Qcn 1 4 december web by Firefly Communications

EXCLUSIVE INTERVIEW: NICK WITTY, DIRECTOR of REAL ESTATE at DELOITTE, ON QATAR’S REAL ESTATE TRENDS - PG. 32

issue 1.4

GREEN BUILDINGS

December 2014

FROM AN OPTION TO A MANDATE

how Green construction in Qatar will no longer remain a matter of choice in the near future

Feature story

How can companies manage and implement health and safety in Qatar’s construction sector?

Technology

BIM is commonplace in Qatar’s construction sector, but is still new in transportation

Plus:

Key issues arising from force majeure clauses in Qatar’s construction contracts

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contents

DECEMBER 2014 www.qatarconstructionnews.com

Cover Story Qatar National Development Strategy FROM AN 2011–2016 mentions OPTION TO A MANDATE green credentials will be mandated by 2016. How prepared is Qatar’s construction market to face legislation enforcing sustainable construction? In an exclusive interview, Meshal Al Shamari, director, Qatar Green Building Council, gives an overview of green construction in Qatar, while forecasting the legislation that will soon enforce developers in the country. EXCLUSIVE INTERVIEW: NICK WITTY, DIRECTOR OF REAL ESTATE AT DELOITTE, ON QATAR’S REAL ESTATE TRENDS - PG. 32

issue 1.4

GREEN BUILDINGS

December 2014

how Green construction in Qatar will no longer remain a matter of choice in the near future

Feature story

How can companies manage and implement health and safety in Qatar’s construction sector?

Engineer Meshal Al Shamari, director of Qatar Green Building Council, says that the Qatar Sustainability Assessment System for Green Buildings (now Global Assessment System for Green Buildings) will establish green building standards to which all government buildings will have to conform by 2016. Thereafter, all new commercial and residential buildings will be brought into the new regime.

24.

26.

Technology global BIM market set to reach USD8.6 billion by 2020

feature story Health and safety in Qatar’s construction sector

The value of the global Building Information Modelling (BIM) market is set to grow from USD2.6 billion (QAR9.5 billion) in 2013 to USD8.6 billion (QAR31 billion) by 2020. Supporting the Middle East’s construction sector, Omnix International has been appointed as the region’s exclusive reseller of MagiCAD BIM software.

Qatar has been under intense international scrutiny over the treatment of migrant workers. Health and safety conditions, inevitably, come under the realm of the overall state of employees at worksites and in their worker accommodations. Simon Joss and Neil Robson suggest some ways through which gaps between local and international workplace health and safety standards can be bridged in Qatar’s construction sector.

Technology

BIM is commonplace in Qatar’s construction sector, but is still new in transportation

Plus:

Key issues arising from force majeure clauses in Qatar’s construction contracts

Regulars

From the Editor - 6 Construction News - 8 Guest Column - 14 Legal - 38 Qatar Tenders - 40

32. Interview Qatar is an emerging real estate market backed by a strong government In conversation with QCN, Nick Witty, director for real estate at Deloitte, provides an overview of Qatar’s real estate sector. With more than 26 years of experience in international real estate advisory across Europe and the Middle East, Witty is a qualified chartered surveyor and a member of the Royal Institution of Chartered Surveyors. QCN | December 2014

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firefly communications PO Box 11596, Doha , Qatar Tel: +974 44340360 / Fax: +974 44340359 www.firefly-me.com The Edge, Qatar Construction News is printed monthly by ÂŠ 2014 Firefly Communications. All material strictly copyright and all rights reserved. Reproduction in whole or in part, without the prior written permission of Firefly Communications, is strictly forbidden. All content is believed to be factual at the time of publication. Views expressed by contributors are their own derived opinions and not necessarily endorsed by The Edge or Firefly Communications. No responsibility or liability is accepted by the editorial staff or the publishers for any loss occasioned to any individual or company, legal or physical, acting or refraining from action as a result of any statement, fact, figure, expression of opinion or belief contained in The Edge. The publisher (Firefly Communications) does not officially endorse any advertising or advertorial content for third party products. Photography/image credits and copyright, where not specifically stated, are that of Shutterstock and/or iStock Photo or Firefly Communications.

December 2014 | QCN

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QATAR FINANCIAL CENTRE: SPORTS AND BUSINESS OPPORTUNITIES Ahead of the major international sporting events Qatar is preparing to host, including the World Athletics Championship 2019 and the FIFA World Cup 2022, the nation is witnessing a surge of construction projects that will undoubtedly contribute to boosting an already buoyant economy. Qatar’s construction industry has posted double-digit growth between 2012 and 2014, and the trend is expected to continue. Billions of dollars worth of infrastructure projects including a rail system, a seaport, and major new roads are currently underway, and more are in the pipeline. All firms looking to explore these oportunities by setting up in Qatar can benefit from the expertise of the Qatar Financial Centre (QFC), the country’s sole onshore business and financial centre, which provides an ideal environment platform for doing business both in Qatar and the region. In recent years, the QFC has broadened the range of firms it welcomes and currently caters to a wide variety of corporate structures and professional and business service companies. As the domestic economy continues to flourish, firms registered under the QFC benefit both from international expertise within the QFC community

and from the strong local networks and exposure that QFC firms already enjoy. Today, Qatar is positioning itself as a regional leader in various sectors, not only sport. As one of the world’s fastest growing economies with the world’s highest GDP per capita, the country is actively seeking to develop its national infrastructure, with the resultant increase in opportunities not only for construction firms but also for the myriad supporting industries, from accountants and auditors to engineering consultants and communication experts. The QFC is continuously updating its offering to reflect the growing needs of Qatar’s economy. Furthermore, the QFC is fully equipped to welcome all suitable firms with a quick and easy process of setting up in this thriving economy. It also allows foreign companies 100 percent ownership, 100 percent repatriation of profits and 10 percent corporate tax on locally sourced profits. As the QFC continues to grow, more and more domestic firms are finding a new home under its umbrella. Today, around 30 percent of QFC-licensed firms are homegrown domestic businesses, eager to strengthen the local private sector as Qatar’s needs continue to grow. QCN | December 2014

editor’s letter

With a number of high-rise scaffolding and deep excavations across construction sites, the risk of death or injury is unavoidable in Qatar.

December 2014 | QCN

Anywhere in the world, there will always be accidents on construction sites. It is the nature of the work that gets carried out. The case of Qatar, however, is unique. The country is going through an unprecedented construction boom. With little experience of simultaneous infrastructure and construction development in the past, a number of challenges are bound to unfold ahead of the 2022 World Cup and of course the Qatar National Vision 2030. One such challenge bringing international scrutiny to Qatar relates to health and safety (H&S) conditions for construction workers here. Most worksite injuries and deaths in Qatar involve objects and people falling from heights. With a number of high-rise scaffolding and deep excavations across construction sites, the risk of death or injury is unavoidable. However, accidents can be reduced if managed with prudent H&S exercises. A key concern for Qatar in implementing sophisticated H&S practices is the nature of its workforce. Most unskilled labourers in the country’s construction industry have little, if any, knowledge of H&S, let alone previous safety-related training. Add to this their linguistic diversity and limited ability to communicate in English, and the task to educate and train them as per international H&S standards becomes even more daunting. Nonetheless, there are organisations in Qatar that have managed to surpass these barriers, reporting millions of manhours without lost-time incidents. That said, there have always been companies that have repeatedly failed on safety grounds, leading to frequent injuries. Often, it is at the level of subcontractors that H&S violations take place – a problem that can be rectified through strict punitive measures. For instance, penalising the violators with heavy fines, or removing them from the site are some strong disciplinary actions lead contractors can take against subcontractors that repeatedly fail to comply with minimum H&S standards. Arguably, the level of H&S practice also depends on the client’s preference. When a client unequivocally dictates health, safety and environment (HSE) standards, chances of improved practices are more likely. However, how these standards are implemented on a

day-to-day basis is something that comes more under the realm of project management. Discussing a managerial approach to implement robust HSE practices in Qatar, on page 26, Simon Joss and Neil Robson suggest some ways through which gaps between local and international workplace health and safety standards can be bridged. Speaking of HSE, environment has a key role in Qatar’s transforming skyline. As the pace of the country’s construction activities has picked up over the last few years, what has become inexorable is the growing amount of construction waste, more demand for energy, increasing water consumption and, of course, the carbon footprint that continues to grow with population. While all this heralds national development, a smart approach can be adopted to protect Qatar’s environment from being jeopardised in pursuit of rapid urbanisation. Efficient management of construction waste, recycling grey water, incorporating district cooling plants and using solar panels to generate power supply are some initiatives to this end. Discussing more steps Qatar has taken towards green construction, Meshal Al Shamari, director of Qatar Green Building Council, gives an overview of sustainable development in the country on page 16. One thing we can expect in the coming years, he says, is legislation forcing developers to construct green buildings. While it is viable to add green credentials to a building under construction or in design phase, how practical will such legislation be for existing buildings or those ready for handover? And what will Qatar’s priority areas for green construction be? These, among others, are some key areas we explore in the cover story of QCN this issue. Enjoy reading, and Happy New Year.

