editor’s letter
FROM THE
EDITOR
BUILD AND THEY WILL COME?
The Middle East’s travel and hospitality sector continues to develop and expand its horizons, offering packages to suit every visitor’s needs, from golf to health, and from city to beach, but what are the challenges that lay ahead? The Middle East and North Africa region (MENA) is the new battleground for the world’s largest hotel companies as they look for sources of growth outside the United States and Europe – already dominated markets – and for high and low-end airline companies, which are rapidly expanding their destination routes. Such has been the pace of tourism development in the MENA region throughout the past decade and steadily increasing visitor numbers have also stimulated increasingly bold hotel and resort projects. However, the past year has been a severe test. Visitor numbers have declined worldwide, leaving many investment projects and airline carriers looking vulnerable, particularly at the top end of the market. The big question now is whether the sector can regain its momentum? When considering the Gulf region, it caters almost exclusively for the business traveller. The formula – involving the provision of meeting, conference and exhibition venues, as well as incentive travel – worked well during the boom. However, the sector’s overheads are considerable and it remains to be seen whether the region can attract a broader clientele to fill its expanding hotel stock. For a growing number of countries in the region, multi-billion dollar projects are expected to unlock the potential of travel and tourism as an engine for economic development. A recent report suggests that the hospitality industry in the Gulf Cooperation Council (GCC) remains vibrant. Dubai-based research company Proleads, estimates that cash expenditure on hotel projects under construction across the GCC will top US$1.17 billion (QR4.258 billion) in 2010. The United Arab Emirates (UAE) will see the main bulk of that cash injection with QR1.69 billion, however, Oman is forecast to outstrip Saudi Arabia this year spending QR980 million as compared to Saudi’s QR893 million. However, that trend is predicted to change in 2011 when Qatar will lead the rest of the GCC, with an estimated spend of QR365 million, followed by Bahrain with QR238 million and finally Kuwait with QR115 million. In an earlier report this year, Proleads estimated the total spend on active hotel projects under construction, but due for completion by 2013 throughout the GCC, to be QR25.5 billion. However, in its latest report, Proleads revised upwards the expected total spend to QR28.4 billion, which it said was largely due to new project announcements in Qatar and Saudi Arabia. The majority of the new projects are in the UAE (QR15.8 billion) followed by Saudi Arabia QR6.3 billion), Qatar (QR3.360 billion), Bahrain (QR1.685 billion), Oman (QR1.091 billion) and Kuwait (QR328 million). A recent study by STR Global also shows that the UAE continues to post the largest number of rooms in the total active pipeline with 52,566, followed by Saudi Arabia with 14,178. The report said that the region currently boasted more than 576,544 hotel rooms with a further 71,331 rooms under construction. And while concerns loom over hotel oversupply and the effect that will have on occupancy levels and average room rates, the latest report by hospitality consulting firm Viability, suggests that nearly half of the hotels in the GCC hotel development pipeline have been delayed by between one and four years. According to the study, around 48 percent of the hotels surveyed had been delayed and “overall” the GCC hotel development pipeline was down by 20 percent. There are 282 new properties due to open from 2010 to 2015, down from 325 in 2009. Despite market forecasts and investment spend, the question remains; can the sector regain its momentum?
Kelly Lewis
Managing Editor Do you have something to say? It is not all about us and we realise that often our readers are in the right place at the right time resulting in great stories. Is there a story that you want TheEDGE to cover? Are we delivering our readership with the content it demands? Are there new sections that you would like to see implemented in the magazine? Or do you simply want to make a comment? If so, send your letters to the editor at:
letters@theedge-me.com JUNE 2010
1
WHO WE ARE
WHO WE
ARE Managing editor Kelly Lewis k.lewis@firefly-me.com +974 5067574 DEPUTY EDITOR David Poort d.poort@firefly-me.com +974 6155908 SENIOR SALES manager Emma Land e.land@firefly-me.com +974 3197446 SALES EXECUTIVE Laura Bridges l.bridges@firefly-me.com +974 5573324 Creative director Roula Zinati Ayoub Art AND DESIGN Lara Nakhlé Rena Chehayber Rana Cheikha Charbel Najem Finaliser Michael Logaring Photographer Herbert Villadelrey DISTRIBUTION & SUBSCRIPTION Michael Javier +974 5262089 m.javier@firefly-me.com Dan Louie Javier +974 6975087 d.javier@firefly-me.com
I
E
ZIN
SE PLEA
GA
IN
UT YOU R
CT PA
TH
O AB
RE MA CYC LE TH IS
2
Firefly Communications PO Box 11596, Doha , Qatar Tel: +974 4340360 Fax: +974 4340359 www.firefly-me.com
M
K
printed by Ali Bin Ali Printing Press Doha, Qatar
About TheEDGE: TheEDGE is an ambitious business magazine targeting professionals operating within Qatar’s multi-sector business landscape. Printed monthly, TheEDGE was launched in July 2009 to fill the market void and to provide the business community with insight into the latest business trends and market developments. TheEDGE is distributed 12 times yearly to a readership base of more than 7500 professionals, providing advertisers with the needed additional reach and frequency to their most important audience. TheEDGE is an authoritative business resource serving both large and small business operators.
TheEDGE is printed monthly © 2009 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 TheEDGE 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 TheEDGE. 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 Getty Images and/or iStock Photo.
JUNE 2010
C all NOW
800 8555
800 8555 - barwabank.com
CONTENTS
CONTENTS 16
JUNE 2010
.14. ON THE EDGE
Kelly Lewis reports on the world’s first solar sailpowered ‘space yacht’.
.16. BUSINESS INSIGHT
TheEDGE speaks with key professionals from in and around the region to uncover the latest news on the business front.
.22. OPINION
Paul Jacobs of the World Economic Forum, discusses the endless possibilities that come with a wireless connected world.
.8.
22
Contributors
A brief introduction to the specialised team of contributors, who regularly lend their expertise and insight to TheEDGE.
.10. NEWS IN BRIEF
A snapshot of the latest business developments affecting the business landscape within Qatar and the GCC region.
.13. NEWS IN QUOTES & NUMBERS
Powerful statements and important statistics that made an impact.
28 .24. In the spotlight
The State versus Goldman Sachs: Leen Qablawi investigates the case against the investment bank.
.28. MARKET WATCH octor
Salwa
The World Economic Forum sheds its light on the financial meltdown in southern Europe.
.34. INSIDE EDGE
Rajesh Mirchandani investigates the toll that the global financial crisis has taken on the Gulf’s hospitality sector.
4
JUNE 2010
CONTENTS
www.theedge-me.com
37
.52. GREEN BUSINESS
Sam Pickering on the sustainable opportunities for Qatar’s growing industry sector.
.56. ENTREPRENEUR
Taking business to new heights, David Poort investigates the high-rise business of abseiling window cleaning.
.59. BUSINESS VIEW – REAL ESTATE
Edd Brookes takes an in-depth look at the resurrection of Qatar’s real estate market.
.37 COVER STORY
64
Jamie Stewart delves into the recovery of the region’s tourism industry, which was badly hit by the global economic downturn.
.43. ECONOMIC BAROMETER
Karim Nakhle examines if Greece’s bankruptcy will have a domino effect in Europe, and how the falling Euro is affecting the economy in the Middle East.
.48. ON THE PULSE
Edward Jameson investigates Qatar’s far reaching investment strategy.
48 .64. SPECIAL REPORT – OBG
Oliver Cornock investigates how Qatar is increasingly targeting more of its own natural resources toward its domestic market.
.66. LEGAL INSIGHT
David Salt and Emma Higham shed some light on Qatar’s visa-on-arrival situation.
.69. BUSINESS KNOW-HOW
Wassim Karkabi argues that the shotage of executive talent in the Gulf region is over. JUNE 2010
5
CONTENTS
72
.72. SPEAK EASY
Doctor Stuart Smith speaks on the art and science of branding, and corporate communications.
.74. BEHIND THE WHEEL
Andrew Newell takes a closer look at a newly developed car that can turn into a light aircraft.
.76. INDUSTRY FOCUS – METRO & RAIL
David Poort explores Qatar’s infratructure problems and delves into the massive railway projects that are planned throught the peninsula.
.79. HOW-TO GUIDE
Nigel Hawthorn explains ‘how-to’ protect your IT infrastructure against the onslaught of World Cup fever.
88
.83. TECH TOOLS
TheEDGE looks at the latest gadgets hitting the shelves this month.
.84. LIFE & STYLE
TheEDGE travels to Tokyo and goes fishing in the clear, warm waters of the Persian Gulf.
.90. EVENTS & CONFERENCES
Key industry events taking place in June.
.91. QATAR PROJECTS
An update on projects taking shape in Qatar.
6
JUNE 2010
CONTRIBUTORS
CONTRIBUTORS Karim Nakhle LEEN QABLAWI
Senior business strategist Doha, Qatar
TRAINEE SOLICITOR London, United Kingdom
>p.24
p.43< Edward Jameson Senior business journalist Middle East North Africa region
Rajesh Mirchandani CEO Dun and Bradstreet South Asia Middle East Dubai, UAE
p.48<
>p.34 SAM PICKERING
JAMIE STEWART International correspondent London, United Kingdom
<p.37 8
JUNE 2010
Managing director Bluu Green London, United Kingdom
p.52>
CONTRIBUTORS
Edd Brookes Director DTZ Middle East Operations Doha, Qatar
>p.59
EMMA HIGHAM associate Corporate and Commercial Clyde and Co Doha, Qatar
Oliver Cornock Regional Editor Oxford Business Group Gulf Coorporation Council region
>p.64
p.66< Wassim Karkabi Managing partner Stanton Chase International Qatar and UAE, and regional practice leader Industrial, EMEA
David Salt Partner Corporate and Commercial Clyde and Co Doha, Qatar
>p.66
p.69< Nigel Hawthorn VP of Marketing Blue Coat Systems EMEA
Doctor Stuart Smith
p.79 >
Head of Corporate Practice Hill and Knowlton Europe Middle East and Africa
> p.72 JUNE 2010
9
News in Brief – LOCAL
NEWS IN BRIEF – Local QATAR EYES USA’s TREASURY’S SALE OF CITI SHARES Qatar Investment Authority has expressed interest in buying some of the shares held by the United States Government in Citigroup, the Financial Times reported, citing people familiar with the matter. A deal would depend on price, market conditions and the government’s willingness to sell its shares to a sovereign wealth fund at a discount, the newspaper said. The first portion of shares to be sold by the government may be completed within days, the Financial Times said. PERSIAN GULF PROPERTY LIKELY TO WORSEN ON SUPPLY, MOODY’S SAYS Persian Gulf real-estate markets will probably worsen in the coming months as a “vast” supply of properties becomes available and lending remains scarce, Bloomberg reported Moody’s Investors Service as saying. Moody’s gave the industry a negative outlook for the next 12 to 18 months and has downgraded the ratings of all Gulf Cooperation Council-based companies affected by real estate, analyst Martin Kohlhase said late last month. “The supply-demand imbalance in commercial property and to some degree in residential units, is likely to grow worse as vast supply meets slack demand,” he said. NO CHANGE TO GULF MONEY UNION STRATEGY The four Gulf states planning a single currency have not changed their strategy because of the debt crisis facing Europe, Saudi Arabia’s central bank Governor Muhammad Al Jasser told Bloomberg. “There’s not been a change in our strategy as scenarios such as the Greek crisis have already been factored in,” Al Jasser, who is also chairman of the Monetary Council, said late last month. Kuwaiti Foreign Minister Sheikh Mohammed Al Sabah said that Gulf 10
JUNE 2010
states may “pause” for reflection on the monetary union project as a result of difficulties facing the Euro, Agence France-Presse reported. He said that a “pause does not mean delay,” according to the news agency. NEW AVIATION RULES FOR QATAR Qatar’s Commercial Aviation Law of 2002 will be revised in bid to effectively deal with in-flight passenger violations. Last year, Qatar Airways recorded 402 cases of smoking and 97 cases of unruly passengers on its flights, the Peninsula reported. The number of rising offences has caused Qatar’s Civil Aviation Authority to examine the effectiveness of current regulations and propose some key changes to the law. Under the new revisions, if convicted of in-flight violations, passengers face up to three years in prison or a fine of QR100,000, or both. BILATERAL BORDER A Bahraini delegation visited Tehran late last month to hold talks on updating bilateral border lines and specifying Iran-Bahrain-Qatar border points in the Persian Gulf, Fars News Agency reported. The seven-man delegation led by Bahrain’s Deputy Foreign Minister for Political Affairs Hamad Amer stepped made the trip to Tehran for the two-day visit. The delegation involved border and legal experts, who held talks on setting Iran-Qatar-Bahrain border points in the Persian Gulf. ISRAEL REJECTS QATARI PROPOSAL TO RESTORE DIPLOMATIC TIES An Israeli newspaper said the Israeli government had recently rejected two proposals from Qatar to restore diplomatic relations and let Israel reopen an office in the country’s capital, Egyptian-based Bikya Masr reported.
Qatar and Israel have a recent history of cooperation and the small Gulf state had believed diplomatic relations would continue their amiable relationship. According to a Ha’aretz report last month, which quoted a senior source in Jerusalem as saying that in return for renewed diplomatic relations, the Qataris demanded that they be allowed to carry out a series of reconstruction projects on the Gaza Strip and to import the necessary construction materials. VODAFONE QATAR TO TAKE REGULATOR TO COURT Vodafone Qatar has announced it is taking legal action against the country’s telecoms regulator (Supreme Council of Information and Communication Technology) for allowing Virgin Mobile’s entry, without being licensed, into the Qatari market, Arabian Business reported. Vodafone Qatar said in a statement that Virgin Mobile’s partnership with Qtel was the entry of a third service provider in the Gulf state. “Vodafone Qatar views this as a violation of its second public mobile telecommunications networks and services licence conditions and the telecoms law in Qatar, which states that no further mobile service provider would enter into the market, and be licensed, until the proposed sector review,” the company said.
News in Brief – international
NEWS IN Brief – International BORIS ASKS FOR INVESTMENT IN AFFORDABLE HOUSING London Mayor Boris Johnson recently warned the Conservative side of the coalition that it should maintain investment in affordable housing despite the need for cuts in public spending. Johnson told Property Week: “Conservatives should remember that Conservatives and Conservative governments get elected and re-elected when they build good quality housing for people who need it. We’re determined to do that in London and that’s a point I’m making to my Conservative friends and colleagues in government.” The mayor’s remarks came after the unveiling of a new development of affordable housing by Project Grande (Guernsey), the joint venture between the Candy brothers’ CPC Group and Qatar’s Prime Minister Sheikh Hamad bin Jassim bin Jabr Al Thani. GBI INKS LANDING DEAL IN INDIA Qatar-based Gulf Bridge International (GBI) has inked a deal with Indian Internet company, Sify Technologies, to provide a submarine cable landing station in Mumbai. The cable system scheduled for launch in 2011 will provide telecom operators and other communications companies, both in the region and globally greater choice, value, diversity and resilience. SCORSESE LAUNCHES DOHA FILM INSTITUTE IN CANNES The Doha Film Institute (DFI) received its official launch at Cannes last month with veteran director Martin Scorsese among the guests, Digital Production Middle East reported. The organisation – which aims to develop a sustainable film industry in Qatar – also announced a formal three-year relationship with Scorsese’s World Cinema Foundation (WCF). Late last year the DFI enjoyed its first international activity with the inaugural Doha Tribeca Film Festival, organised in partnership with Tribeca Enterprises. 12
JUNE 2010
QATARI BOSS SAYS HE WASN’T FORCED TO DITCH CHELSEA BARRACKS PLAN Ghanim bin Saad Al Saad, the chief executive of state-run real estate investment company, Qatari Diar, was last month accused of tearing up a planning application for a GBP3 billion (QR15.7 billion) housing project after an intervention by the Prince of Wales, however, Al Saad insisted the decision was his and his alone. Qatari Diar is fighting a legal claim from its former property developer partner, Christian Candy, in the scheme to redevelop Chelsea Barracks, but Al Saad said he remained independent of any influence from the Emir of Qatar. In his evidence to the High Court last month, Al Saad insisted that the Emir had not asked him to change the design, although he expressed his dislike. CANADIAN ACCOUNTANT TO PROBE $5M QATAR MISTAKE Canada’s Newfoundland and Labrador government has appointed a consultant to look into a US$5 million (QR18 million) blunder at the College of the North Atlantic in Qatar. Canadian Broadcasting Centre reported that accountant Gerry Shortall would make recommendations to the Department of Education about work being done by the government’s internal audit division. The division is trying to establish how more than 100 employees were overpaid. About US$3.5 million (QR12.7 million) was overpaid to college employees, the rest was an overpayment the college collected from the State of
Qatar for services and benefits. Education Minister Darin King said in late April that about 35 percent of the College of the North Atlantic employees with three-year contracts ending this year, and 30 percent of employees with similar contracts ending in 2011, were involved in the overpayment. FOSTER’S GROUP TO SPLIT its LIQUOR DIVISIONS Australia’s beverage giant, Foster’s, plans will split its wine and beer divisions into separate listed entities, which could see its brewery assets sold to an offshore buyer. The company said no decision had yet been made on the structure or timing of the demerger, but it would be unlikely to be implemented until the first half of calendar 2011. Potential buyers include United States brewer Molson Coors, which has held a five percent stake in Foster’s since 2008, and British drinks giant SABMiller, which has demonstrated its interest in the Australian market through its Pacific Beverages alcohol joint venture with Coca-Cola Amatil. NEW YORK CITY COMMUNITY BOARD APPROVES GROUND ZERO MOSQUE A New York City community board has voted to support a plan to build a mosque near the World Trade Center site. It came after hours of contentious public comment about the project to build a mosque and Islamic cultural centre near the site of the September 11, 2001 terror attacks.
