INTERVIEW: Mohamed Salem, chief technical officer, Air2O Cooling LLC, on open-air thermal control – PG 33
issue 2.7 July 2015
LEGAL
Ways to avoid disputes among JV partners
PROJECT UPDATE
The Pearl-Qatar’s recent progress
TECHNICAL
Can back-to-back contracts truly protect contractors and subcontractors?
QAtar’s new Real estate law
a Means toward an end Implications and role of Qatar’s new Real Estate Development Law
Retail Price: QR15 / AED15
18.
In our cover story, we discuss Qatar’s new Real Estate Development Law. In March 2014, the Emir HH Sheikh Tamim bin Hamad Al Thani issued the Law No 6 2014 for Qatar’s real estate sector. The new law deals in areas not addressed comprehensively in the preexisting legislature, such as investors’ rights and developers’ obligations. Among some of Qatar’s freehold properties open for foreign investors are the Zig Zag Towers located in the PearlQatar, pictured here. (Image Damon McDonald/Flickr) Nissan QCN2.6.pdf
JULY 2015
www.qatarconstructionnews.com
Cover Story 1
5/31/15
12:45 PM
In order to safeguard the rights of local and foreign investors, Qatar’s QAtar’s new new Real Estate Real estate law Development a Means toward an end Law has introduced stiffer requirements for developers. In an exclusive interview with Paula Boast, partner at Charles Russell Speechlys, QCN’s Farwa Zahra learns about some key regulations in the new law. INTERVIEW: MOHAMED SALEM, CHIEF TECHNICAL OFFICER, AIR2O COOLING LLC, ON OPEN-AIR THERMAL CONTROL – PG 33
issue 2.7 July 2015
LEGAL
Ways to avoid disputes among JV partners
PROJECT UPDATE
The Pearl-Qatar’s recent progress
TECHNICAL
Can back-to-back contracts truly protect contractors and subcontractors?
Implications and role of Qatar’s new Real Estate Development Law
Retail Price: QR15 / AED15
Regulars
From the Editor - 4 Construction News - 8 Guest Column - 16 Legal - 39 Qatar Tenders - 40
26.
28.
33.
Technical Back-to-back contracts: Can they truly exist?
Project Update rapid progress continues at The Pearl-Qatar
Industry Insights Qatar’s stadiums will need to be air-conditioned
Back-to-back contracts are commonly used in construction contracts across the Gulf Cooperation Council. While they are here to stay, Tom Kapapa of Quantum Global Solutions asks if these contracts truly protect contractors and subcontractors.
On the back of strong financial performance, registering QAR270 million net profit in Q1 2015, United Development Company (UDC) is continuing with new agreements to further develop The Pearl-Qatar, and expand its investment offerings.
In an exclusive interview with QCN, Mohamed Salem, co-founder and chief technical officer of Air2O Cooling LLC, shares details about the company’s sustainable cooling systems for open-air thermal control, along with some other aspects of outdoor air-conditioning.
QCN | July 2015
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editor’s letter
Despite soaring temperatures, there is almost always an upside to staying back in Doha during this time of the year. With summer vacation now started in most schools, you know you will not even spend half as much time as you otherwise do in your daily commute. Add to this the shorter work hours during Ramadan, and the heat seems more tolerable. The situation, however, is not the same for those involved in the country’s construction sector. As per the government’s announcement for Ramadan timing, outdoor/onsite working hours in the morning cannot exceed five hours, and must not proceed after 11:30 am. The July 2015 | QCN
works can later resume at 3 pm. These time slots can also mean extra shifts for those involved in site works. Unlike other sectors, many construction professionals working at some key projects here may not have the luxury to take longer Eid breaks. Their presence is crucial to keep the projects running in order to eventually meet their deadlines – something Qatar desperately needs ahead of the 2022 World Cup. Of the top 100 projects within the Gulf Cooperation Council (GCC), Qatar has a share of 9.3 percent. Despite this relatively smaller share, the country’s construction industry is growing at an exponential rate. In 2014, its real growth rate stood at 18 percent, making it the fastest growing construction market in the GCC, according to BMI Research. In terms of infrastructure projects, Qatar saw the second highest number of awards followed by Saudi Arabia. The figures come as no surprise seeing the country’s track record of awarding several construction and infrastructure projects in the recent past. Keeping pace with the overall growth, Qatar’s residential sector is one of the key areas for developers here. In 2014, the demand for residential units reached 177,000 compared to supply of 129,000 units, creating a shortage of 37 percent, according to Alpen Capital’s 2015 report GCC Construction Industry. The trend is here to stay until at least 2018 when the demand is further expected to grow, reaching 266,000 units. Although Qatar offers a limited range of freehold properties, developments such as Lusail City have sparked a great deal of interest among foreign investors. Speaking of some recent figures, the Lusail Real Estate Development Company sold 35 residential villas at Qetaifan Islands. The same real estate project, however, attracted negative publicity earlier this year with media reporting increasing frustration among investors, complaining about lengthy delays.
Large-scale infrastructure projects are always prone to delays, something that buyers must be prepared for when investing. If, however, prolongation continues over years, legal actions from buyers seem highly likely. In this issue’s cover story on page 18, our focus remains on the rights of investors, which becomes even more topical in the light of Qatar’s recently introduced Real Estate Development Law. Looking at some of its major provisions, it is evident that the government is keen to make Qatar’s real estate market more attractive for foreign investors. Some of the highlights of this new law include stricter requirements for developers, and penalties in the case of non-compliance. Featured in our cover story is an exclusive interview with Paula Boast, partner at Charles Russell Speechlys, who elaborates on key aspects of the new law. While it is an excellent opportunity to expand Qatar’s foreign investor base, looking at the big picture, the new law works as a means towards the overall sophistication of legal framework linked to the property market. More legal reforms are still needed towards this goal. The government, however, can only do so much. Eventually, what is most important is the buyers’ awareness about their rights and obligations before entering into a contract with the developer. Speaking of real estate investments, among Qatar’s most sought-after freehold properties is The Pearl-Qatar, which is expected to release 25 towers for residential use this year, with the entire project’s completion date scheduled in 2017. On page 28, Syed Ameen Kader provides a project update of The PearlQatar. For more on Qatar construction, keep reading QCN. Ramadan Mubarak and happy holidays.
Farwa Zahra Editor
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Construction
Qatar mandates
News vehicles for transpo
Migrant workers wait for a bus in central Doha. Often, they travel long distance in non-AC vehicles to get to their workplaces in Qatar.
July 2015 | QCN
using AC In
orting workers
In a move to benefit thousands of migrant workers, Qatar has made it mandatory to use only air-conditioned (AC) vehicles for carrying 11 or more passengers. However, industry experts are skeptical on how effectively this law can be implemented, considering the fact that many vehicles are old and cannot be modified in the short term, writes Syed Ameen Kader.