Farwa Zahra Editor

Construction

News

â&#x20AC;&#x153;Khalifa International Stadium has always been pivotal to the sporting scene in Qatar, having hosted several international tournaments and friendly matches.â&#x20AC;? - Hilal Jeham Al Kuwari, president of Aspire Zone Foundation.

December 2014 | QCN

Qatar unveils desig stadiums proposed fo

construction news

gns for two more or 2022 world cup With the designs of Al Bayt Stadium and Al Wakrah Stadium already out, the hosting nation for the 2022 World Cup revealed the new design for Khalifa International Stadium, followed by the unveiling of Qatar Foundation Stadium’s design. While the Khalifa Stadium is scheduled to have renovation works complete by 2016, Qatar Foundation Stadium is planned to be completed by 2018.

With renovation works scheduled to be complete in 2016, the new Khalifa International Stadium will accommodate a seating capacity of 40,000. (Image Supreme Committee for Delivery and Legacy)

In June 2014, Qatar unveiled the design for Al Bayt Stadium, only a month after ground breaking works commenced on the site of Al Wakrah Stadium. Five months later, the country has launched the new design for another sporting venue proposed for the 2022 World Cup – Khalifa International Stadium located in Aspire Zone, followed by the unveiling of the design for Qatar Foundation Stadium planned to be completed by 2018. Scheduled to have renovation works complete by 2016, the revamped Khalifa Stadium will feature a seating capacity of 40,000. The parking space for the redesigned stadium will accommodate 6000 cars, while the area allocated for buses will have the capacity for 2300 buses. Attached to the stadium will be Qatar’s 3-2-1 Olympic and Sports Museum, the first of its kind in the country. Other facilities connected to the stadium will include food courts, shops, multipurpose rooms, VIP lounges and a health centre. While FIFA is yet to pass its verdict on the timing of the 2022 World Cup, both the stadiums have been redesigned to be functional for a summer tournament. The new designs for these stadiums feature cooling technologies that ensure an optimal playing temperature of 26 degrees Celsius and provide a comfortable environment for fans and players. This will not be the first time for Khalifa International Stadium to go through renovation. Built in 1976, the stadium is one of the oldest sporting venues in Qatar. The stadium was last renovated in 2006 to comply with the requirements for the Asian Games. Speaking about the position of this stadium in Qatar’s sports legacy, Hilal Jeham Al Kuwari, president of Aspire Zone Foundation, supervising the renovation programme, said, “Khalifa International Stadium has always been pivotal to the sporting scene in Qatar, having hosted several international tournaments and friendly matches. The aim of the renovation is not only to refurbish the stadium to fulfill the FIFA requirements, but to enhance it with new features as well. In this way, we will be able to keep the stadium sustainable for a longer time and ensure that it will remain a global sports hub, as well as a focal point for the local community.” Earlier in November, FIFA cleared Qatar of alleged corruption in bidding for the 2022 World Cup. However, Michael Garcia, the American lawyer who submitted the investigation report about the case, has accused FIFA of “erroneous representations of the facts” presented in his report. While the fate of 2022 World Cup is still subject to international scrutiny, Qatar has regional support from its neighbours. Speaking at the unveiling of Khalifa International Stadium’s new design, HE Abdullatif Al Zayani, secretary general, Gulf Cooperation Council (GCC), said, “Having such a global tournament organised by a Gulf state will be a source of pride not only for the Gulf, but for all Arab countries as well. Hosting the FIFA World Cup is a legitimate right for this region, and the GCC will always stand by Qatar to safeguard this right and make the World Cup happen.” QCN | December 2014

Construction

News

Industry Views

QCN approached a number of professionals to ask about their key concerns in Qatar’s current infrastructure/construction market. Here is what they had to say.

Political instability: A new concern for Qatar’s infrastructure A new concern is regional political instability. Potentially, this could have a detrimental effect on the supply and transportation of construction materials. In general, the scale of the programmes means that it is unclear whether sufficient construction materials and labour can be sourced or delivered through the port. A shortage of managerial and technically skilled people will also be a problem as global demand now exceeds supply. Some rescheduling of projects may be necessary and much depends on whether or not the World Cup proceeds. But even if the supply issues are resolved, it is likely that the volume of material required by Qatar, at the same time that other regional construction programmes are expanding, will cause unplanned and significant cost inflation.

“The size and scale of the infrastructure projects will require careful planning and scheduling in terms of the sheer volume of materials and labour.” Neil Hamilton, director, Quantex Qatar, is concerned that the number of vehicle movements and site deliveries required could increase traffic flows and put pressure on existing resources to meet the tight timescales for these projects. This increased activity, he adds, could also cause a knock-on effect for similar trades on other unrelated projects, such as the availability of specialist plant and machinery, skilled labour and essential materials, and could cause a ripple effect as the supply and demand equation will determine the price and, ultimately, which project, gets serviced.

“An important factor in the Qatar market is price escalation, most large-scale projects are based upon a fixed price element and this is a high risk element.” Mark Rudman, Faithful+Gould’s country manager for Qatar, says another key issue is logistics and material procurement as it requires consideration and forward planning. Procuring the right resource for the entire supply chain is always crucial and as the market is heating up from both an infrastructure and property perspective, this is becoming more challenging for clients, consultants, contractors and subcontractors alike. Another challenge, he adds, is recruiting the right people.

December 2014 | QCN

“Even if the supply issues are resolved, it is likely that the volume of material required by Qatar [and the region] will cause unplanned and significant cost inflation.”

Anthony Holmes is the cofounder and director of the Institute for Infrastructure Studies in the United Kingdom.

“There is an obligation in Qatar to source materials locally, or from GCC member states. Failure to do so can result in fines being levied.” Peter Blackmore, partner at Pinsent Masons’ Qatar branch, says that the cost of materials is a major risk for contractors. There are fears of overheating in the market, particularly for steel and concrete. Additionally, the government’s recent announcement that it will intervene to create single source suppliers in Qatar might alleviate the inflation risk, but it remains to be seen which commodities it will invest in.

“Disputes are a natural occurrence among parties in the construction sector, due to various factors, and these disputes have several consequential effects, such as delaying delivery, and negatively impacting cashflow.” Khalifa Al Misnad, partner, Al Misnad & Rifaat, says the effective and swift resolution of disputes is essential in the sector in order to progress required construction works, and to boost confidence and protect the respective investments of all parties involved in the industry.

construction news

December’s big NUMBER

USD

285 billion

“It’s great to take the World Cup to an Arab country…But we cannot go to Qatar if we don’t solve the issue of the exploitation of the workers.”

Value of Qatar’s active construction/ infrastructure projects. With the amount of contracts awarded in Qatar’s project market reaching USD22.5 billion (QAR82 billion), the value of Qatar’s active projects market has reached USD285 billion (QAR1.04 trillion), according to MEED Projects. As Qatar enters into 2015, the value of its project market is slated to go up. According to Deloitte’s construction report for 2014, the Minister of Finance has allocated USD24 billion (QAR87 billion) to key projects, marking an increase of 16 percent from 2013/14; this is also the biggest infrastructure budget in the country’s history.