NEWS IN QUOTES & NUMBERS
news in quotes
news in numbers
“With the United Arab Emirates as an exception, most Arab countries have dangerous unemployment figures among their youth, with 27 percent in Bahrain, 26 percent in Saudi Arabia, 17 percent in Qatar, 23 percent in Kuwait, 12.8 percent in Jordan and 9.4 percent in Egypt.”
22.2
Mohammed Johmani, CEO and Founder of O2 Network told the audience during the recent Arab Economic Forum in Beirut.
“The global outlook of wealthy individuals is heavily tainted by experiences in their local markets. Wealthy individuals are notably more pessimistic than the majority of professional economists.”
20
10
30
Pat McCormack, head of Barclays Wealth Ireland told the Irish Examiner in relation to an international survey of moneyed investors by Barclays Wealth.
“Because they also have an interest in a strong Europe, the Gulf states have proved very helpful in the economic crisis with investments. One example is Qatar’s cooperation with VW and Porsche.” German Chancellor Angela Merkel’s foreign policy advisor Christoph Heusgen said ahead of her tour of the region last month.
“[Qatar] may divert 12 to 20 million metric tonnes per year (mt/yr) [away from the United States (US) market]. This means our gas exports to the US would remain in the range of six million mt/year… We have agreed with China to export five million mt/ year and with Poland for one million mt/year…We are also negotiating to export an additional seven million mt/yr to China, and to India an additional four million mt/year. “ Qatar’s Minister of Energy and Industry Abdullah bin Hamad Al Attiyah, said in an interview published by the Middle East Economic Survey.
“The two countries [Qatar and Bahrain] are neighbours, these arrests shouldn’t be happening… The two governments need to meet immediately and find common ground on this continuing issue.”
Gulf Cooperation Council countries produced more than 22.2 million tonnes of municipal solid waste and 4.6 million tonnes of industrial solid waste last year, according to Chris Fountain, the managing director of Turret Middle East – the organisers of the Middle East Waste Summit. “The issue of uncontrolled waste affects the entire Arab community and so we need to engage in continuous and comprehensive dialogue to come up with unified strategies for addressing this growing threat,” he said. The Dubai Municipality developed the summit as an annual platform for governments and businesses in the region to discuss the growing threat posed by improperly managed waste. According to Fountain, the rapid economic and industrial growth, and an expanding population have been the major forces driving up the amount of waste generated by Gulf states.
Pic Of the month
Bahrain Human Rights Watch Society secretary-general Faisal Fulad said in relation to the trial of an injured Bahraini fisherman, who was allegedly shot in the back when he was caught in Qatari waters last month.
“There is still low awareness about exchangetraded funds (ETFs) in certain categories of investors in the Gulf, the local ETFs will hopefully help to change that.”
Robert Broadwell, vice president and regional business director for iShares, told The National – iShares, is conducting roadshows in the Gulf to try to raise awareness amid slack demand for the investment vehicle in the region.
- A crab skirts tarballs of oil on a beach at sunrise on Grand Isle, Louisiana. Officials now say that it may be impossible to clean the coastal wetlands affected by the massive oil spill that continues gushing in the Gulf of Mexico (photo courtesy of John Moore/Getty Images). -
JUNE 2010
13
ON THE EDGE
Japan launches the ‘space yacht’ Kelly Lewis reports
T
he Japan Aerospace Exploration Agency (JAXA) has launched the first spacecraft, which is speeding across the solar system using a hybrid solar sail – one propelled partly by solar pressure and partly by traditional solar power. Japan’s solar sail-powered ‘space yacht’ was launched from the Tanegashima Space Center last month and took to the skies headed toward space. Dubbed Ikaros (Interplanetary Kite-Craft Accelerated by Radiation of the Sun), it is the first spacecraft of its kind to attempt to reach deep space. The cylindrical, 307-kilogram craft is sporting a 14-metre-wide solar sail, outfitted with ultra-thin solar cells. The craft will be driven by mission control from the ground, tweaking the angles to ensure enough of the sun’s rays are penetrating the craft to keep it powering on into space. There have been previous attempts made by other solar-sailed crafts to venture into space, but none to date have made it beyond orbit. One plausible reason could be that the cost of the mission is steep. According to reports, the JAXA space programme has already forked out US$16 million (QR58 million) on the project. Ikaros was launched into space hitching a ride aboard an H-IIA rocket, piggybacking with JAXA’s Akatsuki Venus Climate Orbiter mission – Japan’s first Venus-bound satellite – before separating, enabling Ikaros to unfurl its solar sail and travel fuel-free for the rest of its journey. The concept of solar sails first originated in the 1920s. Today, solar sails are large reflective membranes, which allow a spacecraft to be pushed by radiation pressure from sunlight, negating the need for heavy onboard fuel. “It’s the space equivalent of a yacht sailing on the sea,” Yuichi Tsuda, deputy project manager for Ikaros, told National Geographic. Like wind filling a boat’s sails, particles of light – or photons – streaming from the sun bounce onto a mirrorlike aluminised solar sail.
14
JUNE 2010
As each photon strikes, its momentum is transmitted to the spacecraft, which begins to gather speed in the almost frictionless environment of space. A solar sail can eventually reach speeds five to 10 times greater than a rocket powered by conventional fuels. Ikaros is considered a hybrid, because the sail’s membrane – itself just 0.0075 millimetres thick – sports thin-film solar cells for generating electricity, which will power Ikaros’s high-efficiency ion propulsion engines, Tsuda said. He added, the first month of the Ikaros mission will be spent deploying the sail and carrying out initial checks. “As soon as the sail was deployed, the craft was able to start solar sailing,” Tsuda said. “Over the six-month scheduled duration of the mission, we believe it will reach a velocity of 100 metres per second.” Flying along the same path as the Akatsuki spacecraft, Ikaros will be headed toward Venus. Tsuda and his team, hope the solar sail-powered craft will continue even farther, flying for as long as possible. The growing distance between the spacecraft and Earth will make communication increasingly difficult. However, Tsuda’s team hopes to be able to operate the vehicle and collect data for at least a year. Instruments on board Ikaros will send back data on the basic state of the core spacecraft, how much power it is generating versus how much it is using, and the status of the sail. Additionally, six cameras aboard the craft will help the team monitor how the sail fares during its trip. Information gained from Ikaros will be applied to its planned successor, a craft equipped with a 50-metre-wide solar-power sail that will be launched toward Jupiter around 2020. JAXA has also been working closely with the California-based Planetary Society, which aims to get its own solar sail – LightSail-1– into space before the end of 2011. It will be interesting to see how the two fare.
BUSINESS INSIGHT
A PLACE TO CALL HOME Qatar, a developing country at the centre of economic growth and market development, has created an alluring picture of itself for both migrating professional expatriates and investors alike. However, while people flock to the state in search of professional advancement and lucrative investment opportunities, there remains a real gap in Qatar’s mortgage finance industry and homeownership market. Saudi Arabia-based Capitas Group International (CGI) – established with the mission to work with private and public sector institutions to develop innovative Shari’ah compliant financing solutions to serve homeowners, small and medium sized enterprises (SME) and real estate investors – is one company that has its eye’s firmly set on bridging that gap and is in discussions to establish a local presence in Qatar. Kelly Lewis spoke with CGI’s CEO, Naveed Siddiqui, to get his view on Qatar’s mortgage finance industry. To get an overview of CGI and its operations, what is CGI’s relationship with the Qatari market? CGI is a joint venture with the Islamic Development Bank and Capitas Group USA. Primarily, the idea has been to establish a management team that will build, operate and then finally transfer mortgage finance industry components to local markets. There is a huge gap in the local markets here when it comes to home ownership. There are homebuyers, who want to become homeowners, but they do not understand their purchasing power and they do not have financing vehicles to help them get there. We look at the real estate market as being very simple: The real estate market [in the Gulf] is as good as the transactions that are happening here. However, the supply side is not understanding what the real purchasing power of these potential home buyers and home owners is, 16
JUNE 2010
so specialised finance and mortgage finance components have to be set up in these industries. Therefore, what we do is we locate a particular market; we look at progress towards regulation, real estate regulation, home ownership regulation and financial regulation. Then if we see there is willingness on the part of the country, coupled with growth opportunities and a significant population that cannot own homes, we enter the market and advise local governments on how to create the right regulation to satisfy financiers issues, as well as create transparency for home owners, and potential home owners. We also work with the private sector, both banks and developers, to take liquidity and create the right transactions. From the supply side, ee coordinate with developers to make sure they have business plans that are more real to market, taking in mind the actual affordability of their target
market, so they can sell the homes that they are building, rather than building something that is not saleable. In Qatar, and the Gulf, there is a growing expatriate population that also has a healthy disposable income. However, there is a distinct lack of homeownership in the region. Considering this, coupled with the concerns that the property market here may be headed for an unsustainable future, what are your thoughts on the role that homeownership plays in a healthy economy? Homeownership creates a real sense of belonging and also a sense of responsibility – if you are taking on financing to own a house, then you’re going to plan to live in that country for a while. So, whether it’s an expatriate community or an indigenous community, that sense of belonging and of ownership is instilled and it’s imminent. Sooner or later, everybody wants
BUSINESS INSIGHT
to buy a house, so we don’t consider this market demand, we actually consider it a market desire. As far as the expatriate community in Qatar…I think the expatriate community here, if offered the opportunity to own a home and settle, would make a longer-term commitment to this market and create a real substantial consumer market, rather than a transitory one. I think Qatar needs to be branded as a place where you want to come and live, not just a place to come and work and then go. This is a key problem. Currently, Qatar appears (largely to expatriates) as a place with an expiry date. But to truly build a sustainable economy, things like population longevity and home ownership, where people are actually investing into the state, are key economic drivers. Yes, developers, financiers and regulators have to look at building a long-term plan to stimulate this market, not the short-term five-year plan, which is currently happening. Is this something that you are talking to the Qatari government about? We are talking to the government through the Islamic Development Bank about sustainable framework and in regard to the SME sector, we have also created a dialogue as we have expertise in the SMEs field and we believe that both go hand in hand. On the home finance side, we are exploring the market, but we haven’t yet begun discussions because we are still in an exploratory mode. Let me say that we have got the comfort level that we need and there are a few other things that we are exploring in the market, mainly the continuous attraction of the expatriate market. So, if that can continue and we can help build the right infrastructure with the government, then we will approach them at the right time to see if they are willing to entertain us. In regard to Qatar’s legal and the regulatory framework, where do you think things currently stand and where do you think things need to be? It’s not that different from other emerging markets. In most emerging markets there is a reaction to demand and then, in fact, I think that the private sector, or the financial sector, reacts first and then regulation is sort of rushed in.
I think there is an opportunity in Qatar to really do things the right way and to look at regulation that enables affordability; regulation that enables transactions and also regulation that prevents indebtedness – affordability is the key, not indebtedness, so there is an opportunity for the Qatari’s to do that. I think Qatar has shown willingness, like any other country where the central bank has already started creating guidelines around mortgage banking, but that information now has to be translated to the policy makers and regulators, not just to policy makers and not just to regulators because any such policy has to then evolve into law, and the law has to be enacted. I think Qatar is dynamic because there is a lot of communication between government bodies right now, willing communication. Whereas in other countries, where there is a lack of communication, it just delays things for everyone. Therefore, if Qatari’s can keep that in mind and create the regulations sooner, rather than later, it will be the right step. In terms of the financial transparency and risk management, Qatar is moving to establish a credit bureau. How will this help build confidence and investment into the local market? I think the credit bureau will help, but from a financiers perspective you can create a credit bureau, but will it really have the history that I need? Because the bureau will be new, financiers will have to be a little more innovative and entrepreneurial in their approach to this market. There isn’t going to be the credit information that’s needed, so the risks will have to be assessed by working with the developers to make sure the underlying property valuation is good and so quality can be stimulated in the market. Consumers will also have to be worked with, from an employment and education perspective, as to how to manage the risk because there won’t be much in the way of credit history to begin with, but five years from now that credit bureau is going to be dynamic in making decisions – I will be able to write more loans, more comfortably five years from now based on the credit bureau of today.
Some of the research conducted by CGI found disparities between the amount of lending applications received and the amount of loans that were actually dispersed into the market. Can you explain the reason for this disparity? There are a few reasons. Firstly, there is only the banking sector that is flying itself against those applications. Additionally, the banking sector has a tremendous level of regulation and requirements placed on it – how much of the portfolio can they lend? I think the capital of real estate financing in Qatar is around 15 percent, but how much of a home real estate risk can banks take? In certain environments, banks aren’t allowed to own real estate so they go through an summary plan discription. In the mortgage finance business, it is specifically a real estate sector business; it is not a financial sector business that has to be created. There are three main things that are needed by the mortgage financier: a buyer, a supplier and the underlying asset (the property). Mortgage bankers learn to bring all three together, with risk management and credit focus management. They don’t have to worry about depositors’ money; they have to worry about creating more assets that can be sold in the secondary market. Therefore, the reason I think that applications are pending up and deliveries of liquidity of loans are not happening is because it’s being targeted at just the banking sector. Overall the banking sector is very slow and a mortgage finance industry also has to be created. When I say mortgage finance, I mean mortgage finance companies, title companies and proper appraisal companies. These three factors have to be created, so that they can quickly process applications that could be turned into funding. How much do you think the mortgage finance industry could contribute to Qatar’s gross domestic product? Definitely I think the mortgage finance business will contribute greatly to Qatar’s economy – in other markets we have seen an contribution of anywhere from a five to a 15 percent increase. JUNE 2010
17
BUSINESS INSIGHT
‘NO EXPATS, NO GROWTH’ In the past decade, Qatar has witnessed a huge surge in its expatriate population, and continues to do so. But, this sudden population spike resulted in the housing market of Doha’s city hub witnessing a demand that outstripped supply, which also led to a rise in prices and increased inflation. Recently, however, the gap in the housing market between supply and demand has narrowed, and property prices have fallen, as predicted by CB Richard Ellis, the world’s largest commercial real estate adviser. With more than 300 offices throughout 60 plus countries, the company has more consultants advising a greater number of customers than any other property firm. David Poort interviewed Nicolas Maclean, the managing director of CB Richard Ellis Middle East to find out about the current state of the property market in Qatar and the wider Middle East and Africa (MENA) region. - Nicolas Maclean, the managing director of CB Richard Ellis Middle East. -
Why does CB Richard Ellis not have an office in Doha, while the property market is booming in Qatar? We have three principal offices in the Gulf: Manama, Dubai and Abu Dhabi, with 57 people spread between them; the largest of which is Dubai. We service the Doha market from our offices in the United Arab Emirates (UAE). The majority of the work we do for our Qatari clients is actually outbound, meaning it is predominately dealing with investments overseas. The amount of work, which has come to us specifically related to Doha is very limited, but we have a good relationship with the Qatari government and with the large investment houses like Qatari Diar, the Qatari Investment Authority and Barwa, etcetera. But all that work is outside of the Gulf region. 18
JUNE 2010
How did CB Richard Ellis weather the economic downturn? We were relatively unharmed by the slump in the economy because the majority of our business is consultancy; it is not dealing with transactional business. The demand for consulting has actually gone up, not down. Traditionally our revenue was about 60 percent transactions and 40 percent consultancy in terms of fee income. As a result of what happened with the economy, those figures were reversed. Transactions in terms of investment seized completely, but there was an upturn in the demand for people that were looking for accommodation on a leased basis. What is your short-term market outlook for the property market in Doha? Since late December, activity has increased significantly because of the
opportunities that global corporations see in the MENA region. The opportunities have always existed, but there has been a much more conservative attitude in the headquarters of those global firms. Often the decision was taken in the United States or Europe that now is not the time for expansion and, therefore, expansion plans were put on hold. That conservative attitude has changed. Those global headquarters have now approved plans, which have been put in place by regional managers. What about your own expansion plans? We too have been relatively conservative, although we are proposing to go to two new territories in the course of this year. We are going to Saudi Arabia and to Egypt, and we will
BUSINESS INSIGHT
probably create a Qatari office in the course of 2011. The volume of work coming from Saudi and Egypt is huge. We are doing a lot of work there at the moment, which is automatically profiting us. Can Doha compete with Dubai when it comes to the property investment market? Doha was gaining ground on Dubai, which is currently still the regional leader, because Dubai was pricing itself out of the market place. Rents were going up at a significant pace, which made it a very expensive location. Doha now has more competition because pricing in Dubai has come down significantly, perhaps by 50 percent, maybe more than that in some locations. So these locations are competing neck and neck at the moment. Abu Dhabi would like to compete in that space, but it does not have the capacity at the moment. Occupancy is almost 100 percent in all categories in Abu Dhabi. The future success of those three locations would depend on having integrated real estate. There is no point in building offices if you do not have the residential accommodation in which people can live. You also need to offer soft components like proper schools, healthcare facilities – the things that make people want to live in a certain location. Is there too much focus on building office space in Doha? I think there is a danger of many locations within the Gulf Cooperation Council (GCC) countries building too much stock because they have the capability, the expertise and the cash to do it. But, those plans can only work if they are part of an integrated growth plan. And if you have a fixed population, which is providing quite a lot of usage of
accommodation, which is already provided, then unless the demographic increases significantly, clearly you are going to have vacancies. So growing new office accommodation, for instance retail space, can only work properly in the sustainable long-term if you grow the underlying economy and the number of people that are going to work there. So it has to be integrated. Are there enough people moving to Doha to sustain growth? The Government of Qatar is at a crossroads at the moment. There are some people in Qatar, who would like to retain the population as it is, but the population, in my opinion, has to grow to support the level of development. Otherwise Doha faces the same level of vacancy as some of the other centres in the GCC. We will not see the number of vacancies that is affecting Dubai at the moment because the overall numbers are not there yet. But if the projected growth plans of Doha are to be implemented, then the population has to grow to accommodate that. If you look at Dubai and the quantity of offices, and then put that into context, the Dubai office market is about 50 million square feet (sqf). We think there is probably another 26 million or so sqf scheduled to come onto the market place in the next three of four years. So Dubai will have a total office capacity of around 80 to 90 million sqf. In order to support that, Dubai has a population of about 1.7 million people. Quite of lot of those people are construction workers and people who are not going to occupy office accommodation. The government has a plan to grow that population toward four
million people and if they succeed in that, there is no oversupply issue. For Doha to grow and potentially double the quantity of its office and accommodation space, it is suggested that it has to change either the nature of the population that live here – to become predominately office-based – or increase the population. Those are the two options the Qatari government is thinking about at the moment. Do you think Qatar can absorb more expatriates in the near future? The Qatari government is putting in place some considerable plans. The New Doha International Airport, which has a much larger capacity than the current airport, is very important. The expenditure on Qatar Airways is also very important. This type of expansion has been successful in both Abu Dhabi and Dubai, so that is a keystone in building the economy here. Qatar has an advantage in its relative wealth per capita, which is at an extraordinary level even by Gulf standards, so it can do essentially what it likes and can spend quite a lot of money on the infrastructure to make it work. But it has to be a long-term integrated plan, and with the development going on at the moment there has to inevitably be an increase of the population here.