construction news
9
In June, Qatar’s Ministry of Interior issued a directive which states that all buses and vans, that come for renewal of registration from July 1, need to be air-conditioned (AC) in order to pass the mandatory mechanical inspection. Road safety experts applauded the government’s initiative, which is expected to provide some respite to an estimated 1.4 million migrant workers in Qatar, but they say it is difficult to enforce this directive in such a short time. Ian Caygill, head of road safety, Qatar International Safety Centre (QISC), said, “I believe it will be impractical for AC units to be fitted to some vehicles due to the nature and age of the fleet; therefore, extra costs will be involved in upgrading existing fleets.” However, he added, it will definitely go some way to improve their conditions, but there are many other issues. “In many cases the larger buses with 50 to 60 seats do not have AC units fitted and those that do, are invariably in need of repair. In my view, it seems that companies have clear rules and regulations regarding health and safety, but the question that needs to be asked is if these rules and regulations are actually being followed,” he said. However, not all vehicles have to be fitted with AC from July, as this could be done at the time when their renewals come up. This will provide some time for vehicles that are not due for renewal immediately. But Qatar has many buses and vans that are old, and it is practically difficult – both mechanically and economically – to retrofit all of them with ACs. Even many new vehicles that are slated to enter Qatar’s roads are not all AC-fitted. However, this new directive is expected to increase demand for AC vehicles in the market. Safarullah Muhammed, managing director at E2E Fleets, said, “We deal with AC buses only, but we are also getting requests for non-AC buses.” However, he anticipates that there will be higher demand for AC vehicles even without a directive. “At present, we are operating with 60 AC buses of 30 seats, both owned and leased, but we are planning to increase the fleet by 25 percent before the end of 2015,” said Muhammed. Industry observers said that most well known international companies generally transport their migrant workers in AC buses. They also accommodate them in relatively high standard compounds, as this is part of their internal ethics policies. “But as far as local or small companies are concerned, they often use second- or third-hand vehicles for transport. Some don’t even use buses for transport, but pickups or trucks,” said a health and safety expert who did not want to be named. He said it is very unlikely that all the companies would provide AC buses right now even though the directive says so. “It will not be practical, added to which is the fact that several companies will try all they can to avoid this new extra high cost, if they are not able to pass this extra cost to their clients,” said the expert, who works for a global consultancy firm in Qatar. QCN | July 2015
Construction
News
Industry Views
To evaluate the performance of contractors working on government projects, a unified online system is being developed in Qatar for the first time. QCN approached some construction professionals to ask about the usefulness of such a system and its scope in the private construction sector. Here is what they had to say.
A centralised grading system can and should be used in the private sector This unified online system will help the government to control the contractors and assure that projects meet the standards of quality and efficiency, by verifying the building models performing code checks or control, if the projects are being delivered on time, for example. It can and should be used in the private sector. The government would use this information to verify the projects meet the code requirements faster and more precisely. The
“A centralised online evaluation system with a SAP platform will be very important to get higher quality, meet the required standards and deliver projects in time.” Carlos Riera Planells, senior road safety engineer and manager of the Traffic Diversion Plan Approvals Office at the Public Works Authority (Ashghal), further said that such a system needs to be extended to include relevant organisations in the private sector. In addition, he says, by measuring and evaluating the performance of contractors, the system will lead to the identification of potential improvements. “Contractors, that will score higher in key performance indicators (KPIs), will receive incentives,” he added.
July 2015 | QCN
companies would use a shared public database to perform analysis during design phase, for example, to analyse how the building is going to influence and be influenced by the neighbouring buildings, how the increase in people flow will influence traffic, and other aspects. Building Information Modelling is essential for this kind of system. Standards need to be defined by the industry, and it is important to participate in this process. As we see this happening in the
“Any system that encourages transparent evaluation of companies and fair competition between contractors, especially in government projects, should be welcomed.” Nicholas Sykes, interspace manager, Gulf Contracting Company, said that in the private sector with many new companies now operating, clients would benefit from a clearer view of competing contractors’ capabilities to understand which ones deliver the work and operate consistently over the longer term. “I’m sure you’ll see a direct correlation between contractors with in-house capabilities and a reliable consistency to deliver high-quality performance,” he added.
United Kingdom, the government needs to create standards and mandate the use of this kind of technology in order to accelerate the implementation process.
Erick Martins is BIM Constructibility Manager at NCS/ ENGworks.
“To achieve the objectives for the 2022 World Cup and the 2030 National Vision, regulators, owners, designers and contractors must consider alternatives to traditional design-bid-build project delivery.” Allen Jay Holland, BIM manager of design division at KEO International Consultants, said an online performance evaluation system for contractors is a positive step toward modernising the architecture, engineering, construction, and operations industry in Qatar. An online evaluation system assessing the capability of builders to deliver quality, accuracy and efficiency would benefit the private sector in a similar manner, he added.
Construction
News Planned to provide vital transportation links across Qatar, connecting cities, towns and urban arterial routes, the Expressway Programme is expected to deliver about 1000 kilometres (km) of safe and efficient roads, in addition to approximately 360 bridges and 240 interchanges. The New Orbital Highway and Truck Route forms a fundamental part of the Expressway Programme to construct a highway network, meeting international expressway standards. The first contract of the New Orbital
Latest progress update on Qatar’s New Orbital Highway and Truck Route Project The Public Works Authority (Ashghal) provides an update on construction activities underway at the New Orbital Highway and Truck Route.
Highway and Truck Route comprises 25 percent of the 200 km long Orbital highway, including approximately 45 km of road network. Required Foundation works and in progress on an equipment interchange for the machinery have Orbital Highway project. been mobilised for the screening and crushing plants, while other plants and machinery are planned to be mobilised on site in due course. Relevant traffic detours are in progress along with road works, and foundation work for bridges and construction of underpasses has started at various locations on the project along Mesaieed Road and Al Wukair Bypass. The second contract encompasses 48 km of new dual carriageway that includes eight grade-separated interchanges consisting of seven lanes in each direction.
The third contract entails 55 km of dual carriageway with five twolevel interchanges with seven lanes in each direction. Currently, earthwork is ongoing on the highway and over one million cubic metres of excavation has been completed using 75 excavators and 75 trucks. The fourth contract includes 42 km of new dual carriageway that includes five grade-separated interchanges. Onsite mobilisation works are underway in addition to the installation of fences and barriers surrounding the project.
July’s Big Number Awards Key recent contracts awarded in Qatar
11.4%
The annual average growth rate of Qatar’s construction industry is expected to reach 11.4 percent between 2015 and 2022, according to BMI Research’s Qatar Infrastructure Report. With Qatar construction’s annual growth rate for 2014 standing at 18 percent, the sector is expected to stay bullish at a growth rate of 10.2 percent for at least another 10 years. Within the Gulf Cooperation Council, BMI Research has identified Qatar as the fastest growing construction and infrastructure market. July 2015 | QCN
•
•
•
A USD22 million (QAR80 million) contract has been awarded to the Amsterdam-based design consultancy, Arcadis, for the Doha Metro’s Gold Line. The scope of this deal includes architectural, branding, design and construction consultancy services to an international consortium of contractors that won the QAR12 billion civils contracts for the Gold Line in April 2014, according to MEED. Ooredoo has awarded a facility maintenance contract to MMG. The multi-million dollar deal is one of MMG’s largest ever contracts in Qatar. Starting with three years, the USD20 million (QAR73 million) contract is extendable to another two years. The scope of this award includes works at more than 1500 premises in Qatar. A design contract has been awarded to SSH Qatar for an upcoming shopping mall in Qatar. Called the South Mall, the retail facility is being developed by E’Emar Development and Real Estate Investment. The design works will include works for a space of 50,000 square metres, featuring retail and dining outlets along with a hypermarket and a sports club.
construction news
Top 100 Projects In The Gcc Region In 2014, By Country
Top 100 projects in the GCC region in 2014, by sector
3.4% 4.2% 2.4% 9.3%
13
3%
Other
Industry
Power and water
2%
Oman Bahrain
4.8%
Qatar
Petrochemicals
10.1%
Kuwait
10.5% 42.9%
Oil and gas
United Arab Emirates
13.1%
33.3%
Transport
Saudi Arabia
60.9%
Real estate
Global ranking of GCC countries according to the general quality of infrastructure, based on scores 7 United Arab Emirates
6
Bahrain
Oman
Qatar
Saudi Arabia
5 Kuwait
4 3 2
3rd
21st
25th
26th
29th
67th
5.6
5.4
5.4
5.2
4.3
1 0
Score 6.4
Sources: Alpen Capital, MEED, Arab News, and Statista.com QCN | July 2015
News Events Construction
6 – 9 September
4 – 7 October
Port Development Week Health Facilities Design InterContinental Doha and Development Qatar 7 – 8 September
Future Interiors qatar InterContinental Doha - The City
8 – 9 September 4th Annual ITS & Road Safety Forum The subject of international transportation system (ITS) is gaining greater traction across the Middle East. To be held at the Westin Doha, Qatar, the 4th Annual ITS & Road Safety Forum aims to deliver highlevel discussions and insight into the most pressing issues affecting road safety and ITS deployment in the Gulf Cooperation Council. The event is particularly targeted towards professionals in the field of road safety and intelligent transport systems.