Jerome Champagne, FIFA presidential candidate, said that resolving the labour exploitation in Qatar effectively means the companies from the rest of the world have to be subject to strict regulations based on what has been said by Amnesty International and the International Trade Union Conference.

2.3

million The approximate population in Qatar.

The number of people living in Qatar reached 2,269,672 as of November 30, 2014, according to the latest data released by the Ministry of Development Planning & Statistics. In November alone, the number of people entering Doha was in excess of 53000. As of October 31, 2014, the population of Qatar stood at 2,216,500. On month-on-month basis, the recent figures indicate a 2.4 percent increase from October to November. Population growth in Qatar has been the fastest in the Gulf region, averaging 10.9 percent in 2013. A primary connection to the growing population is the influx of expatriates entering the country to join its ongoing construction boom ahead of the 2022 World Cup and Qatar National Vision 2030, and the recently awarded 2019 World Athletics Championships.

Awards

Key recent contracts awarded in Qatar • Qatar has awarded contracts for its new container port worth nearly QAR14 billion and nearly 53 percent of them were won by national contractors. The Minister of Transport HE Mr. Jassim Saif Ahmed Al Sulaiti said nearly 50 percent of the new port in Mesaieed south of the capital Doha has been completed and that the first phase will be ready in 2016. He stated that the port, which will cost QAR27 billion, would handle two million containers when the first phase is completed, adding that the capacity would reach six

million tonnes after the completion of the project’s phase two and three. • The Public Works Authority (Ashghal) announced the signing of 12 infrastructure contracts with an estimated value of QAR5.53 billion, including seven construction contracts under the Local Roads and Drainage Programme, one contract under the Expressway Programme, in addition to four contracts for sewerage stations projects. The total value of Ashghal’s contracts awarded in 2014 now exceeds QAR26 billion

• Lotte Engineering & Construction announced winning a metro construction project worth USD121.96 million (QAR444 million) in Qatar. The Qatar Railways Company-commissioned project calls for building a section of the Red Line North in Doha. The total length of the line to be built by the contractor is 6.7 kilometres. Lotte won the order in a consortium jointly with Rizzani de Eccher of Italy and Redco of Qatar. The construction is set to begin at the end of December 2014 and take 43 months to complete.

QCN | December 2014

Construction section

NewsEvents 10 - 11 December

INSULATIONTech Qatar

27 – 28 January

Major Projects and Infrastructure Qatar InterContinental Doha - The City

1 – 4 February Proper insulation of buildings in Qatar can prevent undesirable temperature flows, hence reducing energy consumption.

Recognising the importance of insulation as central to delivering superior indoor environment quality, InsulationTech Qatar is co-located with AcousticsTech. To be held at InterContinental Doha The City, the event is designed to tackle the challenges of enhancing heating, ventilation and air-conditioning (HVAC) practices through improved insulation.

10 – 11 December

AcousticsTech Qatar InterContinental Doha - The City AcousticsTech Qatar will provide the opportunity to maximise networking and knowledge-sharing between professionals and solution providers operating in the field of acoustics.

11 – 15 January

Middle East Mediterranean Materials Congress on Energy and Infrastructure Systems (MEMA 2015) December 2014 | QCN

Drainage and Sewerage Middle East InterContinental Doha

1 February

Qatar Design Awards

Designed by French architect Jean Nouvel, Burj Qatar received the ‘Overall Project of the Year’ award at the fifth annual Middle East Architect Awards 2012. (Image Corbis)

The Qatar Design Awards is aimed to recognise and reward outstanding interior design and architecture projects, located within Qatar. The ceremony will be held at the W Hotel in Doha. The Qatar Design Awards will bring together 150 leading industry professionals. The Awards are open for developers, operators, interior designers and architects for projects located within Qatar to send their entries online.

2 – 4 February

Interiors Qatar Exhibition Qatar National Convention Centre

11 – 12 February

Offshore Specialized and Construction Vessels Summit 22 – 24 February

Facade Design & Engineering Middle East The 7th Annual Facade Design & Engineering Middle East Summit, to be held at InterContinental Doha, will bring together the pioneers in façade design and construction to discuss key challenges faced in existing and upcoming projects while providing exclusive insight into how they are achieving iconic façades. Key topics to be discussed at the event include intelligent façades to improve sustainability, incorporating values of the past into the modern façades of today’s cities, façade lighting designs and implications of the Global Sustainability Assessment System.

10 – 11 March

Qatar Projects Conference Grand Hyatt, Doha

24 – 25 March

The Energy Efficiency & Conservation Forum Hilton Doha

construction news

Smart data for smart cities in the Middle East Governments in the Middle East need to ‘smartify’ data to enhance their smart city value, SAP announced at the Arab Future Cities Summit in November. Throughout the Middle East, sensors embedded in everyday objects and mobile devices are generating unprecedented amounts of data. By using innovative Big Data mobile and business applications, public and private sector organisations are driving the region’s hyper-connected economy, providing new processes and insights, and delivering new kinds of value to stakeholders. “The Middle East’s smart cities need to ‘smartify’ data generated by the growing number of connected devices in the ‘Internet of Things’ era. By analysing data, governments can gain new insights, provide unique experiences, and create novel sources of value to make...businesses more 1 successful,” Enertech Dec14 QCN HHP2.pdf 12/7/14 said Sam Alkharrat, president, SAP, MENA.

Workshop highlights the role of Qatar National Datum

The workshop was marked by the presence of more than 200 representatives from the consulting offices and the Ministry of Municipality & Urban Planning representatives.

1:09

Qatar Railways Company (Qatar Rail) recently held a workshop in cooperation with the Ministry of Municipality & Urban Planning, the Centre for Geographic Information PMSystems and the Building Permit

Complex Department. The workshop centred on the importance of applying the Qatar National Datum QND95, a comprehensive geodetic datum for topographic mapping used as a spatial reference system in the state of Qatar. The event, held in the presence of engineering consulting offices, came as part of Qatar Rail’s ongoing coordination with its governmental stakeholders towards adopting the highest standards in all its projects’ phases. The workshop included discussions on the importance of dealing with Qatar National Datum QND95, a clarification about the datum specifications, the difference between ‘Level of Zero’ and QND95, as well as the problematics of using ‘Zero Level’ elevations.

sectioncolumn guest

High time for encouraging green buildings in Qatar Looking at some key statistics on carbon emissions and the depletion of natural resources, Khaled Al Jaber discusses Qatar’s need to focus more seriously on developing green buildings.

Khalid Al Jaber is the founder of Innovation Group (Innovation Films & Innovation Teccnologies GmbH).

In light of the colossal evolution and urban expansion ongoing in Qatar’s capital city of Doha, the number of towers and buildings will continue to increase. Doha’s development has served to attract more international visitors not only for work and business opportunities, but also for leisure purposes, which in turn is also leading to increasing demand for more buildings. The demand for office space has increased, contributing to congestion in the capital city. All this progress, however, also means increase in carbon emissions. Hence, it is necessary to invest in eco-friendly buildings, commonly termed as green buildings. Today, the concept of green buildings has turned into a critical issue in developing the State of Qatar. So, why are they called ‘green buildings’, and what are the merits of shifting from traditional to ecofriendly buildings? The United Nations Environment Programme’s Sustainable Buildings and Climate Initiative (UNEP-SBCI) indicates that the construction of buildings consumes 40 percent of December 2014 | QCN