JUNE 2010
19
BUSINESS INSIGHT
SCOUTING LOCATION FOR THE DOHA ADDRESS After developing some of Dubai’s most iconic buildings, like the Burj Khalifa, giant project developer Emaar has set its sights on the rest of the world. With its Emaar Hospitality Group (EHG), the company is looking to expand its successful brand of The Address hotels to at least three continents in the next couple of years. David Poort interviewed chief executive officer Marc Dardenne of EHG, who was in Qatar to explore the possibilities of opening The Address in Doha. When will The Address hotel come to Qatar? We would love to be here and we are currently looking into such opportunities. The biggest task for us here is finding the right product, the right location and especially the right partner. I cannot give you any names of potential partners, because it is too early for that. We have opened discussions, but nothing has been confirmed yet. We will announce the deal when everything is signed, which will probably take a while. People have to get to know us first, stay in our hotels, and feel comfortable, because our brand is fairly young. But I can tell you that this trip to Qatar has been successful. The brand The Address seems to come out of nowhere. Where does the name come from? It all started four years ago when Emaar decided to manage the hotels it was building, on its own. We now have five Address hotels in Dubai and two other hotels that are managed by affiliated companies. Together with the Armani Hotel, that makes eight. I joined three years ago, and so far, knock on wood, it has been very 20
JUNE 2010
successful. I think we have the right formula; it is a ‘five star life-style’, meaning it is vibrant, engaging and obviously the location is key, otherwise you cannot call it ‘The Address’. How did Emaar muscle itself into the hospitality market as a newcomer? We did take a high level of risk by stepping out of our comfort zone, which is developing and selling, to actually operating. This was a completely new market for Emaar. That takes a lot of commitment. We had to invest in people and new technology, which is a longterm process. Before the myth always was that if you were not one of the big guys in this business, you would not be able to pull it off. We have shown otherwise. Our success in terms of performance has really aroused the interest of investors who thought ‘maybe I should not go with the mainstream brands’, but with something that is new and fresh and really homegrown. Now we are successfully competing against very established players. The ability to combine business and leisure was also the key to our success. We are able to attract both
- Chief executive officer Marc Dardenne of Emaar Hospitality Group. -
tourists and the mid-week business traveller. The new traveller is much more discerning than they used to be. Travellers are looking for experiences, versus commodity. We do not just sell a room and a bed. We are trying to sell the whole experience. The financial crisis in Dubai did not seem to affect your hotels too much. How come? The high-end hospitality sector in Dubai has not been particularly affected by the downturn, as much as the rest of the city has been. We were in the lucky situation that we opened most of our hotels only last year, so we could ramp up accordingly. We actually had two management contracts signed in the midst of the financial crisis. So there is also trust from the international markets. The support from the airlines has also been outstanding. We are fortunate to have a great airline like Emirates in Dubai. But also Etihad
BUSINESS INSIGHT
- The Address hotel in down-town Dubai. -
and Qatar Airways are important assets to the region that are really helping our industry. On top of that our industry gets a lot of government support. In Dubai, we have the Department of Tourism and Commerce Marketing (DTCM), tourism boards and the government support that we get in terms of promoting the country. You do not see that in other countries, at least not to the same extent. If you add it all up, I think we can be pretty confident about the growth rates of the hospitality business in the Gulf Coorporation Council (GCC) countries. There is a lot of good news out there.
variation of resorts and hotels, and a high level of quality. Another positive development is the rise of tourism coming from China and India. Until a short while ago, the Dubai government did not give free visa’s on arrival to the Chinese. Now that the visa policy has changed, the Chinese have become quite a big market for us, especially in the five-star high-end hotels. Obviously the Indian market has always been big, but that market is still growing. Brazil, interestingly, is also an emerging market for us. A couple of years ago, we would never have even talked about Brazil.
What went through your mind when the Burj Dubai was rebranded as Burj Khalifa? I see it as an appreciation of the leader of the UAE, and I think, at the time it was the right thing to do. But for us as Emaar, nothing has really changed. We were very glad that the tower was finally declared open. I think the Burj Khalifa sends out a great message to the world, for Dubai, for the UAE and also for the whole Middle East. The fact that we were able to complete this project, with the Armani Hotel and the Dubai Mall – the largest mall in the world – is a great advertisement for the region.
What is your short-term market outlook for the hospitality sector? If we look at the first quarter of this year we are running occupancies of above 85 percent, which is very good. So if you ask me about the outlook, I am quite optimistic about Dubai, but also about the whole GCC, really. I think the region has a lot to offer, in terms of culture, weather and accessibility. In regard to the products, it offers some very good leisure facilities throughout the GCC region. There is as good JUNE 2010
21
OPINION
B I LLI O N S O F
By Paul Jacobs
A
s we all look for answers to some of the world’s toughest challenges, it is wise to remember that the keys to unlocking complex puzzles are often closer than we think. Sometimes they are right in our pockets…the ones holding our mobile phones. Mobile phones – and the 21st century networking infrastructure supporting the devices – are some of the brightest spots in today’s challenging economy. Just as mobile phones have become indispensable in our daily personal lives, they have also emerged as vital catalysts at the macro-economic level. The 4.8 billion mobile subscribers around the world add up. With mobile phones, we literally hold in our hands an unprecedented opportunity for positive economic, environmental and social change. Roughly two million new subscribers are connected to the world every day. At this rate, an additional one billion new opportunities – the majority from emerging economies – are set to join the global economy by the end of 2011. Is it not time to fully recognise the tremendous potential this ‘next billion’ represents? Ubiquitous connectivity – mobile and broadband – is a fundamental step for economic recovery. The macroeconomic impact of mobile communications on gross domestic product (GDP) is genuine. Many academic experts agree that in emerging economies a 10 percent increase in mobile penetration boosts annual GDP growth by roughly 0.8 percent.
Beyond providing new efficiencies for business and personal communications, there is also great potential in turning phones into wallets. Worldwide, there are now roughly one billion people with mobile phones, but with no bank accounts. The ubiquitous mobile platform can be used for delivering safe, secure, convenient and affordable services for the unbanked. The G-20, during the September 2009 summit in Pittsburgh, recognised this potential when all members supported better utilisation of emerging technologies to improve financial access for the poor. The emerging global communications fabric is intelligent, adaptive and highly innovative. It is essentially becoming ‘humanity’s nervous system’ and an ideal platform for
OPINION
OPPORTUNITIES
helping to solve some of our greatest economic, social and environmental challenges. Are there challenges ahead in the evolution of humanity’s nervous system? Absolutely. Scale economics and competitive markets need to be maintained to ensure affordable cost structures. Continued commitments to open standards and interoperability are essential for ‘bottom up’ innovation. The need for localised as well as user-generated content will need to be embraced and supported. Over time, as every ‘thing’ gets connected via wireless sensors and machine-to-machine communications (civic infrastructures, environmental monitors, health-related devices, etcetera), a significant challenge will emerge on the use and governance of the data generated. The information collected and stored on individual behaviours, transactions and geo-location holds tremendous potential for wealth creation and new business models. However, there are also significant risks if this data is misused. Frameworks to ensure accountability and transparency on issues such as data ownership and privacy are necessary. To date, the global alignment of public and private interests has led to unprecedented economies of scale. This has driven down costs, expanded services, lowered prices and
stimulated new capabilities. However, to ensure continued growth and innovation, public and private partnerships must evolve to address the realities of the 21st century. Industry ecosystems are highly complex and dynamic. Policy stakeholders must recognise that legacy assumptions and frameworks may need to be revisited. The global potential of 21st century communications represents a huge point of leverage for addressing some of the world’s greatest challenges. Answering that call can start with what is already in our pockets.
Paul Jacobs is the chairman and CEO for Qualcomm Incorporated. He is the chairperson for the World Economic Forum Future of Mobile Communications Global Agenda Council. This opinion piece was written on behalf of the World Economic Forum’s Global Agenda Council on the Future of Mobile Communications. JUNE 2010
23
IN THE SPOTLIGHT
- Demonstrators from Code Pink for Peace hold photographs of Lloyd Blankfein, chairman and CEO of the Goldman Sachs Group, and demand he be jailed with other executives before a hearing of the Senate Homeland Security and Governmental Affairs Investigations Subcommittee on Capitol Hill in Washington, DC. -
THE CASE
AGAINST GOLDMAN SACHS By Leen Qablawi
I
n recent weeks, the Securities and Exchange Commission (SEC) has accused the Wall Street powerhouse, Goldman Sachs, of defrauding investors, wiping billions of dollars off the firmâ&#x20AC;&#x2122;s stock market value. Goldman has been criticised for selling, and profiting from, complex derivatives based on mortgage investments that it knew were very risky, just as the United States (US) housing market faltered. Goldman, which has come to epitomise the power and extraordinary money making abilities of Wall Street, has denied any wrongdoing. But in the after-math of the credit crisis, and in an election year where US Congress is
taking serious steps towards overhauling the financial system, one wonders whether the outcome of the Goldman case and the potential ramifications for the bank are likely to inform future trends within the global financial industry as a whole.
THE CLAIM
Last month, the SEC bought civil charges against Goldman, the chairman and the chief executive, Lloyd Blankfein, for defrauding investors in a collaterised debt obligation linked to home loans. The allegation centres on a failure to disclose a conflict
IN THE SPOTLIGHT
- Lloyd Blankfein testifies at a Senate Homeland Security and Governmental Affairs subcommittee hearing on Wall Street and the financial crisis, in Washington, DC Goldman Sachs executives were grilled by US senators probing the bank’s mortgage business as Senator Carl Levin asked why it sold a set of investments the lender had itself labelled “shitty.” -
of interest, which saw one of Goldman’s clients, New Yorkbased hedge fund Paulson and Co, help choose which securities were packaged into the mortgage portfolio, while betting on a collapse of the same. Goldman underwrote and marketed the product, Abacus, in 2007, collecting around US$15 million (QR55 million) in fees, while Paulson reaped a US$1billion (QR3.6 billion) profit. Investors on the other hand, lost more than US$1billion (QR3.6 billion) once the US housing market began to topple. The Permanent Senate Subcommittee (PSS) on investigations claims that the efforts to package and sell Abacus was part of a deliberate attempt to get subprime mortgage-based securities off the company books, because Goldman believed they were going to collapse. PSS has been sifting through emails and other Goldman documents obtained in an 18-month investigation, which it said has indicated that Goldman shifted in early 2007 from neutral to a short position, betting that the mortgage market was likely to collapse. ACA Capital, the insurance company that was the main investor in Abacus, claims it thought that Paulson was batting on the same side and so naively accepted some of the hedge fund’s recommendations.
The Defence
Goldman has denied any wrongdoing, claiming that the SEC charges are completely unfounded in law and that they would vigorously contest them, and at the same time defending the firm and its reputation. The bank has emphasised that rather than make money from the deal, its fees of US$15 million (QR55 million) were more than off-set by the US$90 million (QR328 million) loss it made on
the transaction in question, and the greater loss of US$1.2 billion (QR4.4 billion) in the housing mortgage market during 2007 and 2008. Goldman has also claimed that the investors, who lost the most as a result of investing in Abacus, were sophisticated mortgage investors who knew the risk they were taking on. In fact, as the Abacus manager, ACA Capital was legally responsible for approving and authorising every mortgage that went into Abacus. Goldman has also stressed that there was no failure of disclosure, because in the business, market makers do not disclose the identities of a buyer to a seller and vice versa. In Blankfein’s words, “clients came looking for risk and that’s what they got”. Investment banks generally, also, would insist that they do not have any so-called “fiduciary” obligation to do only what is in the best interests of their big sophisticated clients, and that the law only requires this when such banks are dealing with ordinary members of the public.
Triggering the Floodgates
Following claims by the SEC, and an announcement by the previous British Prime Minister Gordon Brown calling for the launch of an enquiry, the United Kingdom’s (UK) Financial Services Authority (FSA) recently announced a formal enforcement investigation into the bank regarding the fraud allegations. The FSA said it would liaise closely with the SEC in its review. In addition to the regulatory actions against Goldman, the German government and insurance company AIG have both said that they are considering bringing private legal cases over money they lost on sub-prime debt that the firm sold to them. JUNE 2010
25
IN THE SPOTLIGHT
- Daniel Sparks (L), former partner and head of the Mortgages Department at the Goldman Sachs Group, Joshua Birnbaum (2nd-L), former managing director of the structured products group trading for the Goldman Sachs Group, Michael Swenson (2nd-R), managing director of structured products group trading for the Goldman Sachs Group, and Fabrice Tourre (R), executive director of the structured products group trading for the Goldman Sachs Group, look over a books during a Senate Homeland Security and Governmental Affairs Investigations Subcommittee hearing on Capitol Hill. -
It is expected that many will jump on the bandwagon now. Goldman seems optimistic, setting aside only US$21 million (QR76 million) of cash to cover the cost of “litigation and regulatory proceedings”. Further, US regulators are now hammering Wall Street with a new investigation into whether the investment banks tricked ratings agencies into giving glowing appraisals of toxic mortgage products. Eight banks have been issued with subpoenas demanding information on their dealings with ratings agencies at the height of the housing boom. This is the first time a regulator has explored whether the agencies themselves were dupes of the banks.
The Deliberation
While the banks have continued to make massive profits and help drive economic growth, no one has questioned Goldman’s behaviour. However, following the onset of the credit crisis in 2008, the finger has been pointed at Goldman repeatedly in what some feel makes Goldman the main scapegoat in the financial crisis game. First, questions were asked about Goldman’s role in the US government’s bail out of insurance giant AIG in 2008 (particularly as it owed Goldman a huge amount of money). Following that were accusations that Goldman helped to hide the true extent of Greece’s debt by using complicated currency swap trades. And now, most damagingly, it has been charged with defrauding investors. On the positive side and despite its legal woes, Goldman announced a perfect first quarter of 2010 with a net gain from its trading floor on every single day – a feat it has never achieved before. The bank reported net earnings of US$3.4 26
JUNE 2010
billion (QR12.4 billion) for the three months to March, double the figure from last year. However, the flip side of the coin points to at least seven law suits brought by disgruntled shareholders, who are accusing Goldman of breach of fiduciary duty, corporate waste, abuse of control, mismanagement and unjust enrichment. They also allege there was a conflict of interest in the way in which Abacus was sold, as the transactions were reviewed by long-term members of management, whose compensation was directly linked to the approval and completion of the proposed transactions. This is arguably just the beginning: in it’s filing, Goldman said it expected further shareholder actions to be bought against it. On customer loyalty, Goldman recently lost its contract to serve as financial adviser to New York’s Metropolitan Transportation Authority (MTA). Though the MTA claimed that the decision was purely commercial and unrelated to the lawsuit against Goldman. Having gone through the normal process of requesting proposals and finding a better deal, one wonders whether more of these ‘commercially-oriented’ decisions will surface in the next few months. However, not all forecasting is glum in the industry. Some doubt that the bad publicity would cause Goldman to lose any customers, particularly in light of its dominance on Wall Street. After all, the services it provides in the trading sector are not easy to replicate. It pays the most, makes the most and carries the most kudos. Also, today, Goldman’s interests extend far and wide. In addition to the multitude of traditional banking and management services it offers, it advises a number of
IN THE SPOTLIGHT
Under one formula outlined in the securities law, the SEC could impose a maximum of US$15million (QR54.6 million) penalty on the bank to resolve fraud allegations that it misled buyers of mortgage-backed investments. That formula has been routinely ignored in enforcement cases and the SEC may want to seek more from a firm, which is depicted as an icon of Wall Street greed at congressional hearings. In fact, the US$1 billion (QR3.6 billion) loss for investors has become the minimum goal post that the public expects the SEC to reach. As the agency’s first effort to punish a bank for creating and selling securities tied to sub-prime mortgages, the Goldman case will be dissected by the industry. With all the attention paid to it on Capitol Hill and in the press, the SEC is very likely to consider how much public interest there is in sending a strong message and coming up with a settlement that shows that cops are on the beat.
Towards Global Financial Reform
- Doctor Hooshidar Daragahi stands among hundreds of union workers outside Willis Tower, which houses the offices of Goldman Sachs, before marching through the financial district calling for job creation and financial reform in Chicago, Illinois. -
government and powerful multinationals across the globe, while also maintaining close ties with Washington.
Negotiating a Settlement
Keen to put an end to damaging publicity and a faltering share price, Goldman has opened talks with the SEC towards an out-of-court settlement over the regulator’s charges. It is widely understood that Goldman’s is refusing to countenance any admission of fraud, but that it may be willing to settle over lesser accusations of negligence or administrative failings. Of late, analysts have predicted that Goldman will pay US$1 billion (QR3.6 billion) or more to settle the SEC fraud suit, although extracting such a record-setting penalty may be easier said than done. When it comes to presenting a settlement for court approval, the SEC will have to have a good explanation and justification for the number. After all, courts can reject settlements and a sanction in the range of US$1billion (QR3.6 billion) would be hard to justify based on the allegations in the Goldman complaint.