The event is aimed to be more than just picking the right colours for the hospital walls. A good structural design has the ability to transform an organisation, and if done effectively, it can improve clinical outcomes. With a number of large-scale projects being announced in both the private and public healthcare sector, the conference aims to address challenges surrounding health design and development and illustrate innovative solutions through keynote presentations, panels and workshops.
11 – 13 October
Employee Health and Wellbeing Conference
Qatar has consistently been under international media’s scrutiny for occupational accidents, and diseasesand work-related fatalities. The issue of worker deaths highlights the need for efficient adoption of a sustainable prevention strategy to counter major occupational health threats. With the aim of reducing the economic burdens of workplace injury and illness, the Employee Health and Wellbeing Conference is designed to propagate high-quality healthcare of workers.
13 – 14 October 2015 The annual ITS & Road Safety Forum attracts professionals in the field of road safety and intelligent transport systems.
Qatar Transport Infrastructure 2015 Doha, Qatar
Pictured here is Qatar’s Hamad General Hospital.
26 – 27 October
Future Landscape & Public Realm Qatar InterContinental Doha - The City
9 – 11 November
8th Bridges and Highways Qatar InterContinental Doha
15 – 17 November
Sports Infrastructure Expo Qatar Qatar National Convention Centre
23 – 26 November
The Big 5: International Building & Construction Show Dubai World Trade Centre, UAE
7 – 8 December
Future Drainage Networks Qatar Doha, Qatar
July 2015 | QCN
16
guest column
economy amid uncertainty
around 2022 World Cup
Football aficionados are not the only ones that have Qatar in their sights, putting up even more pressure on the country’s construction sector, the global natural gas industry is also watching intently as the Gulf state plots its next move, writes Yadullah Ijtehadi.
Yadullah Ijtehadi is energy editor at Torontobased Financial Post.
Qatar’s economic transformation on the back of its natural gas exports is well documented, but it is less known that the country displayed extraordinary self control by placing a moratorium on new natural gas development as early as 2005, which also slowed down specialised construction activities planned for the energy sector. The ban in the gas-rich North Field is expected to be lifted this year, July 2015 | QCN
but it is unclear whether Qatar will resume exploration. That said, contracts worth USD2500 million (QAR9100 million) are expected to be awarded across the oil and gas sector in Qatar by the end of 2015, according to Ventures Onsite’s report Qatar Construction Industry – The World Cup and Beyond. Over the past two decades, Qatar rode the wave of global natural gas development as the stars aligned in its favour. Its desire to invest billions to monetise its formidable gas reserves was met with an equally fervent quest by Asian economies to secure new sources of liquefied natural gas (LNG). But while the International Energy Agency had predicted the “golden age of gas” a few years ago, it now believes the industry is faced with a glut of new supplies that makes the economics of new projects extremely fragile. In addition, LNG prices have halved since Qatar last set long-term contracts with Japan, South Korea and China, which makes investments in new projects a difficult proposition. Qatar’s construction sector had benefitted from the focus on natural gas projects, but that cycle may come to an end. The USD10.3 billion (QAR37.5 billion) Barzan project is currently the only major natural gas development underway, while the USD6 billion (QAR21.8 billion) Al Sejeel petrochemical project is now on hold, and the USD6.5 billion (QAR23.6 billion) joint venture with Shell was cancelled due to unfavourable economics. While new natural gas projects would spark a new wave of construction activity in the country, for now there appears to be a misalignment between government policy and expectations of international companies. In May, German energy company
Wintershall said it is closing its Doha operation after a breakdown in negotiations to gain access to infrastructure for the development of the Radeef discovery on Block 4. The Qatari government is also retendering its Al Shaheen field, after Danish company Maersk failed to renew its licence, which expires in 2017. “In contrast to the policy pursued by OPEC regarding crude oil production, Qatar does not appear, at this stage, to be set on a policy of encouraging supply in order to push down prices,” wrote Michael Barron, director of global energy at Eurasia Group in a recent report, “Rather, Qatar is seeking to participate in the expanding global LNG market and therefore it will not have an interest in forcing prices down.” It is a majority partner in the Golden Pass LNG project in the United States and has interests in LNG import facilities in Italy and the United Kingdom. Through its sovereign wealth fund, Qatar is also an investor in Royal Dutch Shell Plc. While Qatar’s global LNG market share is expected to diminish as Australian projects start to come on line, the government can pursue a host of external options to ensure it remains a formidable natural gas giant, rather than go back to mining the North Field. The next year or so will be crucial for Qatar as it assesses its options. Currently the construction sector is leading economic growth, rising by 22 percent last year. But if Qatar loses its right to host the 2022 World Cup, there might be a focus on doubling up on the natural gas sector to offset the loss of economic opportunity, especially in the construction sector. But it is an option the Qatari authorities would be loath to take.
Real Estate Development Law:
A Means toward an end Implications and role of Qatar’s new law governing its realty sector
Photo by:
Damon McDonald
Among some major issues in Qatar’s real estate sector is the issue of project delays, impacting investor sentiments. Pictured here are the twin towers in the Lusail City, which has been reportedly postponed over years.
To safeguard the interests and rights of local and foreign investors, Qatar’s new Real Estate Development Law has introduced stiffer rules for developers, which include the requirement of obtaining a developers’ licence and opening an escrow account.
In March 2014, the Emir HH Sheikh Tamim bin Hamad Al Thani issued the Law No 6 2014 for regulating Qatar’s real estate sector. Also known as Qatar’s Real Estate Development Law, it deals in areas of the sector, not addressed comprehensively in the pre-existing legislature. With the introduction of requirements such as escrow account and developers’ licence, along with added penalties against builders, the new law seeks to safeguard the rights of investors. In an exclusive interview with Paula Boast, partner at Charles Russell Speechlys, QCN’s Farwa Zahra learns about some key regulations, which will serve as a means toward the country’s goal to fully standardise its real estate market.
O
“Issues such as delay in achieving practical completion and handover, non-payment and termination are usually the most prevalent.” - Paula Boast, partner, Charles Russell Speechlys.
f the top 100 construction projects in the Gulf Cooperation Council (GCC) last year, developments linked to the real estate sector had one of the largest shares. Of the total project value of about USD1.25 trillion (QAR4.55 trillion), almost 61 percent came from the realty market, states Alpen Capital’s new report GCC Construction Industry, published in late June. The report further reveals that between 2013 and 2014, “the residential construction sector accounted for the second highest number of completed projects.” While the demand for residential units has been on a rise for the last few years, Doha saw the lowest supply of units compared to other major cities in the Gulf. With Doha’s increasing population being the primary reason, insufficient supply of housing units is also linked to the issue of delays in projects. Over the past few months, QCN asked a number of construction professionals
about their key concerns. Many agreed that timely completion of ongoing projects is one of the major challenges for Qatar at the moment. Among the key real estate projects facing delays in Qatar is the Lusail City. Dubbed as the country’s largest real estate project spread across 35 square kilometres, Lusail development is planned to provide accommodation for 200,000 residents once it is completed. The time of completion, however, remains uncertain, with media reports on investors’ frustration over lengthy delays and unfulfilled promises made by the lead contractor. Does Qatar’s law provide protection to investors against developers failing to meet project deadlines? QCN approached Paula Boast, partner at Charles Russell Speechlys, to know what rights investors can enjoy as per the new law, among other parts of Qatar’s Law No 6 2014, (Real Estate Development Law), for regulating the country’s real estate
20
cover story
sector. Now implemented, the new law comprehensively deals with issues not previously included in the country’s legislature. Considering the large scale of Lusail City, Boast says, delays were not entirely unexpected. That said, she points out Article 171 of the Qatari Civil Code, which provides that “a contract duly and properly concluded between the parties must be kept, and nonfulfilment of the respective obligations is a breach of that contract.” While there are many exceptions to this rule, July 2015 | QCN
Boast says it provides a good basic position to start from when an investor wants to consider their rights and obligations in circumstances where a deal has not proceeded as both parties had originally hoped for. Summarising some of the common disputes within Qatar’s real estate sector, she says, “Issues such as delay in achieving practical completion and handover, non-payment and termination, including securing possession, are usually the most prevalent [disputes in Qatar].”