global energy, 25 percent of global water and 40 percent of global natural resources. Ultimately, gas emissions linked to these developments is causing the “greenhouse effect”. Nevertheless, green buildings can significantly reduce the carbon footprint. Energy consumption in the buildings can also be reduced by 30 to 80 percent by utilising highly efficient and sophisticated technologies. Importantly, buildings consume 60 percent of global electricity. Considering the fact that Doha’s population has increased substantially in the last few years, and is set to grow further ahead of the 2022 World Cup, Qatar’s energy needs are only going to rise. With Qatar’s simultaneous focus on environmental protection and urban development, investment in sustainable buildings becomes even more crucial. While many in the industry have concerns about the premium cost for developing a green building, a longterm cost analysis only works in favour of sustainable construction, considering the overall reduction in operational costs. A green building consumes less water, electricity and fuel, while also improving indoor quality of a building, which eventually impacts human health in a positive way. On an organisational level, corporate policy towards sustainable development should look at recruiting qualified manpower, and efficient professionals, customers and clients of qualitatively high calibre who seek a sustainable chain of supplies. Such a shift can provide value addition to Qatar’s green properties, and boost the real estate market. The State of Qatar is keen on complying with climate standardisation, and protection of natural environment. Another concern in the pursuit of green buildings is to ensure the use of quality materials and implement correct standards of green building construction. Using materials of high quality are crucial to ensure the green

building is efficient. The use of bad-quality materials can sometimes be attributed to commercial fraud since some people attempt to make use of a commodity and market it before it becomes a viable element. Alternatively, they strive for less costeffective solutions than what are usually enforced in this respect. Some developers seek to use meagre and bad-quality materials manufactured in South-east Asian countries. Thus, it is essential throughout the course of this transformation to partner with experienced entities operating in the field of sustainable construction. The experience of working on sustainable projects with international companies should also be spread across the local industry through training and workshops. Acknowledging this importance of raising awareness to boost green construction in Qatar, several sustainability workshops are constantly being conducted country-wide, with many futuristic schemes being drawn up in order to enforce sustainability in the country.

Construction of buildings consumes 40 percent of global energy, 25 percent of global water and 40 percent of global natural resources.

cover story

Green buildings

in Qatar:

From an option to a mandate How green construction will no longer remain a matter of choice in the near future

An interview with Engineer Meshal Al Shamari, director, Qatar Green Building Council. by Farwa Zahra

December 2014 | QCN

cover story

First introduced in the 2010 edition of Qatar Construction Specifications (QCS), green building has since remained the country’s focus amid ongoing construction developments. Under a number of categories, QCS 2014 elaborates on minimum requirements and the building typologies to which these requirements are applicable. The Qatar National Development Strategy 2011–2016 also mentions that green credentials will be mandated by 2016. All these factors hint to one thing: sooner or later, green buildings will become a norm for Qatar’s construction industry, and to this end, the government is already highlighting the challenge. How has the market’s drive towards sustainable buildings improved in the last few years, and what are the steps Qatar as a nation is taking to preserve its sources through sustainable construction? In an exclusive interview with QCN’s Farwa Zahra, Meshal Al Shamari, director, Qatar Green Building Council, gives an overview of the green building scene in Qatar, while forecasting that the legislation to achieve this will soon become a law enforced on developers in Qatar.

“Energy is much cheaper here [in Qatar]. So that makes the attraction to green investment much less enticing.”

QCN | December 2014

cover story

“I think in two years time, we will have mandatory regulations [for green buildings]… the optional period will give a chance to the companies to enter that market because sooner or later it will be mandatory.”

December 2014 | QCN

f 1236 green buildings in the Gulf Cooperation Council, 16 percent belong to Qatar, which stands at number two in the region’s green building market, according to a recent report by Ventures Middle East. The country is leading the Gulf with its work on the Global Sustainability Assessment System (GSAS) – a certification system similar to that of Leadership in Energy and Environmental Design (LEED). Doha is also on its way to marking a world record with the development of the Msheireb Downtown Project which houses the largest collection of green buildings, 100 in total. Moving towards energy efficient solutions, the country has the world’s largest district cooling plant at the Pearl-Qatar. Qatar is also well on its way to bringing its green roadmap and a green directory. On the research and development side, it houses a Passivhaus in a property of Barwa Real Estate Development. All this was not there a few years ago, but recently the Qatar Green Building Council (QGBC), part of the World Green Building Council, has played a crucial role in promoting sustainability. The QGBC has been working on spreading awareness about sustainability in the country’s construction sector through a series of workshops, and has been an active force behind recent green projects in Qatar. In an exclusive interview, Engineer Meshal Al Shamari, director of QGBC, sits with QCN to discuss the green building scene in Qatar, starting from the basics to the details and updates of the ongoing developments in this milieu. Of the current 200 green buildings in Qatar, about one quarter are complete, says Al Shamari. “We have 50 completed and certified, 100 with Msheireb properties almost in completion, and many other developments in Qatar Foundation. In Lusail city, many projects in design and construction have already started, with further growth in governmental projects and private projects [which are green],”he says. These projects, he adds, use a combination of LEED and GSAS system. Shamari traces the onset of green development in Qatar from 2006, with Msheireb Properties setting the precedent, when Qatar Construction Specifications (QCS) 2010 first stressed the importance of green construction. Qatar’s 16-percent share of green buildings in the Gulf, Al Shamari hints, will soon go up with Gulf Organisation for Research and Development’s forthcoming announcement of a number of GSAS registered projects.

Key construction concerns While a number of credentials add to the sustainability features of a green building, it is not unusual for various construction markets to prioritise some elements over the other, depending on environmental concerns particular to the region. When asked about some priority areas behind Qatar’s green buildings, Al

Qatar has about 200 green buildings right now. Tornado Tower, located in West Bay, is one of most prominent sustainable developments in Doha. (Image FotoArabia)

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“The new construction code, which will be launched by end of this year, will have a complete section about green buildings which will be optional for sometime [before eventually becoming mandatory].”

Shamari mentions water scarcity. He goes on to say that while the LEED system has generic standards for green buildings as a whole, it also has specific standards for every country, much like the GSAS. Speaking about the country-specific standards for Qatar, he says, “In Qatar, we have 10 priority credits. We selected six of them to be about water, which is the most important element that we consider in green buildings. The second thing is energy.” While encouraging the use of recycled water within green buildings addresses the issue of water scarcity, better insulation systems prevent temperature flow, hence reducing energy consumption in air-conditioning and ventilation systems. “In our environment, we always try to focus on insulation because almost everything is affected by high temperature, and the biggest consumer of energy is the HVAC system used for air cooling. So insulation is one of the very important topics that we need to focus on,” adds Al Shamari. However, before these water and energy efficient systems are set up and running, other environmental concerns remain critical to Qatar’s construction activity. One such concern relates to the management of construction waste produced as a result of Qatar’s ongoing construction and infrastructure boom. “One of the biggest producers of the waste in the near future would be rail projects,” says Al Shamari, while mentioning the issue of waste management is on Qatar Rail Company’s radar. “A part of the GSAS criteria for rails is to manage waste,” he continues, adding that infrastructure and large-scale projects are currently priority areas for Qatar in terms of waste management, an area which comes under the realm of the Ministry of Environment. To promote green developments, QGBC is supervising the passivhaus experiment underway at a property of Barwa Real Estate. The experiment involves the construction of a passivhaus (a passive house depending primarily on green energy sources) along with a standard house of same

capacity. The next phase involves the comparison of the two houses in terms of energy consumption and carbon footprint. Updating on the latest status of the experiment, Al Shamari says that two families will soon occupy the two villas to provide data on operational efficiency of the passivhaus. “They will be occupied by two families, after that we’ll do the post occupancy measurement. After that, in six months, we’ll take the two families for an education on how they can reduce energy, water and waste consumption. Then we will send them back to the house again, and conduct another evaluation. It will take another year doing post occupancy evaluation. We can get some figures maybe by next year,” says Al Shamari. Eventually, taking Qatar’s construction industry towards a sustainable future will not merely be a matter of raising concerns and awareness. Part of the movement also lies in facilitating the stakeholders towards this end. In a recent move, QGBC announced the launch of Qatar’s first green directory for the construction industry. Scheduled for release early next year, the directory will work as a reference point featuring a list of companies providing green solutions, both in services and materials. “One of the challenges that we face here is the unavailability of the right information; many investors or

16%

Qatar’s share in the Gulf’s green building market. QCN | December 2014

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Qatar Construction Specifications 2014: Green Construction Overview GREEN CONSTRUCTION CRITERIA

THERMAL COMFORT

WATER CONSUMPTION NATURAL VENTILATION

ENERGY DEMAND PERFORMANCE

MECHANICAL VENTILATION

ENERGY DELIVERY PERFORMANCE

LOW-EMITTING MATERIALS

CULTURAL IDENTITY AND HERITAGE

SUPPORT OF NATIONAL (GCC) ECONOMY REGIONAL MATERIALS RECYCLING MANAGEMENT

BUILDING TYPOLOGIES TO CONFORM TO GREEN CONSTRUCTION

Railways

Health Centres

Light Industry Commercial

Government

Mosques Source: Gulf Organisation for Research and Development’s presentation at Future Smart Cities 2014.