The US Senate has now passed a bill by 59 votes to 39 providing the most sweeping overhaul of financial regulations since the 1930s. The bill is the culmination of efforts led by President Barack Obama to ensure that the financial crisis of 2008-09 can never be repeated. It creates new ways to watch for financial risks and makes it easier to liquidate large failing firms. The bill must still be reconciled with a version passed in the House of Representatives. Although there is common ground between the two bills, there are also some differences and it is expected that some provisions in the senate’s bill may still be removed or watered down, while other provisions from the house’s bill may be included. Though Europe is still some way behind the US in implementing financial reform, there appears to be plenty of reforms in the pipeline. New rules on hedge and private equity funds have just been approved by European Union (EU) finance ministers. Brussels is also expected to bring forward new plans for financial crisis management, including a network of ‘resolution funds’ paid for by the banks, as well as a possible new EU-wide banking supervisory authority. In the UK, the coalition agreement, recently published by the new Conservative-Liberal Democrat government, contains proposals to restrict bonuses, introduce a new levy on banks and to set up a commission that will look at breaking up the big banks.
Muddy Verdict
It is too soon to tell where the wind will blow on Wall Street. Settlement does appear likely, with negotiation centring more on the form it will take rather than the size of any fine. Though the opportunity presented to the SEC to make an example of Goldman, particularly in the backdrop of its international standing with regards to the move towards financial reform across the board, leaves the potential position less than clear. JUNE 2010
27
MARKET WATCH
urope
at a crossroads â&#x20AC;&#x201C; Tough choices ahead
The World Economic Forum on Europe closed in Brussels last month. More than 400 leaders from business, government, academia and civil society from more than 40 countries participated. The meeting, held from May 10 to 11, was under the theme Renewed Leadership, New Vision. Stephen Kinnock, the head of Europe and Central Asia for the World Economic Forum, reports.
MARKET WATCH
T
he recent sovereign debt crisis and the unprecedented rescue package announced on May 10, exposed the fault lines in the eurozone and “blew holes” in the complacent view that Europe is okay. The events that took place during the week of the forum forced policymakers, politicians and citizens to a crossroads, where there is no choice, but to face up to the tough challenges Europe needs to overcome to get back on a growth trajectory. Leaders from both ‘old’ and new Europe agreed at the World Economic Forum on Europe’s closing plenary that the only way forward is reform, which will involve tough, unpopular choices for politicians and citizens. The sheer scale of the immediate and longer-term challenges throws into question the Europe 2020 Strategy to guide the European Union (EU) out of the worst economic crisis in decades, lays bare the weaknesses of the failed Lisbon Agenda and threatens to undermine the European social model. However, the cataclysmic events of 2010 are also viewed as an opportunity. “A decade of austerity will be necessary, but 2010 could become a new start for Europe,” said Vincent Van Quickenborne, Minister of Economy and Reform of Belgium. “Either we go to a future of being a footnote of the United States…or [we] become a world player with more growth; one percent or 1.5 percent growth is not enough to pay for old Europe’s welfare system. We need brave, honest national politicians, who are ready to say that to protect that welfare system, we should work longer and work harder. It is either reform or decline.” In the words of a European policy expert: “We cannot continue in the old rhetoric. It is totally inadequate to the JUNE 2010
29
MARKET WATCH
challenges ahead. We need to redesign the European social model and the social market economy. To do this, we need the language of blood, sweat and tears.” Additionally, Europe needs science, technology and entrepreneurship to fuel innovation and green growth, which is at the heart of the Europe 2020 blueprint for competitiveness. The European policy expert added: “There are new competitors. We need something to export, like a new Airbus or a green car. We can get there. Europe also needs to flex its muscles. At Copenhagen [in the climate change negotiations], Europe was leading but didn’t have the leverage.” Despite the crisis that has rocked the eurozone, Latvia still plans to adopt the currency by December 2015, if rules are enforced and eurozone enlargement is not postponed. Valdis Dombrovskis, Prime Minister of Latvia, reminded participants that many countries in the eurozone do not play by the rules whereby government deficits are not to exceed three percent of gross domestic product. Fiscal control mechanisms and sanctions eliminated in 2003 need to be reintroduced and enforced. Dombrovskis said the best way to protect the European social model is to focus the Europe 2020 Strategy on green growth and jobs. “Bottlenecks do exist,” Dombrovskis states. “We need to improve the business environment by overcoming barriers, cutting red tape to support small to medium enterprises and [push through] labour market reforms. “These [bottlenecks] are all obstacles to the EU’s growth potential. And
30
JUNE 2010
ultimately, the best way to achieve holistic social cohesion is through economic cohesion.” Dalia Grybauskaite, the current President of Lithuania, consideres the macroeconomic picture: “Europe was shaking from global pressures, but we tried not to wake up,” she said. “In Europe, there is an avoidance of seeing reality eye to eye. We can’t live alone in this globalised situation. [Member States] need to clearly agree on what kind of Europe we want, how deep an integration we want and in what other areas we want to agree. Otherwise, Europe will be a discussion club. If we can understand [our] problems, we can avoid them.”
This editorial vwas provided by the World Economic Forum from its Forum on Europe held in Brussels last month.
LS: The Art of Real Estate
LS: Keep Moving infuses the elements of a holistic full service real estate agency, with the clean lines and contemporary perspectives of an art gallery. LS: Keep Moving hosts multiple divisions to anticipate and capitalise on Qatar’s evolving real estate market, and is recreating the process of property acquisition with marked efficiency and style.
its operation as a business; one
LS:’s portfolio.
that embodies transparency,
As Qatar’s real estate market
accessibility and incorporates
continues to evolve, and as a
a customer experience that
growing spectrum of choices
extends far beyond the signing of
become available, things often
any document, and develops into
become tangled, complicated
a relationship that keeps evolving
and lack the simplicity that
as you do.
LS: Keep Moving embodies
Since 2005, LS: Keep Moving
and delivers.
has established itself in the local
LS:’s associates have extensive
marketplace helping to serve
knowledge of the local
Qatar’s evolution through its
marketplace, hold a passion for
expertise, services and extensive
their work and create dynamic
portfolio of properties. Catering
customer experiences. The
at its modern space, which
to the current real estate market
LS: team strives to understand
incorporates liquid crystal
is a challenge, therefore, LS:
every clients’ needs and
which takes important
display (LCD) screens and touch
Keep Moving employs its
personality, sculpting the ‘LS:
decisions and serious
interfaces that enable clients
international team and three
Journey’ around an absolute
negotiations out from behind
to browse properties in an
divisions to create movement
understanding of what
the clutter of a desk, and
open environment. Additionally,
within the market, rather than
clients want.
places them into the comfort
it reflects the avant-garde
being subjected to it.
This kind of business philosophy
of LS:’s newly designed
approach, which LS: exudes
These elements include
translates to greater efficiency
corporate headquarters at
when it comes to the process
‘LS:RES’ for residential sales
and matches people with their
the iconic Tornado Tower.
of acquiring, renting or leasing
and leasing, ‘LS:COM’ for
preferred place, with less stress
Understanding LS: Keep
property. The conceptual design
commercial sales and leasing,
and hassle.
Moving is as easy as glancing
of LS:’s headquarters defines
and ‘LS:PM’ for holistic property
A key component of LS:’s identity
management services.
is perpetuating the slogan “Keep
Having a diverse corporate
Moving”; one which informs
personality, comprised of many
both LS:’s evolving, flexible
different elements, allows
identity as well as the process
LS: Keep Moving to cultivate
of encouraging customers to
potential markets and ensures
discover the perfect home or
that any new properties will
office, which reflects their
become a part of
unique personality.
Keep Moving, is a real estate company,
“All elements of LS:’s vibrant identity centres around our mantra, which is encapsulated in two words, ‘Keep Moving’.”
Having a diverse portfolio of
to achieve great success.
is engaged in various corporate
“All elements of LS:’s vibrant
properties allows LS:’s clientele
The voice of LS: Keep Moving is
social responsibility initiatives,
identity centres around our
to find exactly what they are
carried by its managing director,
which highlight its involvement
mantra, which is encapsulated
looking for and by maintaining
Arron Browne, who describes
in the local community and
in two words, ‘Keep Moving’.
an up-to-date portfolio, LS:
the company by saying: “LS:
seeks to engage local and
This idea of perpetual motion
provides its clientele with an
as a business represents a
expatriate citizens. Using
refers to the process of actual
accurate representation of what
pursuit of innovation, quality
customers own experience of
moving house and extends to
is available in the market.
and transparency that shapes
and positive word of mouth,
the concept of remaining fluid,
In 2010, LS: Keep Moving aims
it into an agency, which creates
LS: Keep Moving seeks to
creative and flexible within the
to make an impact in the market.
movement within the markets.”
perpetuate its brand and gain
industry. The slogan for LS:
To date, LS: has already sold
“Part of our strategic vision is
client loyalty through creating,
becomes a way of thinking and a
450 apartments and the
serving landlords and tenants
and delivering multiple levels of
concept that we both define, and
company continues to fuel its
by being open, modern
customer service totality.
in turn defines us,” Browne says.
development by offering a full
and offering unrivalled real
range of services in a relaxed,
estate services. “This vision
but engaging environment.
is further enhanced by our
Its portfolio consists of more than
international team, wealth of
200 apartments located on The
market knowledge and ethos
Pearl Qatar selling for QR13,000
of simplicity that creates an
per square metre, both directly
atmosphere of customer
and in the secondary market.
engagement and satisfaction.”
LS: Keep Moving is also offering
LS: Keep Moving represents a
clientele 30 apartments for
pursuit of quality, transparency
rent starting from QR13,000
and is an agency that
per month.
encourages employees and
Current estimates suggest
clientele to interact, share ideas,
that Qatar’s real estate market
and which ultimately provides
will grow by a projected seven
an environment where important
percent in 2010, and with 32
discussions can be held in the
percent of responders to Dun
comfort of a modern space.
and Bradstreet’s most recent
LS: Keep Moving firmly
Business Optimism Index saying they were considering “expanding their operations” it, therefore, creates the optimal atmosphere for LS: Keep Moving
supports Qatar’s 2030 vision by striving to establish itself as the foremost real estate provider within the region. Additionally, LS: Keep Moving
“LS: as a business represents a pursuit of innovation, quality and transparency that shapes it into an agency, which creates movement within the markets.”
TEL
+974 (4) 491 3222
FAX
+974 (4) 491 3221
INFO@ LSKEEPMOVING.com www.lskeepmoving.com
INSIDE EDGE
ONWARD AND
UPWARD The global financial crisis has had a significant impact on spending and the saving habits of people the world over. The prosperous era of excessive spending has come to a sudden end and has given way to a feeling of uncertainty leading people to keep a close eye on personal finances. The global travel and tourism industry, which was growing at a healthy pace throughout 2004 to 2007, has been one of the worst impacted industries. Rajesh Mirchandani reports
INSIDE EDGE
A
s savings rates across the world rose during the most part of last year, spending on international travel and tourism was one of the first on the list of expenses to be cut back. Reduced spending was not only witnessed at an individual level, but also at a corporate level as slow business activity impacted business travel industry. According to Air Transport Association (IATA), the passenger traffic during the last year dropped by 3.5 percent and is the worst year recorded since 1945. Any recovery in the travel and tourism sector is expected to be relatively weak and will be closely aligned to the overall revival in economic activity across the world. At the moment, the global economy seems to be tentatively, but steadily, on a road to recovery. A range of unorthodox monetary measures taken across the world, combined with an expansionary fiscal stance, has provided a major stimulus in response to the deep downturn, which began in the fourth quarter of 2008. Among the advanced economies, the United States (US) is off to a better start to growth as compared to Europe and Japan. On the other hand, among the developing economies, a few emerging Asian economies such as China and India are leading the revival in business activity. In line with such improvements, the travel industry is looking upbeat after a disastrous last year where industry saw many small players exiting the sector. The key behind the improvement in economic outlook has been the financial sector, which, directly or indirectly, holds the key to the revival of other sectors. In a sign that lost confidence is being slowly regained, the risk appetite of investors has improved quite substantially in the past six to eight months. Cross-border capital flows have rebounded strongly and have contributed to a great extent in improving the outlook for most of the emerging economies. Additionally, in most advanced economies, banks are moving towards easing off the lending standards indicating return of confidence. The global economy is poised for further growth during 2010, but the pace will be uneven at best. What could possibly derail this nascent recovery would be the selective
lending practices followed by banks, which could possibly hamper the growth of many sectors. One such sector is construction and real estate, which continues to face challenges in raising credit, especially in the advanced economies. High unemployment levels are another cause of worry for policymakers. With millions of people having lost their jobs across the world during the crisis, the threat of lost productivity will weigh heavily on the balance sheet of many governments for years to come. The recent crisis in Greece is another key area of concern, which has the potential to become a factor leading to a sluggish global economic recovery. The fiscal burden of a few eurozone economies has once again highlighted the need to address the rising sovereign debt levels, which, if left unaddressed, could significantly affect financial sector liquidity and in turn, has the potential to derail the economic recovery on a global scale.
The GCC
The growth of the Gulf Cooperation Council (GCC) region has stayed relatively muted as compared to other parts of the world during the past couple of quarters. At the peak of the crisis, the regional economies faced one of their toughest challenges in recent history. On one hand, oil revenues plummeted due to correction in international commodity markets during the end of 2008, while on the other hand, the outflow of foreign capital exaggerated the problem of liquidity squeeze in the finance sector. The steep banking growth witnessed during the pre-crisis era has now slowed as banks face the dilemma of bad asset quality and low liquidity in the system despite the regional governments taking appropriate measures to address these issues. The real estate sector, which was once fast emerging as the next driving force of regional growth, has witnessed a deep correction due to the exodus of mainly speculative money and to a great extent a lack of mortgage lending. As the region undergoes structural changes, the oil prices, which have remained relatively stable during the last few months, will provide adequate cushion to the regional governments to continue their expansionary fiscal stance. JUNE 2010
35
INSIDE EDGE
Going forward, oil prices are expected to be a major catalyst, which could reinstate investors’ confidence back into the region’s fundamentals. Moreover, the recently proposed ‘better than expected’ debt-restructuring plan by Dubai World will clear clouds of uncertainty from the regional markets. It is worth mentioning that in addition to the oil prices, some key sectors have started to show signs of revival in the business activity. The Middle East region is a central hub for trade between many Asian and European countries. With a gradual revival in the international trade, the transportation and logistics sector is also seeing a turnaround in business activity.
Travel and Hospitality Sector
Apart from the traditional finance and logistics sector, the Middle East travel and tourism sector has been a leading contributor to the region’s economic growth throughout the past decade. However, in line with the challenges faced by the global hospitality sector last year, the region has not escaped unscathed. With a decrease in passenger arrivals, combined with the addition of new hotel rooms in the market, the industry players faced severe margin pressure as supply outstripped demand by a substantial margin. The hotel occupancy dipped to around 62 percent, while revenue per available room (RevPAR) fell by around 13 percent in 2009 compared to the previous year. Dubai recorded the largest RevPAR decrease, falling 31 percent. Nevertheless, there are a few encouraging signs visible as the sector is witnessing some sort of stability, which is mainly driven by an upswing in business activity in the region. Dubai appears to be at the forefront in this trend reversal, with occupancy rates hovering around 79 percent in the first two months of 2010, the highest in the region. In the travel segment, Dubai recorded an increase of 20 percent in passenger numbers during the first quarter. Qatar has been building its tourism sector in order to establish itself as the regional business hub. The country, which is bidding for 2022 soccer World Cup, has ambitious 36
JUNE 2010
plans for the sector and has set aside US$20 billion (QR73 billion) for tourism investments until 2013. The recently compliled Business Optimism Index (BOI) study for Qatar by Dun and Bradstreet, further cements the improving sentiments of the industry ahead of such planned investments announced by the government. The study reveals that the overall business sentiments in the country have improved substantially on the back of strong hydrocarbon revenues and relatively stable global economic outlook. The overall BOI in the non-hydrocarbon sectors of Qatar was recorded at 27 in the current quarter as compared to a low of seven, which it registered in the second quarter of 2009. Qatar’s trade and hospitality sector has shown consistent signs of improvement in the BOI throughout the past couple of quarters. In fact, trade and hospitality are the only sectors under study, which have recorded an improvement in expectation of both volume of sales and new orders parameter simultaneously this quarter – a sign that the sector is expecting robust demand going forward. The hiring outlook of the sector is also looking healthy as the sector is continuously recording an improvement in the optimism regarding hiring of new employees throughout the last four quarters. However, profitability still remains an area of concern for the industry as new hotel rooms are expected to come on to the market within the current year, which would drive RevPAR lower. As the regional governments are increasingly focusing on diversifying economies away from excessive oil dependence, the tourism and hospitality sector is likely to be on centre stage in the near future. With expectations of the region continuing its growth trend, around US$7 billion (QR25.55 billion) worth of investment is currently underway into the regional hospitality industry. Combined with the growing importance of the region as a trade and business hub, the travel and hospitality industry could very well emerge as fulcrum for growth and a leading employment generator in the region.
