of four warehouses, with a total floor area of 12,500 sq m, and associated infrastructure, central utilities and networks and full fit-out and testing and commissioning of the two warehouses, the first of which will be occupied by FedEx, on completion.”

Cebarco’s other recent successes include additional works at Dilmunia where the company enjoys an enduring partnership role with the masterdeveloper Ithmaar Development Company, according to Dr Abdulrahim.

“This apart, we have secured several projects, the majority of which are confidential, being either for VVIP clients or of a sensitive nature,” he adds.

Phase Four of the Tubli Sewage Treatment Plant (STP) ... a major ongoing project for Cebarco.

Dr Abdulrahim firmly believes that Cebarco has few competitors that have the ability to offer the complete service that it can provide. “We see many companies taking on complex works and failing as they do not wish to invest in the fundamentals such as EHS (environment, health and safety) and technical design teams, or even producing the correct method statements and risk analysis,” he says.

He cites instances where Cebarco has been called upon to bid for projects alongside its main competitors, where the projects were awarded simply on a cost basis and these started to fail at the onset.

“We even had one client ask if we could suggest a good EHS manager and we could lend all of our EHS documentation as the successful contractor could not provide it. Given these facts, we hope that clients will see the long-term benefit of employing the best contractors in Bahrain. We would like to see a new category in Bahrain such as an AAA contractor for the most complex and expensive projects,” Dr Abdulrahim emphasises.

In terms of technology, Cebarco often uses 3D printing for mock-up samples, which eliminates the need to commission expensive one-off tooling, or when it needs to have a scale model of various components to see how best they can be fitted together, says Sellers.

“Whilst 3D designing does enable complex structures to be visualised, we like to be able to 3D print so that we can touch and feel how complex structures work.

“We have recently experimented with 3D printing in concrete of full-size complex structures but this is technology that is still in its infancy. We are certain that in the next couple of years we will see this form of construction become more prevalent,” he says.

Turning to sustainability, Sellers says: “We are currently considering options to power our site accommodation and site operation through solar panels with battery back-up. Whilst it is feasible economically, the issue is storage and damage of PV panels in between projects. This is currently work in progress but one in which we will be investing on our next long-term project.”

KAR Group companies such as Cebarco, Kartec and KAR Facade have all continued to invest in new equipment during 2022.

“Some significant investments have been made in mobile and tower cranes and particularly in a large fleet of manlifts that have been particularly useful for the EWB project due to the extremely high ceiling heights of 16 m in some places,” Dr Abdulrahim points out.

Another group member KAR Properties, meanwhile, has seen the opening of its latest property Riffa Gharbi shopping centre last year.

“Leasing is moving along with a strong anchor tenant in Al Osra supermarkets. We have also established a new bathrooms and ceramics destination within the mall – Aqualux – which, we believe, is now the most luxurious showroom for sanitaryware and ceramics in Bahrain.

“We will shortly be opening our new ladies healthclub and spa in the Riffa Gharbi mall which will be to international standards. The spa has a gymnasium that will offer fitness and wellbeing training that has never been offered in Bahrain before. We will also be having hairdressing, beauty spa, treatment rooms, saunas and the like,” Dr Abdulrahim says.

According to him, the KAR Group intends to keep adding new businesses to its portfolio and attempting to diversify away from just the construction sector.

“We have been working with several organisations involved in education and healthcare and we see these as fields where we will be moving into,” he adds.

Dr Abdulrahim also intends to support the expansion of the portfolio of his son and daughters – Mohammed, Nouf and Dalal – who are board members and who continue to control their respective lines of business and bring in new business ideas.

“Indeed, it is gratifying to see the dynamism of my children as they continue to establish new lines of business and draw the younger generation into our environment through the use of social media, convenient payment platforms and new ways of placing our products,” he comments.

Outlook

Commenting on the state of Bahrain’s construction sector, Dr Abdulrahim says: “We have seen a slowdown in projects coming to the market as developers reconsider their investments based on current market circumstances. This said, we have a long list of enquiries which, we are sure – once the projects are pressure tested – will feed through to the market. Given the exciting announcements of new gas discoveries, Saudi Arabia’s PIF investments and extensions to the GCC-funded projects, we see a positive future.”

He continues: “His Royal Highness Prince Salman is reorganising the government for greater efficiencies and by appointing HE Shaikh Khalid bin Abdulla as Minister of Infrastructure, it is clear that many of the long-awaited infrastructure projects will come to fruition. The Bahrain Metro, the Fourth Manama-Muharraq Crossing, upgrade of the power and water networks and major redevelopment of the roads infrastructure will all boost the construction sector and, of course, filter down through all of society.”

He believes that increasing private sector participation will give the required push to the real estate and construction sectors in Bahrain – which is already happening with public sector housing developments.

“There is a drive to move away from full government-delivered projects to private developments for the public sector. This initiative should, hopefully, enable more projects to be delivered in a shorter period so as to meet HM the King’s directives to deliver social housing projects,” he says.

In the real estate sector, meanwhile, there is a move from lower value apartments (in the BD60,000 region) to more quality mid- to high-end developments. In addition, people looking at owning homes are moving towards buying from developers rather than building their houses, eliminating some of the headaches and risks involved in undertaking projects by themselves, Dr Abdulrahim indicates.

“Unfortunately, the market has slowed down due to the recent interest rate increase but this is happening all over the world. Once the market adjusts to the new ‘normal’, investors will spend as ultimately the shortage of property is not going away.

“The government is also supporting with incentives with utility connections and the regulations that Rera place on protecting individuals all help in establishing confidence in an increasingly expensive market,” he states.

Despite the downturn in the market, Dr Abdulrahim believes his group of companies is well geared to tackle the challenges.

“We see the current market downturn in Bahrain will hurt many contractors, particularly those without the detailed internal controls that we have. Whilst being a family business, we keep everybody accountable and in check. We have the strength to weather the current conditions and to come out of it stronger. With the support of the government in providing a strong foundation for the private sector and with a serious intent to bring in FDI, the KAR Group will continue to grow and assist in the development of our great nation,” he concludes.