December 2014 | QCN

Sports Education

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While many new developments in Qatar, particularly located in Doha’s West Bay, comply to sustainability standards, most construction in old Doha is based on traditional practices. If mandated, the law for green buildings will likely apply to buildings in design stage, as well as those under construction. (Image FotoArabia)

“Water is the most important element that we consider in the green buildings. The second thing is energy.”

developers like to use green materials but don’t know what services or materials are available in Qatar, and which kind of materials are available. So what we are trying to do is make a kind of platform for those products. Any company that would like to register has to come to us, we review the product to check it is clean,” he adds. Speaking about some of the challenges in compiling the green directory, he says, “The most important process is review of the products, because you get so many from all over the world claiming that they are green. We need to review each product and make sure it conforms to certification. If they have already registered with GSAS, with LEED, with United States Green Building Council, the type of materials they use, the services, that’s very important.” Initiatives such as passivhaus and green directory not only show a serious concern for eco-friendly construction practices, but are also indicative of potential legislation making the now-voluntary practice of green construction mandatory in the near future.

Legislating green buildings With the growing focus on green buildings in the Gulf, Qatar’s construction market sentiment hints towards legislation, which will make green buildings mandatory. Al Shamari expects this to happen once Qatar has its GSAS system ready for implementation. “Once we have the new [GSAS] codes established and operating in the market, that will force everybody to go for that approach. It is a choice now but I’m sure in the near future, it won’t be.” According to the Qatar National Development Strategy 2011–2016, “The Qatar Sustainability Assessment System for Green Buildings (now Global Assessment System for Green Buildings) will be brought into the new regime.” Commenting on the government’s mandates for green buildings in Qatar, Al Shamari forecasts that, “In two years time, we will have mandatory regulations, so that will, for sure, increase the number of projects. The optional period will give a chance to companies to enter that market, because sooner or later it will be mandatory. It is better that everybody QCN | December 2014

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“Many investors or developers like to use green materials but don’t know what services or materials are available in Qatar.”

December 2014 | QCN

prepares during these two years to be ready for the next move.” First introduced in the 2010 edition of Qatar Construction Specifications (QCS), green buildings have been further elaborated in QCS 2014. Under a number of categories, the document states minimum requirements and the buildings to which these would be applicable. The eight building typologies required to include green credentials include commercial, light industry, government, health centres, railways, sports, mosques and education buildings. The criteria for these buildings under QCS 2014 include support of national economy, cultural identity and heritage, recycling management, regional material, thermal comfort, natural ventilation, mechanical ventilation, low-emitting materials, energy demand performance, energy delivery performance and water consumption. Speaking about the government’s mandate to move towards sustainable buildings, Al Shamari says, “All Ashghal projects will now be GSAS certified projects. The new construction code, which will be launched by end of this year, will have a complete section about green buildings which will be optional for sometime and then it will be mandatory.” Explaining more about GSAS, Al Shamari says that while the goal of GSAS is similar to that of the LEED systems, the methodologies are different in a sense that the former selects the items that are more suitable to Qatar. Similarly, the applicability of GSAS is spread across a diverse range of projects. “There is a GSAS for mosques, which we don’t have in LEED. Then, there is GSAS for rails, for example, and other such projects that are more relevant to the Arabian countries,” says Al Shamari. With a choice of LEED and soon GSAS, which certification should a developer aim for? Al Shamari says, to a great extent, the choice depends on the developer’s strategic focus. “Qatar Foundation goes with LEED, depending on their strategy and some other organisations go with GSAS,” he explains, adding that some projects such as the World Cup stadiums are aiming for dual certifications. “I think some of them will have a dual certification, they can have LEED and GSAS because once you start the development or

collecting the points related to your rating system, it is an easy process to get another certificate,” says Al Shamari. In context of the 2022 World Cup, considering FIFA’s elusive standards on sustainable stadiums, it makes sense for Qatar to take a proactive strategy through dual certification that ensures the highest number of green credentials within the stadiums under construction for the 2022 World Cup. In August this year, a delegation of QGBC visited Brazil for a knowledge-sharing experience about the issues the host nation of 2014 World Cup faced in delivering the world’s first LEED certified stadium. In analysis of green stadiums, Al Shamari says, an important consideration is to look at the operational success of sustainable designs. “The most important thing is the performance of the building. You might design to certain elements and the outcome might be different, so that gap analysis is very important,” he says, also adding that Qatar is on track to present a report on the outcomes of such stadiums. Summarising the overall progress of Qatar’s delegation to Brazil, Al Shamari says, “We received great feedback on our activities, and look forward to using it accordingly in our upcoming activities.”

Challenges Green buildings can help lower the operational costs of a building by cutting down the consumption of active sources of energy. “One of the things that we saw developed much in the West, in countries such as the United States, is the ‘Green Economy’, or ‘Green Deals’ as it is alternatively called. In the West, energy is very expensive.” In the Gulf, however, energy is available at much cheaper rates, which actually hinder the growth of green buildings in the region. “Energy is much cheaper here. That makes the attraction to green investment much less enticing,” explains Al Shamari. In general, however, other stakeholders are more resistant to the trend of green buildings. One such stakeholder, Al Shamari mentions, is the developer, “The developers think that green buildings delay their development because they need to apply certain [green] elements while they want to develop as fast as they can to generate revenue. Besides that, they think

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As construction activities continue to escalate in Qatar, a major concern for the country is management of construction waste. According to Meshal Al Shamari, director, Qatar Green Building Council, one of the biggest producer of the waste in the near future would be rail projects. However, he says, Qatar Rail Company is working on efficient waste management. (Image Flickr Hani Arif)

“All over the world, the green building’s price will be higher, but so will be the demand.”

it will have a huge impact on cost.” This, he says, is where the role of QGBC comes in. “We have joined the International Chamber of Commerce because we saw it as a good opportunity for us to work with the industry. We do awareness, research, and training, so we need to do actual projects to make a real demonstration of the benefits of green buildings.” Through their workshops and seminars, the organisation with almost 70 volunteers strives to clear cost-related misconceptions about green developments. “All over the world, the green building’s price will be higher, but so will be the demand. So if you give tenants a chance to select between a green building and a normal building, there will probably be a good demand [for green building] because that building will consume less energy so he will pay less bills and also his life inside that building will be more healthy,” says Al Shamari, highlighting how green buildings makes business and economic sense for developers and occupants. Capitalising on these economic benefits, however, requires time and patience. Because of high-quality

materials, the initial costs of green buildings are usually high. However, the total energy consumption will be reduced, thereby lowering the operational costs and improving indoor quality. “All the materials certified by the green buildings codes are healthy materials,” he says, adding that they control the toxic content within indoor environment and thus improve air quality, and reduce bad building symptoms. For developers, the cost-effectiveness of constructing a green building is still a question mark, even though there is no doubt about the environmental benefits and lower operational costs linked to green construction. However, as Qatar moves closer to legislating green buildings, a number of grey areas need to be addressed. For instance, while the rule for green construction will be straightforward for buildings in the design and planning stage, to what extent will green legislation apply to projects under construction, near completion, waiting for handover and in fact major existing buildings? These, among others, are some questions only time will tell. QCN | December 2014