COVER STORY
YOUR LEISURE is MY PLEASURE It has been a torrid decade for the Middle East tourism industry. From political unrest to the financial crisis, the sector has lurched from one external trauma to another. But as the global economy shows signs of recovery, the regionâ&#x20AC;&#x2122;s dynamic offerings are set to reclaim past potential. By Jamie Stewart
COVER STORY
S
itting at the geographical confluence where East meets West has long been one of the defining factors in the evolution of the Middle East’s fortunes. For centuries the region has been at the centre of trade routes from the North to the South, and from the East to the West. People and goods from all corners of the globe have passed through the desert towns and cities, first on foot, and then by boat and plane on their way from, and to, far flung corners of the globe. And it is the former – people – as opposed to the latter – goods – that have come to represent one of the Middle East’s predominant economic drivers through the ongoing shift to a post-energy economy: Tourism. The numbers are astonishing. Tourism employs no less than eight percent of the total global workforce; 1.6 billion international tourists are expected annually by the close of the decade; and the turnover of the sector totalled QR3.1 trillion in 2009. The potential for attracting income within the tourism sector across the Middle East is something of a sleeping giant. The region is blessed with an abundance of characteristics and natural resources to draw well-heeled individuals from across the globe. And for once, they are features that do not require masses of investment, because they already exist. Year-round sunshine; warm waters; vast, untouched desert landscapes; a rich cultural heritage – that is a pull to people the world over in its own right; traditional foods and
“The numbers are astonishing. Tourism employs no less than eight percent of the total global workforce...and the turnover of the sector totalled QR3.1 trilion in 2009.” - Jamie Stewart
drinks to stir the palate; and a calm, conservative way of life that respects family and friends, that in itself is a reason for many to visit. 38
JUNE 2010
- Saudi Arabia’s tourism sector is largely recession-proof due to the mass development of holy cities such as Makkah. -
However tourism, like almost every other global industry, was hit by the economic downturn, and hit hard. It stands to reason that when a dilapidating and lingering recession sinks its teeth into the global economy, luxuries – such as foreign travel – are among the first things to go. “It was not possible to assess how long the economic crisis would last, nor the extent of the downturn, nor its full impact on tourism,” says Taleb Rifai, secretary-general of the United Nations World Tourism Organisation (UNWTO). Indeed today, in 2010, it is too early to say that a recovery within the sector is complete, although the signs are encouraging. Last year, as was to be expected, the sector’s QR3.1 trillion turnover was down from the previous year’s estimated total of QR3.4 trillion. This year to date, however, the industry has painted a different picture; one that appears to be preceding the fragile global economic recovery by confidently blazing its own trail towards reclaiming the heady growth figures of the prerecession world-wide economic boom. International tourism arrivals were up seven percent globally in the first two months of this year, compared with the same period last year, according to UNWTO figures. Again, growth over these two comparable periods is to be expected – the first two months of 2008 were when the global crisis was working its way through the Western world – yet the predictions for this year as a whole, reflect the industry’s longer-term confidence: The organisation is bullishly predicting growth of between three to four percent in tourism arrivals this year.
COVER STORY
The Qatari picture
“More than 90 percent of visitors come to Qatar for “Tourism can play a critical role in the recovery process business, conferences and trade,” Al Nuaimi says. Adding that the state is not ready to sit back and rest on as a sector with a unique resurgence capacity and an immense potential in terms of employment creation and its tourism laurels. He says Qatar will “harness its resources” sustainability,” the UNWTO’s Rifai says – a statement that to construct more facilities and that Doha intends to become appears to hold water when the sector’s forecasts are taken “a global hub for quality”. Exactly what the busy business traveller may be looking into consideration. So if tourism is a driver, an engine of growth from an for. There is, however, more to tourism than mere business. economical point of view, and the Middle East region is blessed with the cultural, societal and natural resources to Complementation If one concept has come to characterise the development carve its own niche in an ultra-competitive industry, what steps are being taken to initiate the resurgence, both in Qatar of the Middle East’s tourism industry, it is that of complementation, as opposed to competition. Outside of and across the region? In Qatar, the income from tourism is forecast to exceed the private sphere, each state has sought to branch out along the QR3 billion mark in 2010, up from QR2.8 billion in its own path, with the aim of collectively catering for every 2009, according to Qatar Tourism Authority chairman type of tourist. Saudi Arabia’s industry was protected from the downturn Ahmed Al Nuaimi. Al Nuaimi describes Qatar’s role within the global via its aggressive development of the religious tourism sector. Business Monitor International forecasts tourist arrivals sector as being “a bridge between authentic heritage and global innovation”. The state will, Al Nuaimi says, reinvest its vast natural gas exports into tourism – one of many sustainable economic sectors that the government is looking to kick-start in the coming years, as the need for a diversified economy dawns. And the serendipitous hand of geography, also, is not lost on Qatar’s tourism chief: “We will exploit the tremendous economic growth achieved in Qatar as well as the convenience of our geographical location at the cross roads between East and West,” he says. Among the many tourism sub-sectors, and one of the most profitable for Qatar, is business travel. Qatar’s location has already seen it forge a lucrative conference and events industry, spurred further by investment in - Dubai is targeting families and leisure travellers through monster-developments such as Dubailand. recent years. JUNE 2010
39
COVER STORY
developing a tourism industry are not being ignored. “Tourism will help regenerate Iraq,” says the country’s tourist board chairman, Hammoud Al Yaqoubi. “We want to prove that Iraq still exists and maybe we can change people’s minds about it.”
The knives are out
- The Ritz-Carlton Sharq Village and Spa in Doha, Qatar (photo courtesy of the Ritz-Carlton). -
to the country to grow by five percent year-on-year to reach 12.9 million in 2010, after remaining constant in 2009, at just above 12 million, with subsequent annual growth of 6.5 percent to 2014. To the East, Dubai has long targeted the high-end leisure traveller with its marble-floored five-star hotels, endless designer shopping malls and iconic architecture. The city that allows you to bob through a shark tank on a rubber ring in the morning, before retiring to an indoor ski slope in the afternoon, wants for very little within its chosen market. One hundred and twenty kilometres away, Abu Dhabi has chosen to tread a somewhat more refined path, seeking as it is to be ranked in the same cultural leagues as London, Paris and New York through the introduction of the Guggenheim Abu Dhabi, the Louvre Abu Dhabi, and the Performing Arts Centre. Qatar, alongside its ambitious business tourism agenda, has sought to expand its educational and medical tourism sectors, not to mention its pursuit of one-off tourism megaevents such as football’s 2022 World Cup and the 2020 Olympic Games. Elsewhere in the region, Oman continues to promote itself via its unspoilt natural wonders; Bahrain pushes itself as a traditional Muslim destination, rich in culture and Islamic heritage; even the unlikely tourist destination of Kuwait is more than willing to invite the world to experience its beaches, theme parks and ice-skating rinks. And finally, perhaps bottom of many people’s list of ‘must see’ destinations, comes Iraq. But even there, the benefits of 40
JUNE 2010
Complementation and teamwork characterise the public face of Middle Eastern tourism development, but within the private sector, things could not be more different. The Middle East and North Africa (MENA) region is the modern day battleground for the world’s largest hotel companies as they look for sources of growth outside of the North American and Western European markets; behind closed doors – the knives are being sharpened. Upmarket hotel operator Hyatt, which already runs no less than 434 properties worldwide, is set to open two new venues in Abu Dhabi within the coming 12 months. And buoyant expansion plans are also afoot at the Ritz-Carlton Hotel Company. The management group has five hotels across the Middle East at present, and is looking to open a further five by 2012. One of the five new venues will be in Abu Dhabi, one in Saudi Arabia and, as Ritz-Carlton Middle East regional director Vivienne Gan revealed to TheEDGE, one of the remaining three will be in Oman, while the final two venues are still under wraps. “In the past few years major Middle Eastern countries have invested a lot in their tourism infrastructure,” Gan says. “The upcoming airports in Doha and Dubai will be first class, and Bahrain and Oman are investing heavily. European travellers, and even people from as far away as the United States (US), are looking at Oman. That is something that we are very keen on pursuing.” Gan agrees that the industry across the Middle East is characterised by “healthy competition”, and says that visitor numbers from the key European markets have remained strong, when the effect of the financial crisis is taken into account. She adds, however, that “our real focus is on intra-Gulf Coorporation Council (GCC) travel”. This summer the company is “putting its money where its plans are” and targeting travellers from Saudi Arabia, which Gan describes as “amazing travellers”, adding: “The Saudi people like Bahrain, Dubai and Egypt. And we have seen a healthy number travelling to Doha.” As a mark of the region’s importance to the broader company, Gan says that Asia currently holds the most growth potential for the group – specifically China – with the Middle East in second place, ahead of the US and Europe.
COVER STORY
“The tourist industry in the Middle East has found itself on trial before. In the wake of the terrorist attacks on New York’s World Trade Center, up to 50 percent of international trips to the region were cancelled.” - Jamie Stewart The downturn
Taking centre stage on Dubai’s world famous Palm Jumeirah development, there remains a huge hole in the ground that should, by now, be occupied by the foundations and framework of the Trump International Hotel and Tower Dubai. The luxury development was launched at the wrong time for the US-based Trump Organisation and co-developer, Dubai-based Nakheel, for it was within weeks of the starstudded launch party in New York City that the financial crisis arrived with a vengeance on the United Arab Emirate’s (UAE) shores. And Dubai is not alone in its hardships: According to TRI Hospitality Consulting director John Podaras, 13 percent of all the hotel projects across the GCC countries are on hold – the Trump International Hotel and Tower among them – and six percent have been cancelled altogether. The industry was indeed hit hard by the broken world economy, particular sectors more so than others, with highend tourism being the obvious victim, however, stepping back from the battered industry in the wake of the financial
crisis reveals a sector that has been through some severe ups and downs in the past decade. A view that could offer the key to recovery. The tourist industry in the Middle East has found itself on trial before. In the wake of the terrorist attacks on New York’s World Trade Center, up to 50 percent of international trips to the region were cancelled, according to a number of travel agents, while flights in the opposite direction were virtually empty. And the industry continued to operate in a depressed state not for months, but for years afterwards, as the War in Afghanistan and the War in Iraq, although waged hundreds of miles away, continued to have a negative impact on the number of visitors to the region from Western nations. Of course, the market has since drawn itself out of such paranoid days, but the remnants of such uncertain times remain. Lee Morris, architect of the Trump International Hotel and Tower Dubai, was working on the design as the War in Iraq waged on. He admits, “a tremendous amount of work
- Iraq may not be top of everybody’s ‘must see’ list, but the country is looking to expand its tourist industry. -
JUNE 2010
41
COVER STORY
had to be done in the security aspect of the building”. He continues: “In Dubai there had been talk of terrorist attacks, so we looked at access points going into the building in terms of scanning pedestrians and luggage; we looked at bombproof glass; we looked at putting up bollards so that cars could not drive into the front of the building. It was a consideration.” Such a project was unfortunate in that it was conceived as the West waged war in Iraq, it was designed with an eye on global mood and opinion in the aftermath of war, and it was launched within a month of the financial crisis sinking its teeth into the region. But that is a single project. It is the diversity of the industry that will be its saving grace and the engine that will drive the sector along the road to recovery and beyond.
The route back
A combination of resurgent investment, an extension of the sector’s burgeoning diversity, and increased global confidence will, in the mid-term, hold the key to the industry’s growth in the Middle East, just as it did in the six-year period between the New York attacks and the financial crisis, when the Middle East’s great cities exploded from the desert sands. The process is well underway already, at least in the investment front. GCC countries are set to pump more than QR4.26 billion into hotel projects in 2010, according to new research from Dubai-based firm Proleads. The UAE is expected to head the list, followed – surprisingly – by Oman, with Saudi Arabia in third, and Qatar fourth. And the individual projects themselves reflect the aforementioned diversity. Dubai continues to work on Dubailand, its sprawling family entertainment development; Oman continues to trade on its reputation for natural beauty through its 32 square kilometres of Blue City mega-project on the coastline of Al Sawaadi, while Saudi Arabia ploughs on with the mass development of Islam’s holiest city, Makkah. “These figures really show that there is no shortage of ambition or liquidity,” claims Ray Tinston, sales director at the giant Middle East Hotel Show trade event. “When the US and countries in Europe are preparing stringent austerity measures to reduce their budget deficits, and repay billions in loans, the Middle East region is powering ahead.” Tinston adds that the figures reflect growth that is “quite clearly sustainable”. It may be a little premature to be using words such as “sustainable”, however. As Tinston himself admits: “An important factor going forward will be what happens in the global and regional economies to encourage people to travel and impact hotel occupancies.” Wise words. 42
JUNE 2010
- The Ritz-Carlton in Dubai (photo courtesy of the Ritz-Carlton). -
Sitting at the geographical confluence where East meets West has long been one of the defining factors in the evolution of the Middle East’s fortunes – if not ‘the’ defining factor. When political or economic strife settles on the globe, there is no tougher place to be than at the point where East meets West. Yet when global liquidity is rife and the economy is booming, there is no more fortunate place to be. And the signs, midway through 2010, are cautiously optimistic. The route back is clear, but the industry must – as always – tread carefully. Tourism is, after all, largely a luxury. One, which the world is on the verge of deciding it, can once again afford, much to the delight of the Middle East’s coffers.
ECONOMIC BAROMETER
A BIG FAT GREEK BANKRUPTCY This month Karim Nakhle asks: Will the Greece bankruptcy trigger a domino effect within the eurozone? To find out what effect the failing Euro will have on the Middle East economy and what a weak Euro means for Gulf currencies, Nakhle speaks with European Banks and Business leaders.
ECONOMIC BAROMETER
S
ince 2008, the world has witnessed the fall of global corporations and financial institutions. Daily, people would turn on their televisions to stay tuned to who would be the next victim of the global downturn; they watched to see how the latest news would effect their company – and to see if they should get ready for a new career? However, the uncommon news came about in October 2008, in one amazing sentence: Iceland goes bankrupt. How could Iceland, as a country, go bankrupt? It is simple, the country could not pay back its external debts and the Icelandic currency, the Krona, had become essentially valueless in the rest of the world. That means the country could no longer pay for imports. What is worse, is that Iceland was sitting outside the major currency trading blocs, no Euro, and no one with the incentive or ability to save it. Nowadays, forget global warming; catastrophic government spending and the spreading of sovereign debt diseases are the real threats to our economic survival – set to be the big bad news story of 2010. This time it is Greece that is in trouble – and that is official. 44
JUNE 2010
Just as the ‘do not panic’ brigade were telling us not to fret about Dubai World defaulting – not big enough to matter, it is an isolated case, etcetera…a much bigger problem has cropped up. Greece, as an entire country, and a member of the European Union (EU) zone is going bankrupt. Ratings agency Standard and Poor’s (S&P) has already downgraded Greek debt to “junk” status, which means it views Greece as a highly risky place to invest making it difficult for the country to borrow money; more of the same could be on the way for other European countries. Greece was poised to default on its debt when the EU, led by Germany, and the International Monetary Fund (IMF), decided to bail it out or risk the collapse of the entire EU and its currency, the Euro. As always, any time governments are involved, the dollar figure necessary to save Greece keeps rising. At first it was US$50 billion (QR182 billion), then US$100 billion (QR364 billion) and now US$145 billion (QR528 billion) – the biggest loan to a country ever, spread over three years, but on the condition that Greece slashes public spending and boosts tax revenue.
Why did the crisis occur?
In recent years, Greece has been living beyond its means and its rising level of debt has placed a huge strain on the country’s economy. The Greek government borrowed heavily and went on somewhat of a spending spree throughout the past decade. Public spending soared and public sector wages practically doubled during that time. However, as the money flowed out of the government’s coffers, tax income was hit because of widespread tax evasion. When the global financial downturn hit, Greece was ill prepared to cope. Consequently, Greece has one of the highest budget deficit, in addition to a high debt. Greece’s budget deficit – the amount its public spending exceeds its revenues from taxation – last year was 13.6 percent of its gross domestic product (GDP). This rate is one of the highest in Europe and more than four times the limit under eurozone rules. This is particularly troublesome, as Greece must refinance more than EUR50 billion (QR229 billion) in debt this year. Before the credit crunch, an economist would have seen a budget deficit of six percent as being large, a
ECONOMIC BAROMETER
deficit of ‘banana republic’ levels. Most countries have debt around 60 percent of their yearly GDP. The United States (US) debt, for example, is almost 70 percent and now Japan is facing debt levels of almost 200 percent of its GDP (one of the highest in the world). Despite Europe’s big boys rallying round to support Greece, it will come at a massive price. Greece will be forced into a long period of economic stagnation. Taxes will have to be hiked. Prices across the economy will have to be cut, while wages and living standards will have to be slashed. Hopefully the planned spending cuts and tax increases will generate enough government revenue to reduce the debt. Some would say the tragedy was inevitable from the moment, nine years ago, when Greece was admitted into the eurozone. Others would claim that one of the currency union countries was sure to fall behind sooner or later; if not Greece, then some other failing member of the club.
The Euro slumped to a four-year low against the dollar, stocks and oil slumped, as fears that Europe’s debt crisis was out of control rattled global markets and governments. Sentiment remained fragile despite a EU-IMF rescue package worth almost a trillion dollars designed to prevent the Greek debt crisis from spreading, as fears grew that the single currency was at risk of collapse. The price of gold has soared to US$1240 (QR4515) per ounce as investors exited the single currency in favour of safe haven investments, and it is only getting higher. Experts say it could reach US$1500 (QR5460) per ounce by the end of the year. A lack of confidence in world currencies has contributed to the rise. The primary concern centres around the view that EU-IMF rescue package announcements are nothing more than a temporary fix and that debt restructuring will have to be part of any lasting solution. There are fears that the Greek problem could spread to other eurozone countries, such as Portugal, Spain, Ireland and Italy (also referred to as the PIIGS group), which are now anxious to bolster investor confidence.
The IMF is concerned that higher sovereign risk in countries like Greece could spill over to domestic banking systems and across borders, thereby triggering a second global economic crisis. Greece is hardly the worst sovereign debtor on the block – far from it. There are some badly run economies, such as Ukraine, Venezuela and Argentina to name just three; all carry foreign debt that exceed 100 percent of GDP.
What is the effect on the Middle East economy?