Among some of Qatar’s freehold properties open for foreign investors are the Zig Zag Towers located in The Pearl-Qatar, targeted towards the highend residential market. (Image Damon McDonald/Flickr)
cover story Investor’s rights and obligations
“The use of an escrow account boosts consumer confidence in the market, and reduces the risk or perception that developers may re-allocate or misuse the funds for other projects.”
“With some great opportunities, there are a variety of project-specific and other risks associated with investing in a developing and dynamic market such as Qatar.”
Lusail City is just one example of a real estate project facing delays. With a number of other properties underway in Qatar, a general awareness among investors about their rights and obligations can help ameliorate the situation by building up pressure on developers. To ensure their rights are acknowledged in the event of project delays, investors must be wary of all terms and conditions of the contract
Speaking about Qatar’s new Real Estate Development Law, Paula Boast, partner at Charles Russell Speechlys, says the developers’ licence seeks to encourage property investment by building consumer confidence.
21
before signing. “A well drafted contract should always provide a clear answer as to what a party can do at any point during a transaction. This is particularly important when there are delays or circumstances have changed after execution. These are matters that need to be carefully considered by the parties prior to signing the contract as the parties’ willingness to accept particular risks is a critical part of the deal,” says Boast, adding that where the contract is defective or does not clearly define a party’s rights, a more detailed review of the case and background circumstances may need to be undertaken by a solicitor to advise the investor accordingly. While the above applies to both local and foreign investors, the latter must be particularly informed about the nature of Qatar’s real estate market. “Qatar is a developing market that is going through change at lightning speed. Although this provides investors with some great opportunities, there are a variety of project-specific and other risks associated with investing in a developing and dynamic market such as Qatar, says Boast, who advises the investors to realistically manage investment expectations in terms of time, cost and quality of real estate development investments. According to Qatar’s new real estate law published in 2014, development of a property across the country will require an ‘Escrow Account’. For every individual project, the developer is now required to open an account to hold the amount coming from investors and other stakeholders. However, withdrawals from an escrow account are not allowed until the developer proves it has completed at least 20 percent of the project. Boast describes escrow accounts as ‘half way house’ between a developer/seller and an investor/ buyer to protect and hold funds. “An independent third party is engaged as an escrow officer and is in charge of the account. Generally, the escrow officer must ensure that certain conditions are met before releasing the funds from the account,” she says. Providing additional security to investors, the bank holding the QCN | July 2015
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escrow account is required to hold funds equivalent to 10 percent of the total project value unless it provides an acceptable bank guarantee. All transactions and access to escrow account must come after the approval by the Ministry of Municipality and Urban Planning. Commenting on the implications of introducing escrow account, Boast says, “The use of an escrow account boosts consumer confidence in the market, and reduces the risk or perception that developers may re-allocate or misuse the funds for other projects.”
Developer’s rights and obligations When terms and conditions are meticulously reviewed, Qatar’s law provides sound protection to investors. Where, then, do the developers stand? When asked about some provisions providing the rights to developers, Boast mentions the new Real Estate Development Law, which acts as much to protect developers as it does to protect the other contracting parties. By setting out clear definitive guidelines for developments in Qatar, Boast says, “It will certainly assist developers on matters that have previously been unclear, including what is required of them as key stakeholders in the real estate sector. It also importantly sets a standard benchmark for quality in real estate projects and construction, which is important in ensuring that the best developers get to carry out and complete the required workbook of Qatari projects.” In the context of developers’ obligations, the State of Qatar has recently introduced the requirement for developers to obtain a licence prior to authorising their operations in the country. Provided by a designated department of the Ministry of Economy and Commerce, the ‘Developers Licence’ can be revoked if the developer fails to meet certain obligations, including the requirement to start work within six months of being granted permission for off-plan sale of units. Granted for three years, the developers ‘licence sets out the minimum criteria for Qatari and non-Qatari developers. (See boxout on page 23) July 2015 | QCN
61% The share of real estate developments among GCC’s top 100 construction projects.
“Further legislation is still required in relation to a number of areas such as landlord and tenant, strata and the title registration system as well as the establishment of a real estate regulator.”
According to Qatar’s recentlyintroduced Law No.6 of 2014, a developer cannot withdraw any amount from buyers’ proceeds unless it shows it has completed at least 20 percent of the project.
“Together with the other requirements in the Development Law, the licence seeks to encourage property investment by building consumer confidence,” says Boast. However, she points out, it is unclear whether the requirement for developers to have three years of experience relates to the developer’s experience as a whole (that is the entire entity) or individuals within the developer. If the requirement pertains to three-year experience of the entire entity, the introduction of developers’ licence can likely deter new entrants to the market who do not meet this criterion.
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Developers’ Licence: Minimum criteria
For Qatari developers •
• •
Must be a Qatari company duly incorporated under the laws of Qatar and its commercial activities must include the development of real estate. Must have a minimum of three years of experience in development and construction prior to the date of application. Must not have been declared insolvent by virtue of a final court order.
For non-Qatari developers •
• • •
•
Must be a company duly incorporated in a foreign country in accordance with the relevant laws of that country and its commercial activities must include the development of real estate. Provide legalised evidence of its incorporation. Establish a commercial presence in either Qatar or another GCC country. Have a minimum of three years of experience in development and construction prior to the date of application and have a good reputation in the market for similar developments. May only carry out development work in designated areas where foreign ownership of land interests is permitted.
QCN | July 2015
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cover story
Qatar’s new real estate law: Penalties against developers Developers’ offenceS
Penalties against developers
1. Failure to handover the units on the contractual date without an acceptable reason.
Imprisonment of up to one year and/ or a maximum fine of QAR50,000
2. Failure to meet the contracted standards and specifications.
Legislative landscape
3. Operating without obtaining the developers’ licence.
4. Misrepresentation or fraud in relation to the sale of an off-plan unit. 5. Use of funds in the designated Escrow Account for purposes other than those prescribed by the new law. 6. Obtaining financing and using the project as collateral without the approval of the Ministry of Economy & Commerce. 1. Failure of a developer to commence work on the project within six months of its approval date without an acceptable reason. 1. Failure to register the strata titles within two months from the issuance of the completion certificate.
A maximum fine of
QAR200,000,
notwithstanding any higher penalty. A maximum fine of
QAR100,000,
notwithstanding any higher penalty
2. Failure to provide all required documentation to the relevant authorities under the new law.
Source: Reem Al Mahroos, associate at Charles Russell Speechlys.
July 2015 | QCN
“Law No.6 of 2014 has introduced some important provisions relating to the development and sale of offplan units. Such legislation has given greater protection to investors and end users, which is therefore likely to stimulate increased levels of investment.”
Apart from developers’ licence and escrow account, other changes that came with Qatar’s new real estate law include ‘Strata-Title’, providing the Ministry of Justice with detailed information about every off-plan unit and development. The information will remain as part of the interim register, featuring details about owner, sale price, mortgages and judgments, etcetera. Against the backdrop of frequent project delays, the new law also increases penalties against developers for non-compliance. (See infographic) Commenting on the role of the new real estate law, Boast says, “The legislative landscape is continuing to develop and evolve… Law No.6 of 2014 has introduced some important provisions relating to the development and sale of off-plan units. Such legislation has given greater protection to investors and end users, which is therefore likely to stimulate increased levels of investment.” That said, Boast believes the new legislation is not an end in itself, but a means toward an end. A number of areas within the real estate market will need to be addressed in order to fully standardise the sector. “Further legislation is still required in relation to a number of areas such as landlord and tenant, strata and the title registration system as well as the establishment of a real estate regulator,” concludes Boast.