technology

global BIM market set to reach USD8.6 billion by 2020 The value of the global Building Information Modelling (BIM) market is set to grow from USD2.6 billion (QAR9.5 billion) in 2013 to USD8.6 billion (QAR31 billion) by 2020, according to research firm MarketsandMarkets. Supporting the Middle East’s construction sector, Omnix International has been appointed as the region’s exclusive reseller of MagiCAD BIM software in end-November. Deloitte’s report titled Deloitte GCC Powers of Construction 2014: Are you ready for the recovery? suggests that the value of the construction market in the Middle East has reached USD1.3 trillion (QAR4.7 trillion). Considering the growing complexity of large-scale projects, BIM software is increasingly being used by the sector to demonstrate a realistic version of the project before it is commenced, hence verifying the practicality of designs and techniques incorporated. By alerting the stakeholders of the design’s viability in advance, the software makes business sense. “Open BIM is driving Middle East construction innovation, with architects, engineers, and project managers creating intelligent, and information-rich models to deliver projects on time and on budget,” said Paul Wallett, area business director, Tekla Middle East. With Qatar developing its first smart city of Lusail, the need for BIM becomes even more stark. Commenting on the overall trend of BIM in the region’s smart cities, Wallett, said, “The Middle East’s smart cities are seeing incredible innovation in the architecture sphere, with increasingly complex projects requiring the most advanced software,” said Wallett. While BIM methodologies have become commonplace in most industries, they are still new and largely not accepted as standard practice in transportation. Arup’s Madrid office utilised BIM for its USD30 million (QAR109 million) transportation projects in Doha, Qatar. This process improvement has resulted December 2014 | QCN

By bridging the gap between design and construction works, BIM software can help detect problems at an earlier stage.

in significant cost and time-savings. In November, Omnix International was appointed as the region’s exclusive reseller of MagiCAD BIM software. BIM software, like MagiCAD, provides 3D information models of entire projects, enabling designers to check beforehand whether the real-life devices are suitable for the planned installation location, respective of both space and time. “Across the Middle East, complex megaprojects are increasingly being designed with BIM, providing designers with thorough calculations, functional simulations, and new levels of collaboration,” said Brett Saxby, area sales manager, Middle East, Progman Oy, which develops MagiCAD for Revit and AutoCAD building software. “Omnix International’s strong legacy in providing BIM software and training set them apart from the competition, and will drive further innovation in the region’s construction market.” MagiCAD offers design and calculation capabilities for the

mechanical, electrical, and plumbing (MEP) sector, with models providing utilities monitoring, including energyefficiency calculations. When systems are modelled and tested before construction begins, systems can be installed without costly surprises on at a later stage. “The continuing influx of construction projects in the region has stirred the demand for highly efficient software solutions that can aid these projects. With MagiCAD, we will be able to provide our customers with a complete software package for all of their MEP building information modelling and building services design needs,” said Dr. Jayant Deshpande, who is the director of Omnix International’s Computer Aided Engineering division. Featuring more than one million product models from leading worldwide component and device manufacturers, MagiCAD can be localised to different country standards and for firms of every size.

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Workers construct the scaffolding structure for a multistoried building in central Doha. (Image Corbis)

Management must not only provide their workers with the right safety tools, but also equip them with understanding on proper use and maintenance of these tools.

December 2014 | QCN

feature story

Health and safety in Qatar construction Managing and implementing health and safety measures Qatar has been under intense international scrutiny over the treatment of migrant workers. Health and safety conditions, inevitably, come under the realm of the overall state of employees at worksites, and in their worker accommodations. Simon Joss and Neil Robson suggest some ways through which gaps between local and international workplace health and safety standards can be bridged in Qatarâ&#x20AC;&#x2122;s construction sector. QCN | December 2014

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atarâ&#x20AC;&#x2122;s construction industry has gone through an accelerated growth period in the last few years. Ostensibly, the trend is set to continue in the lead up to the 2022 World Cup, the Qatar National Vision 2030, and beyond. However, that very growth also raises a number of questions regarding the health and safety standards in the country and how to implement them, including both onsite safety and worker welfare.

Health and safety: An overview The issue of health, safety and environment (HSE) remains one of the top priorities in the local, regional and global construction industry. However, the case of Qatar is far more delicate. With the winning bid for the 2022 World Cup, the Gulf state is under international scrutiny over the treatment of migrant workers. The need for Qatar to improve health and safety conditions for labourers is paramount, not just on ethical grounds, but to maintain its international reputation as a World Cup host. Effective workplace health and safety not only ensures that employees are happy and productive, but can also help to reduce both the human and business costs of injuries. By prioritising health and safety, companies are effectively communicating that competent employees are a valuable resource in the local construction industry. Additionally, improved health and safety standards help companies become more efficient and improve their business profile with customers and clients. By introducing basic health and safety standards, organisations can understand the human capital benefits this has across the company. Belle Harvey, for instance, focuses on educating and explaining HSE to employees, contractors and vendors, as well as utilising cross-continental industry experience to implement such standards. In our experience, HSE standards and technical specifications must first be discussed and implemented before any person steps onto any construction site, whether in an established building or a new site. However, there is a huge disparity between the current HSE standards practiced in Qatar and worldwide. Gaps between local and international HSE standards can be bridged through December 2014 | QCN

an approach that involves a method statement, risk assessment and job safety analysis.

1. Method statement A method statement is a document widely used in the construction industry. It details specific instructions on how to perform a work-related task, including how to operate a piece of machinery or equipment. This breakdown of tasks is essential, especially in Qatar, where a large part of the workforce is unskilled and lacks general knowledge in HSE standards. In

Construction workers joining a course at Arbrit Safety & Engineering Solutions are being trained to practise safety during scaffolding at worksites. (Image Arbrit Safety & Engineering Solutions )

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Job safety analysis focuses on identifying and controlling workplace hazards, and aims to prevent personal injury to any person working there or that may be passing by.

2. Risk assessment

Falling from height is one of the most common reasons of death and injuries at construction sites in Qatar. (Image Corbis)

Accidents are more likely due to the lack of workersâ&#x20AC;&#x2122; knowledge of health and safety. However, the problem can be addressed through regular training programmes.

addition, the method statement includes how this process should be completed for both employees and contractors throughout the duration of the project. A method statement, featuring a step-bystep process on how to implement HSE standards, must be prepared for each task on a particular worksite and then included in the overall construction safety plan, ensuring that HSE standards have been taken into account for every section of the project. The document itself is a testimonial that workers are a priority, which in turn means they will remain happier and more productive. Another vital component of the method statement is considering worker welfare and the long-term benefits that this has on raising the health and safety standards throughout the country. Considering that many labourers come from countries where their worksite safety is not treated as a key concern, it is important to educate workers with the basics of HSE standards. Another factor to remember is that a large number of construction workers in Qatar work at minimal cost, often with little experience in the trade, and therefore accidents are more likely due to the lack of knowledge of HSE. However, the problem can be addressed through regular training programmes.

Risk assessment determines the quantitative or qualitative value of risk on a particular worksite and any recognised hazards. Risk assessment is another core component of HSE standards and is also an opportunity to focus on what might cause harm to people, and determine whether an organisation or company is taking the necessary preventative measures. During a risk assessment, there is a valuable opportunity to identify sensible measures to control in the workplace and to think about how accidents may happen and concentrate on the very real risks that are involved. Risk assessment can be broken down further into two parts: a hazard, anything that may cause harm; and the risk, the chance that an individual may be harmed by a hazard(s) along with a suggestion as to how serious this harm could be. An organisation should concentrate on both of these components as HSE standards remain applicable to all aspects of the construction industry, as well as to Qatarâ&#x20AC;&#x2122;s private and public sector.

3. Job safety analysis Job safety analysis focuses on identifying and controlling workplace hazards, and aims to prevent personal injury to any person working there or that may be passing by. During this phase, the company determines which job/task needs to be analysed, followed by breaking this down QCN | December 2014

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A construction company reminds its workers to be careful with dangerous areas on a site in Doha. (Image Flickr/Christian Senger)

into a step-by-step sequence. This ensures that nothing is missed, and health and safety remain integral parts of each and every job. Next, it is important to categorise potential hazards, with the final step being implementing measures to overcome these hazards. Once more, by focusing on identifying and controlling workplace hazards, workers’ welfare remains at the core of an organisation. This then leads to motivated workers who understand the implications of these hazards and how to avoid personal injury.