To find out, I asked Ahmad Tharwat, chief economist of Arab Development Bank. According to Tharwat: “The Greek crisis and its impact on the Euro and European economy, will be a vital lesson for the Gulf Cooperation Council (GCC) countries single currency – since much of the preparatory work was based on the Euro model, and since its introduction and the technical support it receives from the European Central Bank. If the crisis in Greece or elsewhere irrecoverably damages the eurozone, it could trigger a rethink within the GCC.” United Arab Emirates (UAE) Central Bank governor Sultan bin Nasser Al Suwaidi said in a statement to the press: “I do not expect the financial crisis in Greece to affect Dubai. It’s in a different region. There will be nothing of significance at all, regarding local banks’ exposure to Greece.” According to Paul Haywood, executive director of EuroMed Capital: “At this stage it’s too early to say how the Greece crisis will impact the Middle East Region. The situation keeps on evolving and it’s not certain what the final outcome will be and how successful the Greece authorities, with the support of the EU and the IMF, will be in containing the crisis,” he said. “At first sight there is no immediate direct threat for the Middle East as the region does not have strong trade and investment linkages with Greece. However, through indirect channels such as the exchange rate and the equity market, we are likely to feel the impact. JUNE 2010
45
ECONOMIC BAROMETER
“The recent decline in stock market prices throughout the region has been attributed to the Greece crisis. Global investors tend to lump countries together in risk categories and right now the risk profile of Greece very much resembles that of an emerging market/developing country economy.” Bilal Idriss, deputy CEO of European Arab Foreign Trade Bank believes the financial crisis in Greece will not have a negative impact on the region, but instead says the local economy may receive a boost as a result of the changing exchange rate of the euro: “The fall of the Euro exchange rate against the US dollar will have a positive impact on the Middle East’s economy. The value of its imports will fall as local currency is pegged to the US currency in most countries, which also means that the purchasing power of these countries will increase,” Idriss said. 46
JUNE 2010
“Because our trade relations with Greece are somewhat limited, hopefully its debt crisis will have no direct impact on our local economies.” Kuwait is the only Gulf Arab country tracking a currency basket after it broke ranks with fellow dollar-pegging oil producers in 2007 to keep surging inflation in check. The basket peg provided relatively more room to manoeuvre in designing and conducting monetary policy and helped to insulate the Kuwaiti economy from external inflationary pressures linked to exchange rate fluctuations. Francois Duchemin, Head of Forex at ING Financials, said: “Effects on Gulf countries will be limited because the bulk of commercial exchange is with Asian countries. The drop in the Euro value will reduce the cost of the Middle East’s imports coming from Europe and will also reduce the
trade deficit between the Middle East economies and EU countries as onethird of the trade deficit is in Euro,” Duchemin stated. “However, this will only be beneficial in the short-term. If the situation worsens, it will affect world economies. There may be a major impact on the region if a pessimistic feeling occurs globally, and international demand on oil decreases.” Aftershocks caused by repercussions of the global economic crisis will continue to take place worldwide. There might be a psychological effect on the stock markets in the region, and the crisis may also affect Gulf countries’ investments, particularly wealth funds in Europe. So once again, like many times before, the Middle East should be ready to overcome any economic challenges that might come from a crisis in Greece, Spain, Portugal, or even Italy.
ON THE PULSE
HOW TO BUY
THE WORLD Qatar’s global shopping list appears to know no bounds. Harrods? Definitely. Manchester United? Maybe. Porsche? Been there – done that. But, Greece’s energy sector? At a time when the European Union (EU) member state is teetering on the brink of economic collapse? Hmmm… Edward Jameson explores Qatar’s investment strategy.
W
estern European financial markets have been on a roller-coaster ride worthy of anything the world’s great theme parks may have to offer since the Greek debt crisis shifted into top gear. For those unfamiliar with the condition of the southeastern European nation’s public finances, Greece owes hundreds of billions of Euros to nations across the EU – a figure that makes Dubai’s debt crisis look like loose change jangling in a banker’s pocket in comparison. As was the case with Dubai, the fear is that the nation may be forced to default on its debt mountain, unless a bailout plan can be organised and put into practice. It may seem unlikely, therefore, that Qatar would choose now to invest in Greece.
Yet, on May 3, Qatari Prime Minister and Minister of Foreign Affairs Sheikh Hamad bin Jassim bin Jabor Al Thani revealed that Doha was to pump funds into a EUR3.5 billion (QR16.1 billion) liquid natural gas (LNG) terminal, with a capacity of seven billion cubic metres, to be built by Qatar Petroleum in western Greece. Unsurprisingly, Greek Deputy Foreign Minister Spyros Kouvelis welcomed the news. For a senior Greek politician awaking to daily reports of riots and petrol bombs on the streets of the Greek capital Athens, good news has not exactly been free-flowing of late.
Qatar’s purse strings
The foreign investment strategy of Qatar, as discussed in this column in a previous issue of TheEDGE, is a nonsentimental, profit driven, long-term plan motivated by the state’s – and indeed the Middle East region’s – increasingly urgent need to diversify its economy away from its current reliance on hydro-carbon dollars.
Investment is continually being made in energy infrastructure, in Qatar and further afield – as is the case in Greece – but such mid-term investment is required now if the returns from that investment are to arrive in the Qatari coffers in sufficient time to be reinvested into other, long-term sustainable sectors. The principal foreign investment body, in Qatar’s case, is the Qatar Investment Authority (QIA). The QIA manages Qatar’s sovereign wealth fund (SWF), and is estimated to hold assets of around US$60 to US$65 billion (QR218 to QR237 billion) according to the SWF Institute, an organisation established to monitor the often secretive actions of SWFs and its impact on global economics. The QIA is ranked the 13th largest SWF in the world, and the fifth largest in the Middle East behind oil-exporting giants Libya, Kuwait, Saudi Arabia and the United Arab Emirates’ (UAE) Abu Dhabi. Qatar’s purse strings can stretch a very long way when the QIA decides to dig deep into its pockets. On May 3, it
ON THE PULSE
– While the global economy sunk, Qatar’s LNG trade more than kept the state afloat. –
emerged that the debt-laden, economically crippled, cash-starved nation of Greece was the QIA’s latest target.
Europe’s “junk”
another – together the five countries are unflatteringly referred to as the P.I.I.G.S – and vastly greater amounts to the economic power-houses of Europe: Germany, France and, to a lesser extent, the United Kingdom (UK). Should Greece default, the fear is that a domino effect would be set into motion, with Portugal next on the watch list due to its high public debt of 62.6 percent of GDP. Spain would subsequently follow, trailed by Ireland and then Italy, which sits on public sector debt equal to 100.8 percent of its GDP, but with a markedly better deficit position compared with the preceding countries. Italy does, however, owe a whopping QR2.35 trillion to France, or 20 percent of French GDP. An Italian collapse would not be good news for France – which would be even worse news for
Europe and the Euro. In total, Italy owes an eye-watering QR6.44 trillion. That is equivalent to QR976 for every man, woman and child on the planet.
The current stage of the Greek crisis Bargain-bin So why would Qatar choose this began on April 27, when ratings agency moment to target Greece for investment; Standard and Poor’s downgraded the nation’s debt to “junk” status, sending a nation that stands at the head of a multi-trillion Riyal queue of dominos stock markets tumbling across Europe; teetering on the verge of collapse? oil plummeting on the back of fears over On April 23, 2009, the EU Europe’s macro-economic outlook; and the Euro went into freefall. Renewable Energy Directive became To put things into perspective – all law. The directive set ambitious targets figures being listed in Qatari Riyals for all 27 EU member states regarding the amount of energy within their final and correct as per the exchange rate at time of writing – Greece owes a consumption that must originate from renewable sources by 2020. In the case total of QR1.08 trillion. That is just shy of QR100,000 for every man, of Greece, the target is 18 percent. woman and child living in Greece. In a recent progress update to the EU, the Greek government Greece’s public sector debt is equal to 94.4 percent of its gross pledged, “the target will be achieved through domestic product (GDP). However, the dire domestic production”. “Greece has long standing, multisituation does not end there. The government added: faceted, activities and cultural, As is alwaysttt the case with “Greece has long standing, multi-faceted debt default, the problem and commercial ties with its is one of contagion. activities and cultural, and commercial ties with its Greece owes money to neighbouring countries...” Portugal, Italy, Ireland and neighbouring countries in - Greek government spokesperson Spain, all of which owe the area of south-eastern substantial sums to one Europe...it intends to JUNE 2010
49
ON THE PULSE
- Qatar Holding snapped up London’s flagship luxury store Harrods last month in a deal valued at QR6.9 billion. -
utilise these interactions to initiate joint projects, especially in the electricity generation sector.” In short, Greece intends to pump a pile of money that it does not have into its renewable power sector, both domestically and through bilateral projects, which will not leave much cash aside to ensure mid-term energy security in the years beyond 2020. Enter Qatar. With its coffers overflowing and the income from natural gas exports showing no sign of letting up, Qatar is not afraid to put its investment strategy into practice. As the global economy shows signs of recovery, and Western nations return to growth – the Greek crisis aside – now is the time for Qatar to snap up an international portfolio of assets at bargain-bin prices, along with the great potential that such assets now hold, as the green shoots of ‘boom’ emerge from the ashes of ‘bust’.
completed the purchase of the London’s flagship luxury store, Harrods, in a deal believed to be worth QR6.9 billion. Chatting to a journalist from the UK’s Financial Times newspaper, Al Sayed offered a glimpse into Qatar’s investment strategy. He said the Harrods scoop was part of the strategy to acquire “prestigious top-performing
businesses and to buy them at the right point in the cycle”. “We are a financially driven institution and the first thing we look for in an investment is the return,” he added. “We are not chasing trophy assets. Harrods offers a number of growth opportunities. It is a good time in the cycle to be buying luxury goods businesses.”
The good times
On May 8, Ahmad Al Sayed, chief executive of Qatar Holding, a branch of the QIA, was sat in the lobby of the Connaught hotel in central London awaiting a lift to catch a flight, having just 50
JUNE 2010
- The Centre for Renewable Energy Sources, Athens, Greece. The country will struggle to meet its energy commitments under the European Union. -
ON THE PULSE
- Sheikh Jassim bin Abdulaziz bin Jassim Al Thani, left, next to Porsche chairman Wolfgang Porsche. -
The phrase that lifts the lid on about to end at the doors of Harrods. Less than three months earlier, on June Qatar’s investment strategy is “a Only one day before the luxury 1, the US-based motoring giant General good time in the cycle”. While store deal was inked, the QIA had Motors had filed for bankruptcy. Porsche the global economy contracted been linked to a monster bid for one chairman Doctor Wolfgang Porsche was violently following the collapse of of the UK’s most prized football clubs: the first to welcome Qatar to the table, the United States’ (US) sub-prime Manchester United. saying that the deal would “only improve mortgage market, Qatar continued Elsewhere, Qatar has announced its Porsche’s liquidity situation”. to grow. Although energy demand intention to partner with Gazprombank Words that sound strangely familiar faltered, the world still to those of Greek Deputy needed natural gas and Foreign Minister Spyros Qatar, with its multiKouvelis, who lauded “I believe that this agreement billion Riyal investment Qatar for its investment in in infrastructure having the energy sector at a time will be the first step in a closer recently started bearing when the Greek economy cooperation between Greece fruit, was more than needs to take swift steps willing to oblige. towards growth and and Qatar.” Today we are seeing attract investment. - Greek Deputy Foreign Minister Spyros Kouvelis vast potential in stable, “I believe that this international assets that agreement will be the have stood the test of first step in a closer cotime, yet are owned by states, or in Russia to launch a Moscow-focused operation between Greece and Qatar,” organisations, that do not have the real estate fund in October 2010; the Kouvelis said, “and other investments available capital in the wake of the QIA is also looking to launch a second will follow”. recession to invest in and unlock the real estate fund in Brazil in December; Considering it is the right time in potential to its fullest. It is, therefore, and falling within the “deals done” the cycle, who would wager against “a good time in the cycle” to invest category comes Qatar’s 2009 purchase Kouvelis’s statement? And who would in the Greek power generation sector, of a 10 percent stake in German wager against Qatar? The Gulf state or London’s high-end shopping and motoring giant Porsche. that is buying the world, one piece at tourism sectors. The deal was, unsurprisingly, a time, in a dramatic bid to hedge its And it would appear that Qatar’s hammered out at a time of severe bets, and save for its future, on a truly interest in prized UK assets is not uncertainty for the automobile industry. global scale. JUNE 2010
51
GREEN BUSINESS
QATAR’S ECONOMY IS SET
- Sam Pickering, managing director of Bluu Green. -
GREEN BUSINESS
FOR CONTINUED GROWTH: IS THIS THE TIME FOR THE SUSTAINABILITY INDUSTRY TO TAKE ROOT? Sam Pickering investigates
T
he economy of Qatar has flourished in recent years, experiencing an average growth of nine percent throughout the past seven years, according to the CIA World Factbook. This rate of steady growth is predicted to continue with substantial opportunities for business. In recent months, opportunities have been extended to the international business community through Enterprise Qatar – a new entity to support innovative entrepreneurial small and medium enterprises (SMEs) in Qatar. This opening in the economy is sure to see a rise in innovative SMEs and hopefully among these will be companies practicing in the growing worldwide movement for sustainability. In April this year, the Ministry of Business and Trade announced that the initiative would “lead a new phase of development for this dynamic sector of the economy”, adding that it would actively dismantled some of the current limitations on foreign investment in the country. The announcement offers an encouraging sign to those thinking of setting up an SME within Qatar and an exciting chapter in the country’s development. At present, the usual suspects of multinational organisations and business giants have a presence in the country, but the smaller, entrepreneurial businesses rely on finding a Qatari sponsor and, as such, have been restricted. Opening the economy further to foreign interests also has the effect of widening the diversity of the industries represented in the country. One new sector that will be attracted by the initiatives of the Enterprise Qatar is the sustainability industry. As a relatively fledgling industry, the ‘green economy’ is a
hotbed of small, entrepreneurial and passionate businesses. Therefore, of notable importance to environmental businesses is Qatar’s Emir, Sheikh Hamad bin Khalifa Al Thani’s, recognition of the importance of SMEs. Leading a drive throughout the world for a more carbon (CO2) neutral existence, these smaller businesses will be greatly encouraged by Qatar’s openness.
JUNE 2010
53
GREEN BUSINESS
“The United States and Europe, at this stage, continue to be the world leaders in solar renewable technologies, however, in a region where solar is plentiful there is every hope that the Gulf will play a major part in technology development.” - Sam Pickering Indeed, Qatar has already shown leadership in the drive towards a reduction in green house gases and a suitable host to sustainability businesses. The Qatar National Vision 2030 is laying the foundations for a diversified economy, which will produce lower CO2 emissions. Towards this end, the country has initiated various schemes to showcase the drive for sustainability including the Qatar Sustainability Assessment System (QSAS), a Qatar specific way of scoring developments for their sustainable credentials. To fulfil these assessments, the country will need to rely on sustainability companies advising clients on QSAS compliance requirements these companies are, in the main, SMEs. Particular areas of sustainability that will flourish in Qatar include environmental consultancy and project management on schemes tackling greenhouse gas (GHG) emissions in both Qatar and the wider Gulf region. With the 16th Conference of the Parties under the United Nations Framework Convention on Climate Change (COP16 UNFCCC) conference being held in Mexico between November 29 and December 10, 2010, it is hoped that a legal agreement on GHG reductions will be put into place worldwide. Tight targets on CO2 emissions provide a perfect incentive and market for companies that can offer consultancy and GHG management. The opportunities for the economy as a whole are endless and in line with what are already well established within Qatar. In addition to project management, companies specialising in research and development (R&D) should be encouraged to set up in Qatar, as renewable technologies such as solar have a relative advantage with abundant ‘natural resources’ to tap into. Simple economies of scale will mean that R&D into alternative energy technologies will begin to grow in those areas where there are obvious growth opportunities and profits. The United States (US) and Europe, at this stage, continue to be the world leaders in solar renewable technologies, however, in a region where solar is plentiful
54
JUNE 2010
there is every hope that the Gulf will play a major part in technology development. As the Government of Qatar has already recognised, there needs to be an incentive and support system in place to encourage the Qatari entrepreneurs to grasp such opportunities. Qatar Foundation has already shown initiative by starting a joint venture with Solar World AG to form Qatar Solar Technologies. The proposed plant will produce solar grade polysilicon, the essential ingredient of solar panels. This paves the way for the manufacture of solar panels within Qatar. In addition, the built environment has embraced Leadership in Energy and Environmental Design (LEED) and more recently QSAS. It has been a challenge to achieve the highest scores under these environmental assessment systems due to the lack of recycling and locally manufactured construction materials. The change in focus of projects to a more sustainable model will provide the incentive to entrepreneurs to manufacture construction materials locally and ensure their commercial success. It is likely that developers will be willing to pay a slight premium for ‘home grown’ products in order to gain those important credits to achieve a ‘sustainable’ development with a high environmental assessment score. Qatar is fast becoming a very attractive location for international investors of all sizes and the Emir has issued a
GREEN BUSINESS
new law allowing non-Qatari investors to take full ownership of companies in certain sectors. This includes consulting services, technical and information technology, cultural, sports and entertainment services and distribution services, which, therefore, paves the way for international companies to set up without the requirement of a 51 percent/ 49 percent ownership requirement. With a large portfolio of business interests in foreign countries such as the United Kingdom (UK), Qatar is truly setting itself up as a forward thinking and diverse economy, which understands the needs of both large corporations and the smaller business entities. The recent developments are encouraging for the Qatar economy and are likely to provide impetuous for an influx of foreign investment, coupled with locally grown entrepreneurs. As business flows into Qatar, so too does diversity. Among these new sectors are companies offering sustainability solutions; as a relatively young industry, Qatar could prove to be a welcoming host. However, there must be a note of caution as the sustainability sector is in a fledgling state globally, with few standards and auditing procedures. An influx of new business providing sustainable solutions and services needs to be regulated, and standards must be implemented. This is a complex field and not one for this article, but the pit falls are plentiful.