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technical
Back-to-back cont
can they truly e In a back-to-back contract, the rights, liabilities and interests of the contractor under the main contract are the same as rights, liabilities and interests of the subcontractor under the subcontract in relation to the subcontract’s scope.
Back-to-back contracts are frequently used in construction contracts. While they are here to stay, Tom Kapapa of Quantum Global Solutions asks if these contracts truly protect contractors and subcontractors.
There are gaps in backto-back contracts, which simultaneously present problems and opportunities.
July 2015 | QCN
Qatar’s construction market is booming, dynamic and expanding at a very fast pace. The next few years will continue to see even more volatility with increasing construction activities as we count down to a few major events and ultimately the 2022 World Cup. While the growing number of projects
means more business for contractors and subcontractors, it also poses challenges to them along with other industry stakeholders. The spectrum of risks is therefore expanding, forcing stakeholders to look at ways of managing and controlling the externalities in order to protect their interests. I have been in the Middle East for over nine years with seven years here in Qatar, and one key issue that keeps bothering me is the prevalence of socalled ‘back-to-back’ contracts, which are mainly between contractors and subcontractors. So why are they so prevalent here in Qatar?
technical
tracts
exist?
Let us first define what they are meant to be. Back-to-back contracts are simply back to back. Stated differently, as per these contracts, the rights, liabilities and interests the contractor has under the main contract are the same rights, liabilities and interests the subcontractor will share with the contractor under the subcontract in relation to the subcontract’s scope. Interestingly, by looking at this simple definition, this should be a very positive contract arrangement in which if a contractor gets extension of time, it will give the same extension to the subcontractor. Similarly, if the
contractor gets prolongation costs, subcontractors will have a share in it. Does this explain why they are so prevalent here in Qatar? Or is there another motive behind, that is to transfer all the pain instead of sharing the gain? It seems to me that the latter reflects the common purpose of such contracts, leading to many disagreements. In practice, there cannot be a true back-to-back contract, as opposed to the general understanding. This perhaps could be why the likes of the International Federation of Consulting Engineers (FIDIC) have not produced a standard back-to-back contract. Also it is important to note that under the main contract, the main contractor is fully responsible for the whole works including those carried out by his subcontractors. As such, back-to-back contracts come into question for a number of issues: (1) the scope of main contract is wider than, and incorporates, the subcontracted works; (2) the main contractor is fully responsible for the planning and monitoring of the whole works; and (3) the main contractor is the overall responsible party for the interface management and coordination between/ with other trades subcontracted for the works. The question then is, can any of the afore-mentioned responsibilities of the main contractor be transferred to the subcontractors. What is currently evident within the industry is that contractors seem to think such responsibilities are transferable under the guise of back-to-back contracts. These gaps simultaneously present problems and opportunities. In general, subcontractors’ liabilities towards the ultimate employer or client are limited by the subcontract terms and conditions. However, the rights given to subcontractors through back-to-back contracts allow them to have more claims and entitlements. These powers flow from the employer’s instructions or risks as stated in the main contract. Clearly, a back-to-back contract is more encouraging for subcontractors. As subcontractors become fully aware of their limited liabilities and responsibilities, they can take advantage of the opportunities these back-to-back
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contracts offer. Contractors are seemingly hesitant to use standard provisions, which provide a tried and tested balance of risks and opportunities. This could be due to the rise of bespoke contracts imposed by project owners with strong buying power while attempting to transfer all risks to contractors. That said, risks also bring opportunities, and as long as the parties understand and identify the risks and establish a proper live risk management system, these opportunities should be maximised (in theory). While there is common belief that back-to-back contracts shift all the risks from top to bottom of the project supply chain, I believe this is practically or contractually impossible. According to Article 140 of Qatar Civil Code, if a party uses its influence to conclude a contract in his favour while exploiting the rights of the other party, “the judge may, at the request of the party who is a victim of such undue influence, reduce his obligations or increase the obligations of the other party or annul the contract.” In other words, what matters is who is best placed to manage the risks. Back-to-back contracts are here to stay with contractors believing this is the best way to protect or transfer their risks and obligations to maximise their interests. While main contractors should beware of the opportunities afforded to subcontractors through back-to-back contracts, subcontractors need to be fully aware of the opportunities they have through such contracts.
Tom Kapapa is the operations and technical director at Quantum Global Solutions.
QCN | July 2015
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project update
rapid progress at The Pearl-Qatar On the back of its strong financial performance, registering QAR270-million net profit in Q1 2015, United Development Company (UDC) is continuing with venturing into new agreements to further develop The Pearl-Qatar and expand the island’s investment offerings.
T
he Pearl-Qatar, UDC’s ambitious master development, is witnessing rapid progress with many of its facilities slated to open this year. The company’s representative says the project’s increased pace has helped UDC improve its revenues with QAR676 million profits in the last financial year. As far as the group is concerned, UDC has been seeing some new developments within the company. The country’s leading Qatari shareholding company in June announced the appointment of Ibrahim Al Othman as its new chief executive officer. UDC is optimistic about continuing the good run through the year and beyond, particularly in the construction of vital projects on the island. Roger Dagher, director of corporate communications, UDC says, “While our positive latest financial results confirm our commitment to profitability, they also represent a unique growth opportunity for UDC.” He explains the company has managed to achieve steady progress by focusing on growth and profitability, and accelerating the development of new retail and residential districts in The Pearl-Qatar. “We are committed to provide resources for operations in sectors such as hospitality management, security, technology and facility and waste management,” he adds. Talking about the company’s outlook, specifically for The Pearl-Qatar, Dagher July 2015 | QCN
UDC’s current priority is to complete all 10 precincts of The Pearl-Qatar while at the same time remain focused to core businesses such as sales, retail, facilities management, district cooling and assets management.
“We want to move ahead by focusing on our three imperative strategies: attracting investors, attracting retailers and developing the organisation.” – Roger Dagher, director of corporate communications, UDC.
project update
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Qanat Quartier is one of the most attractive and recognised precincts in The Pearl-Qatar.
QCN | July 2015
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project update
QAR
270
million UDC’s net profit in Q1, an increase of eight percent from Q1 2014.
says, “We want to move ahead by focusing on our three imperative strategies: attracting investors, attracting retailers, and developing the organisation. Moreover, we will continue our progress by increasing profits from sales and retail leasing, in addition to improving the performances of our various subsidiaries and partnerships.” UDC’s current priority is to complete all 10 precincts of The Pearl-Qatar while at the same time remain focused on core businesses such as sales, retail, facilities management, district cooling and assets management. “There is huge potential in these five major streams and we are confident in our ability to achieve success while meeting the expectations of our shareholders,” says Dagher. The Pearl-Qatar project has currently entered into the third phase, which will see more residents and retailers moving in Medina Centrale. During the same phase, the company announced construction of the Abraj Quartier district, which started earlier this year and is expected to be completed in 2016. The two main 40-storey Abraj Quartier towers, located on the opposite sides of the main access road to The Pearl-Qatar, will boast a build-up area of more than 230,000 square metres (sqm). Dagher reveals, “Other varied vital facilities are also being built throughout the island including Gymito, a state-of-the-art sporting facility located in Qanat Quartier, spanning an area of 2000 sqm with more convenience stores and services extended to this charming precinct.” The Pearl-Qatar will also house many five-star hotels and boutique properties throughout its 10 precincts. In addition to the Kempinski Hotel in Costa Malaz, which was inaugurated last December, two July 2015 | QCN
Compared to tra systems, evap solutions help m consumption by 40 p reducing the op in the long term. are Air2O’s hybri installed in a sc Dubai. Within Qatar, projects is Gran
project update
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they expected to award any such projects this year? Dagher says their strategy in real estate, unlike other master developers, is to retain much of the assets for lease, rather than sale. He explains that although there is no ready-made formula to protect oneself during a major market downturn, “these stable income streams will cushion us from market cycles and support growth and profitability.” Qatar has been witnessing rapid increase in property prices and rentals in the recent times – something that has made property purchase unaffordable for many. What has been the company’s pricing strategy for The Pearl-Qatar? Dagher says the country’s growing population ahead of the 2022 World Cup continues to impact real estate dynamics of supply and demand. “Therefore, it is safe to say that rent figures at The PearlQatar are also determined by these same market forces, although demand for quality residential and commercial leasing offered at The Pearl-Qatar is particularly high compared to other parts of Doha,” he says. As far as more affordable housing is concerned, Dagher furthers, UDC has designed 10 residential precincts in The Pearl-Qatar with different features and amenities. “This variety is meant to give investors and residents the privilege of choosing their preferred residential precinct on the island, based on their budget without compromising on quality, of course,” he explains.
aditional HVAC porative cooling minimise energy percent, hence perational costs . Pictured here id cooling units chool facility in , one of Air2O’s ndma Nursery. (Image Air2O)
In addition to the Kempinski Hotel in Costa Malaz, which was inaugurated last December, two more five-star hotels will open soon at The Pearl-Qatar.