The role of management While a method statement, risk assessment and job safety analysis are integral parts of HSE standards, this must be coupled with the role of management and their workers’ welfare. All these factors combined will help successfully implement HSE standards for the long-term benefit of organisations and workers. Instilling the knowledge and understanding of HSE standards among unskilled labourers should start by focusing on the basics. This includes giving an overview of Personal Protective Equipment (PPE), which is a vital component of onsite safety and refers to protective clothing, safety reflective vests, safety helmets, hard hats, goggles or other garments or equipment that are designed to protect the wearer’s body from injury. This overview must be done in basic terms and include a demonstration; with simple, supporting images to December 2014 | QCN

reiterate their point; along with a construction manager who is fluent in the workers’ native language. This gives the workers an opportunity to ask any additional questions and further familiarise themselves with HSE standards. By implementing these measures, workers become more proactive when it comes to health and safety and what it really means to them. In addition, management must not only provide their workers with the right tools, but also equip them with understanding on proper use and maintenance of these tools. Belle Harvey offers Toolbox Sessions whereby a qualified tradesman conducts essential training on various tools to overcome the lack of understanding when it comes to traditional training methods. These sessions are key in helping the workers understand what can happen if these tools are not used safely and also if they are handled by more than one person. By doing so, organisations can show the very real risks that are involved if HSE practices are not implemented properly. Other issues under management’s role include proper signage on site, and warning the workers and other visitors about potentially dangerous parts on site. Off site, the management should step in to ameliorate the living conditions of workers by providing them with accommodation, entertainment facilities and good hygienic conditions.

Some safety issues under management’s role include proper signage on site, and warning the workers and other visitors about potentially dangerous parts on site.

Some providers of HSE education and training in Qatar • Doha Industrial Safety Service • Enertech Qatar • Integral Training & Development • Qatar International Safety Centre • British Safety Services • Arbrit Safety & Engineering Solutions

Simon Joss and Neil Robson are cofounders of Belle Harvey Interiors, a Qatar-based company specialising in interior design and construction fit-outs.

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interview

Qatar estat by a s and e econo

According to Nick Witty, director, real estate, Deloitte, significant rental increases on an annual basis are unsustainable in certain real estate subsectors and the landlords may need to adjust their pricing strategies if they are to secure tenants and retain an acceptable level of rental income.

December 2014 | QCN

interview

r is an emerging real te market backed strong government: extremely positive omic fundamentals In a conversation with QCN, Nick Witty, director of real estate at Deloitte, provides an overview of Qatar’s real estate sector. With over 26 years of experience in international real estate advisory across Europe and the Middle East, Witty is a qualified chartered surveyor and a member of the Royal Institution of Chartered Surveyors – an internationally recognised body for real estate professionals. What are some key trends in Qatar’s real estate market right now? A significant volume of development activity in Qatar is speculative in nature, meaning that construction commences with no tenant necessarily signed up at that time. During the construction period and post practical completion, a ‘letting’ agent is appointed to attract and sign up tenants, but there is always a risk that the development in question remains vacant for a period of time. While approximately 10 years ago, the market was relatively immature and the limited new product was relatively easy to lease, today the market has matured significantly and, as such, tenants have more choice and

“Qatar has been identified as one of the most expensive locations to live in the Gulf Cooperation Council and many expatriate residents have to subsidise their housing allowances.” - Nick Witty, director, real estate,Deloitte.

are in many cases more discerning. As a consequence, I envisage developers become far more end-user focused, whereby the functionality of the building will be more important than the form that is the external appearance, so they will build with this in mind in an attempt to secure quality tenants for longer periods of time. Currently, there are 13 new malls under construction in Doha, which will add an additional 1.3 million square metres (sqm) to the existing retail supply of approximately 712,000 sqm by the end of 2017, assuming they are delivered on time. The more successful developments will be those that have carefully thought out tenant mix plans, offering a wide choice to the shopper, but equally those that have QCN | December 2014

interview

The Pearl-Qatar, Nick Witty says, will continue to attract interest from tenants and buyers alike for a variety of reasons, including its accessibility. (Image Corbis)

â&#x20AC;&#x153;An Emiri Decree in Q1 2014 effectively capped retail rents, [which] suggest that the government is aware of property market issues and is prepared to react if they feel necessary.â&#x20AC;?

December 2014 | QCN

been designed with both the shopper and retailer in mind. The developments that do not match these criteria will struggle to compete with the better schemes and are likely to have to reduce rental levels in the hope of securing tenants. Meanwhile, in the office sector, there is significant new supply coming up between 2014 and 2018, which will deliver approximately 2.3 million sqm. In this case, the requirements of the tenant are imperative, which include a high volume of car parking, flexible floor plates, a high quality IT backbone, etcetera. As with the retail, those buildings that do not match these requirements will also struggle and may be forced to offer discounted rents to secure secondary tenants.

Where do you see rents going in all four subsectors? How likely is a rental freeze in the residential sector? Irrespective of the projected longerterm oversupply, it is unlikely that rental levels will abate much in the short term in any of the subsectors, simply because

there is short-term demand as a result of the significant economic diversification referred to above. Qatar has been identified as one of the most expensive locations to live in the Gulf Cooperation Council (GCC) and many expatriate residents have to subsidise their housing allowances. Clearly, significant annual increases are unsustainable in certain sectors and as such, landlords may need to adjust their pricing strategies if they are to secure tenants and retain an acceptable level of rental income. Notably, an Emiri Decree issued in Q1 2014 effectively capped retail rents whereby retailers were granted a one-year extension of their existing leases on the same terms and conditions. This type of initiative suggests that the government is aware of property market issues and is prepared to react if they feel necessary.

What other measures do you think Qatar can take to relieve rent pressures? Rents are generally market-driven and

interview when tenants cannot afford a particular product, they will naturally migrate to a different, more affordable one. This will create different market tiers across all use classes that are prime, secondary and tertiary. In the event landlords cannot lease their prime product due to the affordability of the tenant and they are experiencing high levels of vacancy, by default, they are most likely to reduce their rents. While this may take time, this balance of supply, demand and pricing is likely to take effect. Clearly the challenge will be whether tenants have an option, other than high-rented accommodation, and whether they are prepared to move down a tier, only time will tell.

Which real estate subsector, in your opinion, will see most competition in Qatar in the near future?

residential within the Foxhills District of Lusail, the level of demand will have to increase significantly. Lusail and the Pearl, when fully developed, will provide accommodation for more than 500,000 people.

Is Qatar’s real estate market any different from the rest of the Gulf? Each GCC market has its own characteristics. Following the boom period up until 2009, the majority of these markets were mainly supplyled. However, following the global financial crisis, they have had to adapt. Qatar should continue to work on the development of a sustainable market over the short to medium term, that matches demand yet attracts the requisite number of tourists, businesses and others to ensure the economy grows at a reasonable pace.

“Qatar will need to ensure it is competitive in relation to other GCC states if it is to be considered by foreign investors. This may take the form of additional free trade zones, and more detailed landlord and tenant legislation, etcetera.”

All sectors are increasing supply, but if we are to highlight which is likely to face the most competition in the near term, it is probably high-end residential. There are a total of 60 towers planned in the Pearl-Qatar. Approximately 24 of those are currently inhabitable or near completion and the majority are not fully occupied. Given the release of additional units on Qanat Quartier and the ongoing development of

500,000 Number of people the Pearl-Qatar and Lusail will accommodate once the developments are complete.

An aerial view of central Doha, which has been witnessing increasing levels of rents in the residential sector due to the city’s increasing population. According to Nick Witty, director, real estate, Deloitte, rents are generally marketdriven and when tenants cannot afford a particular product, they will naturally migrate to a different, more affordable one. (Image Corbis)

QCN | December 2014

interview

“Irrespective of the projected longerterm over-supply, it is unlikely that rental levels will abate much in the short term in any of the subsectors.”