JUNE 2010
55
ENTREPRENEUR
- Images courtesy of Rope2Access. -
A BIRD’S-EYE VIEW OF DOHA
Abseiling window cleaners are slowly becoming a familiar sight in Doha’s highrise area of West Bay. Cleaning windows sometimes hundreds of metres in the air, these workers take their lives into their hands. With nerves of steel they do not hesitate to step over the ledge of a skyscraper and spend their days dangling in the air, removing dust and dirt from its façade. David Poort investigates the high-rise rope access industry of Doha.
ENTREPRENEUR
T
he modern rope access industry has grown rapidly since its inception and not without reason. Since its early beginnings in Britain in the 1980s, the adoption of mountain climbing techniques was quickly recognised as a valuable method of gaining access to work areas previously considered difficult, expensive or just plain unattainable. Rope access now enjoys international recognition as a fast, cheap and practical solution for workplace access at heights. It is used daily around the globe for performing tasks ranging from window cleaning and façade inspections on basic sites, to the most complex of tasks in the most challenging of locations. Rope access is a relatively young industry in Qatar. There are only three companies currently actively working in Doha, one from France, one from Dubai and one Australian company that goes by the name of Rope2Access. Rope2Access started off 12 years ago in Sydney as a window cleaning company for high-rise buildings, but soon enough it grew with the introduction of new rope access systems. Different techniques were developed to create easier access, with lines and walkway systems, anchors, hang rails and ladders. The company became Australia’s one-stop-shop for anything of height. What begun as a simple abseiling window cleaning company quickly became a successful enterprise with more than 40 highly trained professionals working full time. The company arrived in Doha only in December of last year after a local contractor contacted them about high-rise window cleaning. “On our first day in Doha, after a short drive through the West Bay area, we decided: yep, we are setting up shop here,” says general manager Tyrone Stewart of Rope2Access. “We have just stared here in Doha. There are two of us from Australia and we have trained 10 Filipino’s in the Philippines. They all passed their exam and are now certified for the job in Doha,” adds Stewart.
“Façade cleaning of a 22-storey building costs around QR40,000 and probably takes five to six days. With a traditional cradle it will cost slightly less, but it will take about five weeks. “I can send in a crew of six guys and they will be out of there within a week, so it is a lot more beneficial – especially for clients like hotels that want these guys in and out as quickly as possible. They do not want to see a cradle going around the building for two months. By the time the cradle is done, they have to start cleaning again,” Stewart states.
Hanging by a thread?
To the untrained eye it might look incredibly risky to dangle from a rope off the side of a skyscraper to clean windows. Obviously this job is not for people who are scared of heights, but it is only until people get into the nuts and bolts of how the workers are trained, and how stringent the safety is with it that they realise it is not as dangerous as it looks. There are fewer accidents in this industry than in construction or transportation, where people handle a lot of heavy machinery. Stewart says the only time anything goes wrong with rope access is generally when there is a human error. This can happen when people are trying to cut corners, or when workers are not properly trained. “When I saw how the Filipino guys were operating in Manila I thought: ‘Oh my God, why aren’t you all dead yet?’ We introduced the Australian certification system in the Philippines straight away,” informs Rope2Access’ business development manager Shahan Shahsuvaroglu.
Efficiency
Façade cleaning is traditionally done by window-cleaners in cradles or gondola’s, but Stewart says they cannot always reach every angle of the modern day architectural creations of Doha’s West Bay area. All too often, construction companies in Qatar continue to build complicated structures with overhangs or round shapes, without thinking about how to access the façade to clean it. Hence rope access. “We started out in Qatar by giving a week of demonstrations because we brought a lot of new techniques to Doha,” Stewart says. “We introduced the pure water system, which filters minerals and calcium from tap water, converting it to pure water. Cleaning with pure water is much more efficient than using detergents as they create a film on the glass to which dust can stick. So what we do is not your traditional façade cleaning with a squeegee. “In some cases it may be more expensive to hire a rope access company to clean a building, but it is a lot quicker. Rope access is also a lot less intrusive than a big machine or cradle going up, down and alongside a building.
- Images courtesy of Rope2Access. -
JUNE 2010
57
ENTREPRENEUR
- Images courtesy of Rope2Access. -
With the arrival of Rope2Access in Qatar the rope access industry is now a certified profession. There are different levels of training, from basic to advanced, which takes several years to achieve. All workers have to abide by a Code of Practice, set by the Australian Rope Access Association. “If you have six guys hanging over the edge of a building and someone hurts themself, you have to get that person down. You need to know how to rescue. In the end, it is safer than crossing the road here because these guys are trained; everybody has a certificate,” says Shahsuvaroglu.
have never had an accident. I have actually never seen a fatal accident, and that is all due to training”, says Stewart. Rope access companies in the UAE sometimes dress up their workers as Spiderman to attract attention to their business. But according to Steward ‘Spiderman doesn’t have a thing on these guys who earn a living hanging off the sides of the tallest buildings in Doha’. “We never had to pull any stunts to get our business out there.”
Danger pay
A trained rope access professional will earn a higher wage than a regular window cleaner. Rope Access technicians in Qatar earn about QR2,500 plus food and housing, whilst regular window cleaners, working off a cradle, will make about QR600 plus food and housing. “These guys get picked up from the labour camps somewhere in the industrial areas and work God-knows how many hours. We do not work like that. We actually found one of these guys coming down from a building with his harness wrapped around the cradle and not to himself. We asked him why he was not wearing his harness, and he said: [There is] no need, [I use it] only when there is too much wind,” tells Shahsuvaroglu. Rope access workers in Doha do not get additional ‘danger pay’, as employers do not see it as a dangerous job. Insurance companies call this high-risk, so they class the industry in that category. But according to Rope2Acces, it is not high-risk if people are properly supervised and highly trained. The company is insured for public liability for up to one million Qatari Riyals. As yet, there is no information of any fatal accident in Doha within this young industry, although it remains questionable if such an accident would be publicly announced. “I have been dangling from ropes for more than 15 years and I have never had an accident. People in our company 58
JUNE 2010
- Images courtesy of Rope2Access. -
BUSINESS VIEW – REAL ESTATE
edd brookes Residential and Commercial Market Update Edd Brookes reports The first five months of 2010 have witnessed a return to activity in the real estate market. Recently, DTZ published its latest Qatar Market Review report. Therefore, for my editorial this month I am going to discuss some of the highlights with the readers of TheEDGE. ECONOMIC / DEMOGRAPHIC
Qatar benefitted from continued stable economic growth despite the unstable global economic climate in 2009. The growth coupled with a relatively small population, means that it continues to have, per capita, one of the world’s highest rates of gross domestic product (GDP) and is among the best performing economies in the Gulf Cooperation Council (GCC) region. The oil and gas sector remains the main economic driver as Qatar continues to expand its liquid natural gas (LNG) production to meet increasing export opportunities. Oil and gas revenue contributes significantly to the country’s reserves and supports the government’s strategic plan for economic diversification by focusing on the development of the non-hydrocarbon sector such as real estate, tourism, education, medical and scientific research, professional and financial services, thereby stimulating domestic demand for residential, office and retail accommodation. Qatar is forecast to achieve real GDP growth of 18 to 23 percent in 2010. These forecasts are based on strong growth from LNG output and exports, which are expected to increase from 44 million tonnes in 2009 to more than 70 million tonnes in 2010. The positive GDP growth figures have been achieved despite global
BUSINESS VIEW – REAL ESTATE
- Construction is underway on the New Doha International Airport. -
economic uncertainty and portray the stable foundation of Qatar’s economy. The Qatari government is expected to receive a budget surplus of QR9.7 billion in the 2010/11 fiscal year despite a proposed 25 percent increase in public spending. In contrast, it is expected to announce a deficit of QR5.8 billion for 2009/10. The government budget for 2010/11 is formulated based on an oil price of US$55 (QR200) a barrel, which could be considered low with current prices exceeding US$80 (QR291) a barrel. Allocated expenditure for the non-hydrocarbon sector in 2009/10 is estimated to take up about 40 percent or QR37.9 billion of the total budget, reflecting strong commitment by the government to invest in economic diversification through public spending on transportation projects, including the New Doha International Airport, Bahrain Causeway, Inter Gulf Rail Network and a local metro system. Other areas identified for major investment, include healthcare, sports, education and housing projects. Strong government spending will create a multiplier effect on the rest of the economy, contributing to increased consumption and demand for better quality housing, office and retail facilities. Per household consumption levels increased steadily by 15 percent per annum since 2008 and are expected to reach approximately US$33,000 (QR120,000) by 2013. The government continues to spearhead several initiatives to attract more business and investment opportunities beyond the hydrocarbon sector through the establishment of entities such as Qatar Financial Centre, Education City and Sidra Medical and Research Center, as well as free trade areas such as Qatar Science and Technology Park and the Qatar Economic Zones. The Qatar Tourism and Exhibitions Authority plans to grow the tourism sector in Qatar by focusing on attracting a projected 1.4 million tourists by 2011 for business, conferences, education, sports and culture. Investment in tourism infrastructure will 60
JUNE 2010
increase by US$17 billion (QR62 billion) and a tourist package ‘Qatar 48’ is being promoted to entice visitors to extend their stay and experience Qatar in 48 hours. Inflation, which peaked at 15 percent in 2008 and was perceived as a threat to the economy, has been brought under control and reduced to a more manageable level, with inflation expected to average four percent per annum over the short- to mid-term, reflective of an emerging market economy. Increased supply of real estate and a global reduction in construction costs has been a key driver in achieving this goal. Recent reports estimate Qatar’s total population to be approximately 1.67 million. An updated census, due to be published in 2010, will enable accurate data on demographic trends to be analysed. It is recognised that historically there has been a strong correlation between economic performance and population growth. Latest forecasts predict sustainable population growth of three to 10 percent per annum in the next five years.
COMMERCIAL MARKET
Total current office stock in Doha is estimated at 3.2 million square metres (sqm) of which, 50 percent is considered as ‘Grade A’ stock. The Diplomatic District, which is regarded as Doha’s new central business district (CBD) accounts for just more than 70 percent of the current ‘Grade A’ stock. In comparative terms all other locations are considered secondary. Office accommodation is also found in districts such as Grand Hamad Street, Airport Road, Al Sadd, Salwa Road and along the C and D Ring Roads. By the end of 2008 there were 46 completed, high-rise commercial office towers within the Diplomatic District providing 680,000 sqm of leasable accommodation. That figure now stands at 1.1 million sqm, equating to a 60 percent increase in supply over 15 months. There is currently, approximately 158,000 sqm of space being marketed
BUSINESS VIEW – REAL ESTATE
- Upon completion, The Pearl project will comprise 16,000 residential units accommodating approximately 40,000 residents. -
- The 52-storey Tornado Tower (pictured) is one of the most recent additions to Doha’s new central business district in West Bay. -
producing a vacancy rate of 14 percent in comparison, with 22 percent recorded in December 2009 and sub five percent at the end of 2008. A further five developments are under construction and scheduled for completion before the end of 2010 creating an additional 192,000 sqm available to lease. These will take total office stock in the Diplomatic District to 1.3 million sqm if construction works are carried out according to schedule, without any major delays. In contrast, demand for office accommodation has reduced significantly since the third quarter (Q3) of 2008 in response to the global economic slowdown. In Q3 2008, DTZ registered new demand for office space in excess of 180,000 sqm, while throughout the duration of 2009 DTZ only registered new demand totalling 137,580 sqm, which was 50 percent less than the recorded increase in supply. The first quarter (Q1) of 2010 witnessed renewed occupier confidence, with registered demand totalling 137,200 sqm –
the highest level recorded for a single quarter since Q3 2008. Historically the government, oil and gas, and financial services are the top three sectors accounting for more than 75 percent of the total demand. Since 2008, government related requirements have been scaled back as an anti-inflationary measure. The latest research highlights that in Q1 2010, government related bodies accounted for 59 percent of registered demand. These results are an indication that the government sector is increasingly active now that the threat of rental inflation has receded. Government ministries leasing three towers in the Diplomatic District, equating to almost 100,000 sqm of supply, have been a key driver in the reduction of the office vacancy rates in the past three months. Financial services and technology companies are the most active private sector companies seeking new space. These sectors are supported by several government-backed initiatives, such as the Qatar Financial Centre Authority, Qatar Science and Technology Park and Qatar Foundation. The majority of companies registered in Q1 2010, are seeking accommodation under 500 sqm. On a positive note, increases in activity from large space users are evident in the figures. Rental growth in the period from 2005 to 2008 was one of the key factors behind Qatar’s high inflation rates. These were followed by declines of 20 to 30 percent in 2009. Rates on prime accommodation have stabilised over Q1 2010, though further declines have been witnessed on secondary stock. Prime rates in the Diplomatic District reached QR250 per sqm per month, however it is possible to secure new accommodation from rates as low as QR180 per sqm per month. As the market continues to mature, greater levels of stock have provided potential occupiers with a choice of accommodation and resulted in the development of a twotier office market. High quality, modern offices, designed and built to meet occupier requirements are able to command the prime rates with secondary stock suffering from increasing levels of vacancy and reduced rentals to attract interest. Landlords are prepared to offer discounts from prime rentals to occupiers, with larger space requirements and to those that are prepared to commit to lease terms of more than five years. Tenants benefiting from rent-free periods of two to three months are now commonplace. After location and rent, availability of sufficient car parking is generally considered as the most important criteria for occupiers evaluating property options.
RESIDENTIAL MARKET
Population growth slowed in 2009 and as a result the level of new demand for residential accommodation reduced considerably in comparison to the previous three years, during JUNE 2010
61
BUSINESS VIEW – REAL ESTATE
- To date, four towers on The Pearl, or approximately 800 apartments, have been handed over to purchasers. -
which the population doubled. In parallel with reduced demand, the level of supply in housing stock has increased at a faster rate as a number of developments started, in response to the housing shortage, and reached completion. The impact of these shifts in supply and demand saw rental levels drop by 20 to 30 percent in 2009. In Q1 2010, the demand for residential property showed signs of improvement, with increased economic activity creating new jobs and attracting people seeking employment to Qatar. The focus for new residential development in Doha continues to be the three prime residential districts of the Diplomatic District, West Bay and Al Waab/Ain Khalid. Regarded as the new city centre of Doha, the Diplomatic District is an area, which predominantly comprises luxury, high-rise apartment developments with recreational facilities. The majority of developments in this district are owned by local developers and investors, who subsequently lease them to international companies and expatriates. DTZ estimates that there are approximately 6100 residential apartments in the Diplomatic District. Approximately 60 percent of the existing residential stock consists of two and three bedroom units. The majority of demand is for one and two bedroom units, with requirements for three bedroom apartments limited. The West Bay area incorporates the districts of New Doha and West Bay Lagoon. The latter being one of three areas designated for freehold property ownership by expatriates. It predominately comprises large, high-end, standalone villas, which target market includes high-income expatriates and wealthy Qataris. The most recent addition to the West Bay Lagoon area is the Lagoon Plaza ‘Zig Zag’ Towers, which houses 750 apartments offering one, two and three bedroom units. Units commenced handover to purchasers in the latter half of 2009. Adjacent to Lagoon Plaza is The Pearl, a mixed-use development, built on four million sqm of reclaimed land off the eastern coast close to West Bay Lagoon. The final project will comprise 16,000 residential units accommodating approximately 40,000 residents. Apartments, villas and townhouses in the two main phases of Porto Arabia and Viva Bahriya have gradually been launched since 2004. To date four towers, or approximately 800 apartments, have been handed over to purchasers. The residential district of Al Waab mainly comprises villa compound developments typically leased to professional expatriate families. The popularity of this residential district can be attributed to its proximity to major international schools, Villaggio shopping mall and access via Doha’s main arterial roads of Salwa Road and Al Waab Street. Average rental prices for luxury apartments in Doha have reduced further, by 10 to 15 percent, in the first quarter of the 62
JUNE 2010
year, with supply continuing to outstrip demand. We expect this trend to continue throughout the year as the levels of supply increase and new developments come to the market at The Pearl, and in the Diplomatic District. Rentals for the best compound villas have also decreased due to oversupply in the market, albeit the average reductions have been less than 10 percent. In comparative terms, large stand alone, high-end villas have performed better, with rates for good quality stock stabilising due to restricted availability. Rentals start at QR23,000 rising to QR40,000 per month. To date, residential sales at The Pearl dominate the freehold market. Average apartment sales prices peaked at rates of QR18,000 to QR20,000 per sqm in Q2 2008. Since then, the global economic situation and delays in handover of units have resulted in lower market confidence among property investors, with stricter bank lending requirements discouraging off-plan purchases. The result is a difference in pricing expectations between vendors, particularly developers and purchasers, which has led to a limited number of transactions making it difficult to benchmark current pricing. There are a growing number of vendors that purchased units at pre-2008 prices, who are now seeking to sell these units on the secondary market. The majority of these vendors are seeking prices that equate to QR10,000 to QR13,000 per sqm. Evidence of distressed vendors agreeing to lower rates, sub QR10,000 per sqm remains limited and typically only applies to multiple unit sales. The banks continue to be more cautious than at the height of the market and have put provisions in place to protect themselves. These include being more selective on the developments, which they are prepared to lend on. Mortgage products are also becoming more sophisticated, with preferential interest rates being offered to investors/ purchasers prepared to invest a higher percentage of equity. Qatari’s typically benefit from preferential rates and loan to value (LTV) ratios in comparison to non-residents. There is a more positive outlook for the freehold market in 2010, with signs that investor confidence is returning. Secondary market sales of completed product available at the rates mentioned above are expected to lead the recovery. More banks starting to offer retail mortgage products and existing lenders promoting their products reflect that outlook. We expect that Doha will continue to experience relatively strong residential demand over the short- to medium-term as the economy remains stable and the population growth continues on a positive track. In next month’s editorial, I will be looking at the latest forecast data for the retail and hospitality sectors, examining the impact of new stock coming onto the market in the next few years.