In the past few months, a series of new retail stores and restaurants have opened in the precincts of Porto Arabia and Medina Centrale.
more five-star hotels will be opened soon. Earlier in 2014, UDC had also launched the construction works for the new Hilton Panorama Residence at Abraj Quartier which, once completed in mid of 2017, will comprise 445 serviced hotel apartments. Additionally, in the planning stages are two mosques, a comprehensive school and other hospitality, entertainment and cultural facilities throughout the island – to be announced in due time. “It is worth mentioning that all four phases of the island development, including all five-star hotels and boutique hotels, is expected to be completed by the end of 2018,” reveals Dagher. Since UDC’s business strategy in the past had involved giving out under-developed land to other contractors for development, are
Alcohol ban Being developed as a premium leisure, entertainment and hospitality destination, The Pearl-Qatar has many food and beverage (F&B) outlets which were reportedly
“It is worth mentioning that all four phases of the island development, including all five-star hotels and boutique hotels, are expected to be completed by the end of 2018.”
QCN | July 2015
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project update
impacted by the ban on alcohol serving. But Dagher claims, “As far as our UDC-managed restaurants on the island are concerned, footfall is increasingly improving as customers and tourists are enjoying the high standard of service and cuisine variety.” Other F&B outlets and coffee shops have also established their presence irrespective of the alcohol factor, he furthers. However, the Marsa Malaz Kempinski became the first hotel to be allowed to serve liquor in The Pearl-Qatar after the ban came into effect from December 2011. Is there any possibility of the decision on ban to be reviewed in the near future? Dagher explains the decision to ban alcohol in various restaurants and hotels at The Pearl-Qatar and elsewhere in Doha was made by the state authorities, which is not a decision issued or controlled by UDC or The Pearl-Qatar. “To that end, those same authorities are entitled to extend liquor trading to any premises, particularly five-star hotels in accordance with laws and regulations related to hotel operations in Qatar, and that also covers the new Kempinski at The Pearl,” he adds. In the past few months, a series of new retail stores and restaurant have been opened in the precincts of Porto Arabia and Medina Centrale. “These openings serve to fulfil the island’s promise of offering great retail experience, and that caters to the growing number of residents and visitors longing for an exclusive shopping and dining experience in Doha,” says Dagher. The island’s development will also see more popular and accessible brands opening in Medina Centrale this year, along with the mega indoor entertainment centre, Megapolis. On the Porto Arabia front, a number of fashion and lifestyle stores as well as dining concepts will also continue their string of openings throughout 2015.
Health and safety UDC recently won two awards for the health and safety and worker’s welfare. It received the Labour Rights Protection Shield at the Labour Rights Protection Conference. This award is given to organisations that have successfully implemented fair, work-friendly practices and standards throughout their domain of operations. The company also received a safety award during a conference held to release the ‘Qatar Achievement on Vocational Safety’ book in collaboration with Qatar Chamber. Dagher stresses that UDC plays a key role in the country’s development while maintaining strict safety and health standards. “We are equally proud to take the lead as a safety conscious employer that treats labourers fairly and justly. The company employs a highly trained and experienced health and safety team, using the latest technology, and applying the highest standards and procedures in regulating working conditions,” he concludes.
July 2015 | QCN
Strong financial performance
UDC registered a strong performance in the first three months of 2015 with a net profit of QAR270 million, an increase of eight percent from Q1 2014. The net profit, attributable to owners of the company, stood at QAR262 million compared to QAR241 million in the same period during 2014. For the 2014 financial year, UDC reported revenue of QAR1.9 billion with net profit reaching at QAR676 million compared to QAR409 million in 2013. The company, which targets investment and joint venture opportunities in infrastructure, real estate, urban development, utilities, hospitality, retail and other service oriented businesses, also reported a gross profit of QAR1.1 billion, while total assets stood at QAR19.2 billion.
5 Gold Anchors Rating for Porto Arabia marina Porto Arabia marina has recently received a 5 Gold Anchors rating from the Gold Anchor Award Scheme by the Yacht Harbor Association, a trade association, which provides support for marinas and related business throughout the United Kingdom and internationally. Ronautica Middle East, a wholly-owned subsidiary of UDC, is the operator and manager of The Pearl-Qatar’s three marinas. The principal operation at Porto Arabia is the largest marina facility in the Middle East and one of the largest in the world. It features state-of-the-art berths for up to 850 vessels at lengths exceeding 60 metres. A second marina, at Costa Malaz, was opened in 2013 and offers 117 berths for yachts to 15 metres. The award recognises Porto Arabia marina for reaching international standards set for marinas offering excellent facilities, the highest service levels for members, and achieving the International Council of Marine Industry Association’s Clean Marina standard.
industry insights
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Qatar’s stadiums will need to be air-conditioned, irrespective of the external weather conditions In an interview with QCN, Mohamed Salem, co-founder and chief technical officer, Air2O Cooling LLC, shares details about their sustainable cooling systems for open-air thermal control.
Mohamed Salem is the co-founder and chief technical officer of Air2O Cooling LLC. Salem has more than 20 years of experience in the field of heating, ventilation, airconditioning and cooling (HVAC), as well as sustainable energy saving solutions linked to HVAC.
Tell us about Air2O Cooling.
The use of outdoor cooling is still not popular in Qatar, which, according to Mohamed Salem, is because of the inability of the traditional methods to work successfully in the open air. With advanced cooling solutions available now, the country can increase the overall attractiveness and useability of its open-air venues such as Katara’s Ampitheatre pictured here. (Image Isabell Schulz/Flickr)
Air2O Cooling is a multinational corporation. It builds and designs residential, commercial and industrial cooling solutions with a focus on energy efficiency. In Qatar, the company is represented by its sole distributor Doha Cool & Fog WLL, actively reaching out to all the clients, consultants and contractors to implement evaporative cooling in the upcoming projects for more sustainability and energy efficiency.
How are your solutions different from other sustainable HVAC systems? At its heart, Air2O uses a two-stage indirect evaporative cooling solution that is not a compressor-based system. Air2O has a unique ability to adapt and become
QCN | July 2015
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industry insights
a hybrid cooling system, incorporating traditional refrigerant or chilled water-cooling coils. Its intelligent control system can automatically respond to external weather conditions, switching its cooling strategy from evaporative cooling to air-conditioning; only when needed. This ensures consistent performance, high efficiency and significant energy savings.
The 2022 World Cup will now be held in November-December. What are some cooling/heating requirements the stadiums will need to fulfil? It is not very efficient to build stadiums without cooling technologies, given the fact that the most dominant weather condition is the summer here in the Gulf region. The stadium needs to be designed for 12 months rather than a one-off event. Winters in the Gulf consistently remain around mid 20 degrees Celsius (oC), and the month of November is not as cold. However, considering the number of people attending the World Cup, we will still need a good cooling system in place for human comfort due to the internal heat gain through occupancy and lights. We would not need any artificial heating as the internal heat gain
In preparation of the 2022 World Cup, Qatar experimented open-air cooling on a large scale with the launch of Brazil 2014 Fan Zone at Katara, featuring a capacity of 15000. (Image The Supreme Committee for Delivery & Legacy)
July 2015 | QCN
will be sufficient. Qatar wants to represent itself on the global stage at its best by being in line with its promise to deliver an amazing fan and player experience at the 2022 World Cup. The government of Qatar wants to provide facilities which are useable all year round, and not just restricted to the winter months. So, for Qatar, having air-conditioning or outdoor cooling in its stadiums will provide a legacy of facilities that can be used throughout the year. The stadiums will need to be air-conditioned, irrespective of the external weather conditions as they will need to stabilise the football pitch at 26 oC, and spectator seating area between 24 and 28 o C, as per FIFA regulations.