How do you see the buying trend for property investors? What makes Qatar’s real estate market attractive for international investors? Mature international investors that invest in real estate such as pension funds, hedge funds, etcetera, are very selective and generally risk averse. If we concentrate on the office and retail sector, in most cases, they have to meet certain criteria which can only be met in more mature markets. Further, the global financial crisis has meant a correction in their investment parameters and in many cases, they have retrenched geographically to what they consider “safe havens”. Currently, Qatar is an emerging real estate market backed by a strong government and extremely positive economic fundamentals. As the real estate market matures, and international developers regain confidence in investing abroad, it is likely that Qatar will be on their radars.

What are the factors discouraging foreign investments in the sector?

Currently, there are 13 new malls under construction in Doha, says Nick Witty. (Image Corbis)

It is not so much an issue of Qatar’s market as it is an issue of the confidence, strength and appetite of foreign investors. Many have had their ‘fingers burned’ during the boom period and are now in a period of consolidation. Clearly, Qatar will need to ensure it is competitive in relation to other GCC states if it is to be considered by foreign investors and this may take the form of additional free trade zones, and more detailed landlord and tenant legislation. This is likely to evolve over time and be considered very carefully before implementation.

Of real estate developments under construction in Qatar, which ones do you think would be most attractive for tenants and buyers? Dealing first of all with the residential sector, I believe, the Pearl-Qatar will continue to attract interest from tenants and buyers alike for a variety of reasons. Although it is still under construction, it is accessible and sections of it are well established, benefitting from convenience shopping, restaurants, a cinema complex, good quality amenities within the towers December 2014 | QCN

interview

“As the real estate market matures, and international developers regain confidence in investing abroad, it is likely that Qatar will be on their radars.”

Given the release of additional units on Qanat Quartier at The Pearl-Qatar, the level of demand will have to increase significantly. There are a total of 60 towers planned in the Pearl-Qatar. Approximately, 24 of those are currently inhabitable or near completion and the majority are not fully occupied.

themselves and reasonable quality maintenance of the common areas. From a retail perspective, one of the most attractive propositions will be Doha Festival City scheduled to complete in 2015. Comprising a retail and entertainment hub, incorporating business and hospitality facilities, motor show rooms and a theme park, it is likely to become the major retail destination in Qatar and its first regional mall, given its significant critical mass and ease of access.

What are the most common disputes you have observed in Qatar’s real estate sector? The most common disputes have undoubtedly related to the timely completion and handover of projects,

both residential and commercial, by developers to end users across the region.

Investing within Qatar’s real estate or outside of the country, which of the two options is more preferred for Qatari nationals? Historically, Qataris have been keen to invest at home for a variety of reasons. For example, they have an intimate knowledge of the local market, thereby reducing their perceived risk; funding has been readily available; returns have been high and there are no tax implications. Nevertheless, many local Qatari investors are now seeking to mitigate the risk of concentrating a portfolio in a single geography by looking further

afield, and favoured locations are the United Kingdom, France, Germany, the United States, and parts of the Far East. What is more interesting perhaps, is that some investors are now willing to consider investment opportunities outside of capital cities where returns/yields are significantly higher and there has been a growing interest in logistics, hotels and student accommodation in recent months.

Where do you see Qatar’s real estate market after 2022? I envisage that towards the end of this decade and post 2022, the market will witness a slowdown in new building and more of a focus on implementing urban development projects, adopting a sustainable approach to urban expansion and population distribution in line with the Qatar National Vision 2030. QCN | December 2014

legal

FORCE MAJEURE IN qatar’s CONSTRUCTION CONTRACTS

James Bremen and Leith Ben Ammar of Herbert Smith Freehills discuss the key issues arising from force majeure clauses in construction contracts. Recent civil and political unrest in the Middle East and North Africa impacted the performance of contracts with counter parties in the affected countries. Those particularly affected were businesses in the energy and infrastructure sectors, including major Qatari energy companies, contractors and developers, and these events raised questions concerning the impact on these businesses’ contractual obligations. In such circumstances, parties will usually turn to force majeure – unforeseeable circumstances that prevent someone from fulfilling a contract – clauses within their contracts. While Qatar’s Civil Code does not explicitly define force majeure, it deals with the consequences of an ‘extraneous cause’ outside of the contractor’s control and provides relief to contractors when such events arise, including releasing the contractor from its contractual obligations, releasing the contractor from responsibility for damages to the works, and dissolving the contract in the event performance becomes impossible. Qatar’s Civil Code also allows the parties to contractually agree to allocate those risks to the contractor. Like many legal systems across the world, Qatari law sets out rules which deal with risk allocation should extraneous events affecting projects arise. However, relying purely on the assistance of Qatar’s Civil Code will not be satisfactory for parties in complex and high-value projects. Adequate and project specific force majeure clauses will be necessary across the various project agreements in order to achieve acceptable and bankable risk profiles for owners. Drafting a force majeure clause A force majeure clause excuses nonperformance when impossibility results from a cause stated in the contract. Force majeure is often used synonymously with acts of God or forces of nature. However, on a construction December 2014 | QCN

project, a force majeure event is simply whatever the contract says it is. Force majeure clauses typically define the term as an event, or act, that: • is beyond the reasonable control of the affected party; • was not reasonably foreseeable or, if foreseeable, could not have been avoided; and • prevents the affected party from performing its obligations under the contract. Certain force majeure clauses may also specify an illustrative list of events, which will be deemed force majeure events if they also comply with the conditions above; others may be restricted to the general conditions. Depending on the circumstances, parties may seek to exclude particular events in order to allocate liability in advance for such events; for example, the acts of certain regulatory authorities. Contractual force majeure clauses will usually include a provision requiring notice of the event to be given to the other party and generally prescribe a time limit for this purpose. Failure to comply may or may not have a debarring effect. Force majeure clauses will generally prescribe a graduated range of remedies, including extension of time, suspension of performance, termination of the contract and consequential provisions. The party seeking protection under a force majeure clause has the burden of proving the force majeure event exists and that it is preventing performance. Generally, force majeure clauses are neutral, meaning that loss usually lies where it falls. Time-related risk is often allocated to owners in force majeure clauses but seldom cost-related risks. The elements of force majeure clauses that are usually negotiated by the parties are the length of force majeure before termination becomes available and the payments that must be made if the contract is terminated. Often, the approach to termination

is the same as with termination for convenience. However, any termination payment may either exclude or limit greatly the amount of loss of profit that may be paid. Energy projects What constitutes force majeure is often discussed between the parties. Agreeing to the definition of force majeure events can be a substantial task given the extensive number of inter-related agreements and parties in energy projects. It is crucial for owners to have a consistent strategy in the drafting of force majeure clauses under the various agreements they are a party to in a given project. The approach to risk allocation taken by a party will be different depending on the agreement. Force majeure clauses must be looked at holistically and drafted so that the owner retains no liability whatsoever under the various project agreements in the event of force majeure. The best approach to achieve this risk profile is to have identical force majeure clauses throughout the project agreements. Particular attention must be given to the drafting of force majeure clauses when the various project agreements are governed by different laws. In that case the force majeure clauses in the various agreements must be drafted to achieve the same effect.

James Bremen is a partner in Herbert Smith Freehills’ Doha office. Leith Ben Ammar is an associate at Herbert Smith Freehills.

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Monitoring the structural health of buildings in Qatar

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Does Hamad International Airport already g u l f e a need r t h m oa ving second terminal? Are more women needed in Qatar’s construction sector?

Terminating construction contracts in Qatar Business Optimism Index for Qatar’s construction sector

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9/16/14 12:26 PM

INTERVIEW:

Engineer Ali bin Nasser Al Khalifa, CEO, Astad Project Management

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issue 1.4

GREEN BUILDINGS

December 2014

FROM AN OPTION TO A MANDATE

how Green construction in Qatar will no longer remain a matter of choice in the near future

Feature story

How can companies manage and implement health and safety in Qatar’s construction sector?

Technology

BIM is commonplace in Qatar’s construction sector, but is still new in transportation

Plus:

Key issues arising from force majeure clauses in Qatar’s construction contracts