One of Air2O’s projects in Qatar is the under-construction Mall of Qatar, where the use of evaporative recovery units will recover twice the amount of energy compared to conventional heat recovery approaches. (Image Al Khayyat Contracting & Trading)
“Overall, the Qatar market has been very exciting as the HVAC designers and clients are ready to implement more sustainable technologies with lower operational costs in the long run.�
industry insights
What are some exclusive features of outdoor cooling? Outdoor cooling is not done in a confined space where elements such as the heat load, total area and all necessary design criteria are available at the designer’s disposal. It has no standard load calculation methods, so we have to utilise computational fluid analysis (CFD) of air with the zone to be cooled. In doing this, many factors are considered, such as wind chill, wet bulb globe temperature, apparent temperature, and discharge air velocity, etcetera. Here, the natural and obvious challenges are of wind, which needs to be reduced utilising various techniques to create a barrier or to deflect the air under high wind days so as to safeguard the cold zone.
The Mall of Qatar is a mix of open and covered spaces. Are you responsible for all cooling systems for the entire mall? No, we are not responsible for all the cooling requirements. We are utilising our unique method of Evaporative Heat Recovery System and are solely responsible for half a million cubic feet per minute of fresh air supplied to the mall. The ultimate goal is to recover and deliver air at the same enthalpy of the internal design condition, so there is no positive or negative impact on the air-conditioning system in place. We would recover a total of 1720 tonnes, compared to a traditional system which would only recover 900 tonnes. Hence, looking at the actual fresh air load requirement here in the Gulf region, we can recover and precool the fresh air utilising our technique and actually make a serious impact on the total cooling load of a project. However, due to this large requirement of fresh air and the expenses attached to it, such as designing larger chiller plants, consultants and designers are often forced to reduce the fresh air load or intake, instead of complying with American Society of Heating, Refrigerating, and Air-Conditioning Engineers (ASHRAE) standards.
load, which would otherwise be 30 to 40 percent higher. We take care of all the fresh air needs in a building, so we need sufficient time to educate and work with consultant.
How efficient are Air2O’s cooling solutions compared to traditional and sustainable systems? By no means are we here to replace any of the traditional cooling techniques. We are here only to supplement and enhance the energy savings potential by minimising the dependence on compressor-based systems to meet the peak design load. We do not offer a complete solution, but only merge with other technologies to create a true hybrid operation in order to achieve minimum and guaranteed savings of 40 percent by properly hybridising the available technologies.
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“We are here only to supplement and enhance the energy savings potential by minimising the dependence on compressor-based systems to meet the peak design load.”
Despite intense weather conditions, openair cooling systems have not been very popular in Qatar. How do you see Air2O’s scope in the market? The true demand for outdoor cooling was not very high due to the inability of the traditional methods of cooling to successfully function in the open air, as well as their operational cost. Our work for cooling down a prototype open stadium in Qatar took our hybrid units only 1500 tonnes of DX where the rest of the cooling load was taken care of by evaporative cooling compared to traditional cooling proposal, which would need 5000 tonnes to achieve the same design criteria. The introduction of evaporative cooling by Air2O has changed the total formulae and perspective towards outdoor cooling being possible in a very energy-efficient way, but at the same time in a very cost-effective manner with regard to the investment and operational costs. The size of the machines
Compared to traditional HVAC systems, evaporative cooling solutions help minimise energy consumption by 40 percent, hence reducing the operational costs in the long term. (Image Air2O)
Generally, at what project stage should cooling solutions providers come in? Early design phase. Indirect evaporative cooling is a simple yet effective technology which can be utilised very smartly in a project to maximise energy savings by downsizing the chilled water or the direct expansion (DX) QCN | July 2015
What are some aspects you find most challenging in Qatar’s building market?
Pictured here are Air2O’s hybrid cooling units installed in a school facility in Dubai. Within Qatar, one of Air2O’s projects is Grandma Nursery. (Image Air2O)
“We create a true hybrid operation in order to achieve a minimum and guaranteed savings of 40 percent by properly hybridising the available technologies.”
July 2015 | QCN
is very similar to any other standard package units available in the market. This has created a belief in the market for an effective solution to outdoor cooling which indeed is creating a serious interest and demand towards outdoor cooling. Tell us about the park projects you are working on. In terms of heat control, how different will they be from existing parks in Doha? We are currently working on the design of a few parks in Qatar. These include temperature-controlled children’s play area and seating areas, designed to maintain 24 o C in extreme heat. The idea is to let people enjoy the fresh and open cold air all year irrespective of the natural weather. When properly designed, cold air creates a thermal barrier which results in zoning out cold areas from the external hot air. Another interesting part of these projects is a new system (ACSESS controller) developed by Air2O. Here, engineers design a cooling system based on one single extreme condition, while in reality, we live in a spectrum of conditions that vary between hot, mild, cold, dry and wet. Depending on the specific condition, different cooling strategies can be used, which brings huge volumes of savings as the controller responds to external weather conditions and swaps its cooling strategy from one to another to find the best possible strategy for that particular ambient condition.
Tell us about your work at the Zoo & Safari Park? What are some cooling requirements in this facility? It was challenging to meet the needs of animals and the visitors at the same time. We were able to humidify or dehumidify based on the requirement of the designer to his set indoor/outdoor conditions, which obviously gave us the edge and added advantages of high energy savings for the client with a minimum of 30 percent savings. When considered in financial terms, the annual savings are enormous.
The most challenging part is to convince a designer and then the client to adapt from traditional cooling to evaporative cooling. This requires educating them about the usefulness of these solutions. Currently, evaporative cooling market is not very mature in the Gulf because the history of evaporative cooling is sometimes negatively fed due to its unpredictability. This is where we actually make a difference as we have developed DEN – a performance predicting software for evaporative cooling. The removal of uncertainty provides HVAC engineers with the confidence to select the appropriate evaporative cooling technology and demonstrate the system performance to the end users. Evaporative Cooling is a serious energy saving technology, which should not be prohibited due to the lack of understanding. With the world power crises on the rise, green approaches must be adopted to replace or reduce the high-power standard airconditioning equipment. Overall, the Qatar market has been very exciting as the HVAC designers and clients are ready to implement more sustainable technologies with lower operational costs in the long run.
How has been Air2O’s experience in Qatar so far? We are currently working on various projects in Qatar, Dubai and Kuwait with various installations in factories, hospitals, car showrooms, workshops, and outdoor car parks, etcetera. The feedback we have received from Qatar’s market is truly encouraging, which gives us confidence to heavily focus on this Gulf market to reduce its immense dependence on traditional compressor systems by reducing the actual cooling load by a minimum 30 to 40 percent. We are pleased with the support from various clients, contractors and consultants across the Gulf. Then there are engineers who believe and understand Air2O’s systems’ true benefit, but to build their confidence to implement these systems is very time consuming. Eventually, we are working according to the standard designs available in the market by proposing a more sustainable design, which obviously takes time.
human resources
Top 10 skills employers in Qatar are looking for Based on recent surveys, the research team at Bayt.com reveals the 10 most sought-after skills by construction employers in Qatar: 1. Communication skills: Sixty one percent of employers across the region say that good communication skills in Arabic and English are the most important thing they look for in a candidate. 2. Interpersonal skills: By this we mean the ability to relate to your boss and coworkers and other stakeholders, 48 percent of construction employers are looking for good team players who are cooperative, helpful and flexible. 3. Leadership skills: Forty-four percent of construction employers are looking for good leadership skills. Having great leadership skills and an optimistic outlook on life will help you inspire troops and take you far in this industry. 4. Technical skills: The construction industry warrants strong technical know-how. With 40 percent of employers looking for candidates with such skills, 58 percent of employers are looking for candidates with engineering experience, while 56 percent want candidates with engineering graduate and post-graduate qualifications.
5. Flexibility, adaptability and multitasking: The construction industry in Qatar is strong and thriving, but it is also volatile and subject to changes in the economic situation of the company and country, so you will need not only to adapt to the marketplace, but also adjust whenever required. 6. Planning and organising: About 43 percent of employers are looking for candidates who can work under pressure. Planning and organising are important for being efficient; and 38 percent of recruiters are looking for candidates who are productive and efficient. 7. Multicultural awareness: With construction companies becoming more global, it is very important to be aware of other cultures and ethnicities. Employers are looking for people who can identify with different cultures and nationalities, and be fair and equal. 8. Willingness to learn: Are you always up for learning new skills? Do you ask questions when you do not understand something? Do you research your industry and stay up-to-date with the latest trends? The willingness to learn is a major trait that regional employers are looking for.
Current Vacancies in Qatar Organisation
Position
Reference
National Brothers
Project Manager – Construction
JB3283540
Nakheel Landscapes
QA/QC Engineer
JB3283646
DicoTech Qatar WLL
Sales Manager – Oil & Gas Construction Services
JB3279742
Arab Engineering Bureau
Proposal Engineer
JB2993962
Al Watania Concrete Co. Ltd
Operations Manager
JB3264159
Obayashi Corporation
Planning Engineer
JB3264069
Al Watania Concrete Co. Ltd
Maintenance Manager
JB3264155
37
When it comes to landing a job in Qatar’s thriving construction sector, certain skillsets will help you stand out more than others. Though most of these skills are industry-related, many of them are easily attainable through self-learning and training. 9. Problem solving, creativity and logical reasoning. Organisations encourage new ideas to be tried out. Construction employers are also looking for people who can think outside the box. This is especially important when it comes to architecture, design and management. 10. Good negotiation skills: Signing deals with various parties is frequently required in the construction sector, which may be why 37 percent of construction employers are looking for good negotiation skills in a potential candidate.
Qatar employment in numbers
58%
of construction employers say engineering experience is the most important thing they look for.
41%
of professionals in Qatar say they did not get a salary raise in 2014.
22%
professionals in Qatar do not expect a raise in 2015.
58%
of professionals in Qatar say cost of living has increased up to 20%.
36%
of professionals in Qatar are satisfied with their job.
61%
of professionals in Qatar are of the opinion that the employment rate of local talent has increased. Sources: The Bayt.com Salary Survey, May 2015, The Bayt.com Job Satisfaction in the MENA, April 2015, and The Bayt.com Nationalization in the Gulf Cooperation Council poll, April 2015.
QCN | July 2015
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legal
39
Successful joint ventures: avoiding internal disputes Joint ventures (JV) are common in Qatar, given the size and scale of construction projects, bond requirements, engineering licensing rules, and local shareholding requirements for foreign companies. Pamela McDonald of Pinsent Masons suggests some ways to avoid disputes among JV partners.
I
f a project runs into difficulties, a dispute may arise not only between the parties themselves, but also internally between the JV members. Internal disputes often arise where the JV agreement stipulates that partners have joint liability. In those circumstances, each JV member is liable for the other’s actions or breaches of the contract, irrespective of which partner is at fault or caused or contributed to the loss. Where the JV members are severally liable, they are individually liable for their own actions and breaches, rather than cumulative liability. The likelihood of internal JV disputes can be reduced and perhaps avoided if the partners, at the outset, communicate and expressly agree how the scope of work and administrative processes will be divided among them.
Division of the scope of work A JV agreement often provides for the partners to carry out separate scopes of work according to their respective specialisation and experience. Disputes may develop when the JV partners and the contract documents – both the contract establishing and regulating the JV and the construction contract itself – do not clearly delineate responsibility. Consistency between these documents is also key. In order to reach a common understanding, the overall scope should be carefully defined at the start. Each section and element of the works should then be considered in detail in the context of the partners’ respective technical strengths. The agreement reached as to the division of responsibility should be recorded in writing.
Cultural considerations In the Middle East, where JV partners are often from different cultural backgrounds, there are differences in management styles, approach to risk, systems, policies, procedures and so on. For example, in relation to record keeping, procurement methods, review of design submittals and recruitment of manpower, one JV partner may have a very different approach to the other. At the earliest opportunity, partners should ensure these topics are on their meeting agendas, and agree for the best approach to achieve success. During execution of the project, success is more likely to be achieved if JV partners trust each other, communicate and interact, and are strategically compatible. This strategic compatibility may not come naturally, but it can be achieved or increased through recognition and agreement as to how cultural and management differences will be addressed.
Electronic document management Usually a single platform, internetbased, electronic document management application is used to share information such as design drawings and material approval requests, etcetera. When used effectively, the benefits of these platforms cannot be overstated. In the event of a dispute, the platform will almost certainly be relied on as an audit trail of what occurred through the life of the project and can be a persuasive evidence of one party’s failure to comply with the contract. JV partners should take a consistent, aligned approach to
the use of document management applications. An effective protocol will set out the standard parameters for using the software, such as which file formats to use, the information to be included in document title blocks and document naming policies. A thorough protocol will also provide detailed guidance on matters such as how to identify new drawings created by a subcontractor based on an original design drawing.
Dispute and enforcement Most JV agreements will contain an escalation provision requiring the partners to attempt to amicably resolve disputes. If this turns out to be unsuccessful, and the dispute proceeds to litigation or arbitration, a key concern for international JV partners will be enforcement of any award that is made in the country in which the assets of JV are situated. The choice of governing law and the forum for dispute resolution should therefore be given careful consideration. A successful joint venture may only require the partners to focus and agree on a few fundamental issues. The key is recognising what these issues are, ensuring express agreement is reached on them, and reflecting that consistently in both the JV agreement and the project documents.
Pamela McDonald is a solicitor at Pinsent Masons’ Doha office.
QCN | July 2015
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description
client
Fit-Out Works
Provision of fit-out works
Qatar Railways Company (QRC)
549
8/31/15
Consultancy Services
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824
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Qatar Fertilizer Company (QAFCO)
55
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2747
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Qatar Fuel Company (QFC)
275
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Building Renovation Works
Carrying out renovation works for an industrial area building
Ministry of Energy & Industry, Qatar
41
8/2/15
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Qatar Petroleum (QP)
137
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Project Management Consultancy Services
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Qatar Railways Company (QRC)
5495
7/30/15
Self Loader Truck & Tractor Head
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Qatar Petroleum (QP)
137
7/27/15
Visitors Center, Auditorium & Aquarium Construction
Design and build of a visitors’ centre, including New Port Project auditorium and aquarium Steering Committee, Qatar
1374
7/26/15
Fuel Station Construction - Wadi Aba Seleel Area
Construction of fuel station at Wadi Aba Seleel area
275
7/13/15
275
7/13/15
Ministry of Municipal & Urban Planning, Qatar
Qatar Fuel Company (QFC)
Fuel Station Construction - Al Rayyan Area Construction of fuel station at Old Al Rayyan area Qatar Fuel Company (QFC) July 2015 | QCN
Fee(USD)
Closing (m/d/y)
INTERVIEW: Mohamed Salem, chief technical officer, Air2O Cooling LLC, on open-air thermal control – PG 33
issue 2.7 July 2015
LEGAL
Ways to avoid disputes among JV partners
PROJECT UPDATE
The Pearl-Qatar’s recent progress
TECHNICAL
Can back-to-back contracts truly protect contractors and subcontractors?
QAtar’s new Real estate law
a Means toward an end Implications and role of Qatar’s new Real Estate Development Law
Retail Price: QR15 / AED15