SPECIAL REPORT
Qatar:
Value-Added Energy
- Oliver Cornock, OBG, Qatar. -
After establishing itself as the worldâ&#x20AC;&#x2122;s leading supplier of liquid natural gas (LNG) products, Qatar is now targeting more of its resources towards its own domestic market. Oliver Cornock reports
SPECIAL REPORT
L
ong focused on exports and being largely responsible for the upsurge of LNG usage around the world through its promotion of the product, Qatar’s gas industry is now looking to the local economy. Already the world’s largest LNG producer and exporter, Qatar’s output is projected to exceed 77 million tonnes per year by the end of 2010. While the vast majority of this is intended for the export market, an increasing percentage is being reserved for local industries. On May 10, Qatar’s ruler, Sheikh Hamad bin Khalifa Al Thani, inaugurated Al Khaleej Gas 2 (AKG-2), a US$4.7 billion (QR17.1 billion) plant to process gas from the Khuff Reservoir, part of the massive North Field. Along with the already operational AKG-1, the two facilities boast a combined daily production capacity of 56.6 million cubic metres, all of which will be channelled into the domestic economy. According to Qatar’s Deputy Prime Minister and Minister of Energy and Industry, Abdullah bin Hamad Al Attiyah, AKG-2 marks a milestone on the road towards diversifying and strengthening the country’s economy. “This project, developed in cooperation between Qatar Petroleum and ExxonMobil, will be a major supplier of clean energy sources for power plants and various industries, and will contribute to the country’s comprehensive development,” he said in his address at the opening ceremony. Among the industries that will benefit is the Ras Laffan Olefins Company, which will be supplied by gas, ethane and gas-to-liquids producer Oryx GTL. Output from the project will also be used to turn the turbines of the country’s two largest electricity producers, the Ras Laffan Power Company and the Qatar Power Company. Not only will this help keep the lights on at home, the additional gas will assist the utilities in ramping up their own production, ensuring they can meet the growing needs of non-hydrocarbon industries. When initially conceived a decade ago, the Al Khaleej project was intended to meet the needs of the export market, mainly in the Gulf region, where the gas would be supplied to Dolphin Energy, the Abu Dhabi-led scheme to ship Qatari gas to the United Arab Emirates (UAE) and Oman. However, today only around 56.6 million cubic metres are being sent to the UAE each day.
The Al Khaleej project is by no means the end of Qatar’s plans to fuel its industrial base, with tenders having been called in April for the initial offshore development of the Barzan project, with four engineering, procurement and construction contracts worth around US$1.7 billion (QR6.2 billion) scheduled to be sealed by the end of the year. With the finalisation of the front-end engineering design (FEED) and the tender process already under way, the new project could be in the production phase within four years, according to Saad Sherida Al Kaabi, Qatar Petroleum’s director of oil and gas ventures. “As far as Barzan is concerned, it is in the FEED stage and the plan is to float the engineering, procurement and construction process possibly in summer. So, 2014 is perhaps the right date for the project to come on-stream,” Al Kaabi told reporters in early May. Not only will the Al Khaleej and Barzan projects ensure a constant supply of energy to Qatar’s existing industrial developments, but they also serve as an outstanding advertisement for the country’s future potential. With its massive gas reserves and clear commitment to allocating a large percentage of these reserves to the domestic market, Qatar is in a position to attract new industrial projects – a clear advantage in the heated Gulf-wide competition to diversify economies and develop a broad industrial base. While Qatar needs to maintain a balance between meeting the needs of overseas clients and feeding growing local demand, the country is in the process of investing in its future on both fronts.
JUNE 2010
65
LEGAL INSIGHT
E D Y L C
o C &
, way Nor den, , Swe land e Zea Spain, nd, Th a l w , r ica, Ne arino witze mer S , A M , o a f c e o r an na Mo gal, S uth Ko States City. and u o n d t S a es r e , c t o i i e P por ds, Un nd Vat ulf Tim ported a g Sin erlan ma ior he G s re Co’s eth Kingdo 2010 t gencie f Inter ad N n , a e a mma me Unitedn April 1i news inistry oise the visthe d y l e ar O M ev of C ), and E hed so Qat atari ns to r at tim s that r r e e h a Q a h l t t n p s w t o e t me A th ed ns par e (QFC office, at unc eme. revisio 3 sche or, h o g t n n 3 i an e sch yf he had rrival ult of t e of th o appl lled. nag re Offic same ion. a t d s a r m m v e d t e o o r s ra e ee on rted w ls alt, al Cen e in th l situat s of now n they t ationa o l the r “a S a p e n e d r n d o r t i e d o l ed i a s i o t t c a u i f v u o na he ll” be cluded ), Un Dav r Finan associ on-arri of fully to “a only t er all ntries w , visas n K e s i r r U a be ou btain , this om ( a n an actice numb m c t a e c h a e v t s a , i a d o le h g v e) Q pr e er dm We , rath use in ugh th to tim r and examp ted Kin US) an the ham atar’s g ” a ( i a o r t i y c n ing of h o a a n e e t r Q c F U l H a i b k Q u m a r i o ( d e m e . t o r h “ y” n on us t . ente f 33 orit of t s of Am system nd and licatio ther om g n maj nals o ate fr ently scheme ude: e light b y of visitin e t e ur u n k a g f t e a p m tio uctu as e, en urr f the s incl m, S Schen e we the a v c y w w l n e t t fl e a n r the ver th wing can ions o ntrie ther elgiu d th rece oes uld y o O llo eports, ntil grante famil s, co he d untries provis e cou tria, B inland, o f r e t m F us co r the k lr ong it fo ds and lleagu age of sche , A e wee initia rk, o t e und urrent ustralia enma ce, H pan, s e frien ess c advan h D e C in l to , A Gre aly, Ja sia, t a, bus taking . y orra Canad ny, idua nge It a d l v i a n e y , d a b A d a m n erm , M elan nei, y ch an i atar n sche Bru ce, G nd, Ir mburg r Q rrival llows 00 (ma igratio e t e n a a a e 1 Fran , Icel , Lux me ort. imm -onQR visa he sche isa for om the al Airp isas in ng e o t s K v n T te a v me) fr nation he h s e c s a e i a i t t L HAM ch ter lly pur time to oha In ingly, H IG oca l A o s M from ers at D surpri rred t EM n e offic ot u re ref visas. a N al sed n-arriv cha pur st or o i tour
: The Qatar
Question
Visiting
U
ID DAV
SALT
of
? isas V
LEGAL INSIGHT
local and international news agency coverage of the planned scheme revisions. In addition, the embassies of the scheme countries made their own announcements. It became rapidly apparent that in fact the on-arrival-visa scheme was to be withdrawn. As of May 1, [under the proposed new visa scheme] all individuals entering Qatar, who did not hold a Qatar or Gulf Cooperation Council (GCC) passport, would need to contact the Qatari Embassy in their country of residence in order to apply for, and obtain, a visa to enter Qatar before travelling. For nationals of non visa-on-arrival scheme countries, such as South Africa, India and Lebanon, this has always been the case and so the application process, including submission requirements – valid passport, passport photographs, bank statements, letter of introduction, fees and application lead times – are well known and the application process is accepted as standard practice. Not so in the visa-on-arrival scheme countries. The new rules were a cause for concern and described as all of the following and more: An onerous administrative burden, a potentially insurmountable hurdle to international investment and business development, and even a diplomatic miscalculation.
The ‘Doha grapevine’ only made matters worse. Toward the end of the week following the initial announcement an outside observer would probably have concluded that rather than simply asking visitors to organise their visa requirements before travelling, Qatar had actually closed its borders to any nonQatari passport holders. This was of course never the case or the intention. Various reasons have been put forward as to why the Ministry of Interior planned the changes, including the assassination of Mahmoud Al Mabhouh in January 2010 associated with the suspected involvement of Mossad and the forgery of passports from UK Ireland, France and Germany; or the on-going use of on-arrivalvisas by business men and woman of scheme countries to work in Qatar in breach of Qatari Immigration (and Labour) Laws. The most likely reason, however, is the
concept of international reciprocity, which would normally govern visa requirements between countries in terms of access and travelling nationals. Qatari nationals cannot, for example, enter the UK or Australia by purchasing a visa on arrival however UK and Australia nationals can enter Qatar on that basis. South Korea is a notable exception given we understand that Qatari nationals may enter and stay in South Korea for 30 days without a visa. On April 19, just two-and-a-half weeks after the initial plans to revise the on-arrival-visa scheme were reported by Qatar media outfits, the same agencies reported that the plans were to be suspended until further notice. It would appear from the reports and also from discussing the matter with various Qatar-based embassy officials, and diplomats that the plans have been suspended for some scheme members to
JUNE 2010
67
LEGAL INSIGHT
allow nationals to acquaint themselves with the application process, and with some scheme members, who have reached an understanding with Qatar in relation to reciprocity, indefinitely. In terms of becoming acquainted with the visa application process the fact of the matter is that individual travellers from visa-on-arrival scheme countries have always been able to obtain visas before travelling and the requirements are clearly set out on the Qatar Embassy websites. Using the UK as an example, the embassy website www.qatarembassy.info has a link to the application form and sets out all the submission requirements to obtain a visit visa, including two passport photographs, bank statements showing that the applicant has access to (either directly or indirectly) at least GBP850 (QR4600), address and contact details of the person to be visited, postal order for fees and a valid passport (with at least six months duration and a clean page for the Qatari visa. Where a business visa is required materially the same documents are 68
JUNE 2010
required, but in addition a letter of introduction must be submitted. It should be noted that as with most Qatari (and other country’s) embassies, even though the visa application requirements are set out on the Qatar Embassy in London’s website, the submission cannot be made online and must be made in original form. By way of information the embassy is located at 1 South Audley Street, London W1K 1NB; contactable by telephone +442074932200 and fax +442074932819 between 9am and 4pm Monday to Friday; and open from 10am to 1pm. Where applications are couriered rather than delivered to the embassy prepaid return postal arrangements will also need to be complied with. There is currently no further information as to when, and if any, plans to amend the visa-on-arrival scheme will be enforced. Many Qatari nationals and residents believe that the scheme will not be materially amended in the current global economic climate.
In any event April’s announcements and the discussions, which they promoted raised diplomatic and public awareness of the scheme. Including the fact that Qatari nationals do not enjoy the same reciprocal benefits in terms of access to scheme countries as the nationals of those scheme countries enjoy with Qatar, to the publics attention. At the very least it raised awareness and allowed the Qatari government to engage with other governments to discuss extending Qatar national’s reciprocal access rights in the future.
Note: This article is of a general nature only and is not legal advice and, therefore, should not be relied upon as such. Any person or entity requiring legal advice should consult a lawyer and obtain advice specific to their individual circumstances. For any information in respect of legal issues, please contact: Emma Higham (emma.higham@cydeco.com.qa) or David Salt (david.salt@clydeco.com.qa)
BUSINESS KNOW-HOW
THE ‘WAR ON TALENT’ IS OVER The shortage of executive talent and a continued positive outlook for the GCC keeps the region very attractive. Wassim Karkabi reports
T
he 2nd CEO Census, conducted by Stanton Chase International, a global executive search firm, reveals new trends about chief executives in the Middle East Region. More than 600 respondents from more than a dozen sectors said that their view was optimistically above average in regard to the outlook for business growth in the Middle East region, naming Saudi Arabia, Qatar and United Arab Emirates (UAE) – in that order – as champions of the growth prospects in the region. The census engaged CEOs on a number of items including executive agenda, leadership talent shortage, attracting talent, mobility, career development, executive engagement, job search habits, tenure and compensation. Respondent demographics shows that 78 percent of CEOs in the region are aged 36 to 55, with 47 percent of the total respondents aged between 36 and 45, accounting for the largest age group.
Compared to a survey of other sources conducted around 10 years ago, this recent study shows a major shift in age group concentration where we are seeing CEOs that are much younger. Males still dominate the scene, with females accounting for only eight percent of total respondents. The majority of CEOs, who participated, were married with children (70 percent), and another 15 percent claim to be married without children. Thirteen sectors were represented in the survey. Executives from a wide variety of sectors actively participated in formulating the survey’s results. Banking and financial services, and consumer products and services lead the group with 14 percent, followed by industrial and manufacturing (10.8 percent), technology, telecom and IT (10.8 percent), energy and natural resources (8.5 percent), as well as other sectors such as government, education and NGOs, hospitality, life science and pharma, logistics and transport, media and advertising, professional services, real estate and construction, as well as family conglomerates.
BUSINESS KNOW-HOW
- Source: Stanton Chase International. -
Market Outlook
When comparing respondent outlook figures from 2009 against figures from 2010, optimism has dropped tremendously (see above graph). Those who claimed to be ‘optimistic’ in 2010 account for 40 percent of CEOs, as opposed to 50 percent in 2009 – dropping 10 percentage points from last year. Those who claim to be ‘very optimistic’ dropped one percentage point. The number of those who responded with ‘negative’ feedback in regard to the market outlook, also increased by 14 percentage points. This signifies a total shift
- Source: Stanton Chase International. -
70
JUNE 2010
of around 26 percentage points towards the negative. Despite this change, the total outlook remains, to a large majority of CEOs, very optimistic, with more than 75 percent of CEOs claiming to have a positive to a very positive outlook on market and business growth in their relevant sectors.
Best Career Opportunities at Executive Level
Energy and natural resources is affirmed as the sector that offers the most lucrative and attractive opportunities as viewed by our CEO respondents (see below graph).
BUSINESS KNOW-HOW
Energy and natural resources recorded a tremendous change in its attractiveness to CEOs moving by 35 percentage points, from 30 percent to just more than 50 percent. This is great news for countries like Qatar, Saudi Arabia, and the Emirate of Abu Dhabi, which are witnessing a greater number of professionals looking for senior positions within the hydrocarbon market. On the other side of the spectrum, the sectors that registered the greatest loss in attractiveness to CEOs in the Middle East region was the real estate and construction industry – with an unforeseen exodus of CEOs abandoning interest in the sector. The attractiveness index for the real estate and construction market witnessed a decrease from 48 to 11 percent – a significant 37 percent decrease in attractiveness.
points – from 25 percent in 2009, to 40 percent in 2010. Additionally those who expressed an interest in retaining a long-term position contracted from 30 percent in 2009, to 17.2 percent in 2010. This result is also supported by an increase in the percentage of executives that are open to suggestions – from 41 percent in 2009, to 55.5 percent in 2010 – citing a lack of career advancement opportunities and roles that possess a high-level of responsibility, while the absence of authority was found to be the most prominent reason (see below graphs).
Shortage of Talent Perseveres
Despite a short win for employers, when during the 2009 period the ‘war for talent’ tipped its hand from being talent favoured to employer favoured, talent remains to win the total ‘war on talent’. Demand is high and supply continues to be stunted across all sectors, and the perception is that there is a tremendous shortage of talent at senior and executive levels. This means that the Middle East and especially the Gulf Cooperation Council (GCC) countries like Qatar, Saudi Arabia, and maybe even the Emirate of Abu Dhabi can provide a safe harbour to a large number of the world’s senior executives, who are currently based in more mature markets to the West and maybe on the lookout for new opportunities. Of course when asked about attractiveness of the relevant countries they are operating in, CEOs were split, almost down the middle, on whether the country they were working in offered attractive conditions to attract such talent. Sixty percent claimed their particular situation did offer attractive conditions, while the remaining 40 percent did not – Saudi Arabia, Qatar, and the UAE where on the list of countries that were said to offer attractive conditions to those senior executives.
- Source: Stanton Chase International. -
Meeting Organisational Expectations
The survey showed that leading and advocating change is the number one competency required from CEOs in the region. Innovation and strong values placed second, and third on CEO agendas, respectively, as being the areas of major focus required by employers.
Tenure AND Stability
The survey revealed that tenure results have also changed tremendously. One would think that with the global economic crisis at hand, people would stay longer in their current roles. However the reality is, the percentage of senior executives, who plan to move within the coming 12 months, and who would consider opportunities immediately, has shot up by 15
- Source: Stanton Chase International. -
In summary, from the outset of 2010, there remains a highlevel of scepticism in regard to market growth; a tremendous shortage in executive talent; opportunities in the Middle East and more specifically available in the GCC region, with a focus on Saudi Arabia, Qatar, and UAE – in that order of importance. Ultimately, this will result in a great deal of movement of talent across sectors and within sub-sectors, both within the region and into the region from Europe and North America. JUNE 2010
71
SPEAK EASY
The Art and Science of Communications
By Doctor Stuart Smith
I
n 1988, public relations (PR) was still maturing as a discipline and I was newly emerged from gaining my PhD in environmental chemistry at Oxford. My first job was not in PR at all, but working for a consultant engineering firm’s environment division where I was put to work writing guidance notes for existing environmental protection legislation, helping to define, and draft new legislation through a contract for the United Kingdom (UK) Government’s then Department for the Environment. I knew nothing of the world of PR until I socially met the father of a friend. He patiently explained what the discipline was and how it benefited companies – then he proceeded to recruit me as his agency’s first environmental affairs consultant. That took all of 24 hours and I have not looked back since. In the past 20-plus years, I have been privileged to work in three of the world’s largest international PR agencies. I have also worked on the client side in both the private and public sectors. So when I was asked to write up an article around the future of communications and current trends in PR, I initially thought it would be a simple task. And it would have been a simple task five years ago before Web 2.0, the development of social media, the falls in trust of traditional media, the proliferation of small web-enabled hand-held devices and the changes in the way people consume information. However, it is 2010 and the communications industry is in the grip of a global revolution, which has been accelerated by the changing habits of consumers, by technology and by the recession. Below are some of the mega-trends, which we, as a company, are seeing emerge across international markets. Their applicability to individual geographies vary, but the direction we believe is true:
Digital goes mainstream
Companies have experimented with social media in the past three years and in 2010, this channel will push itself into the mainstream. Some data to support this: By 2014 traditional newspaper advertising spend in the United States
(US) will be matched by Internet advertising spend and according to a 2009 Internet Advertising Revenue (IAR) report, during the past six years US Internet advertising has almost quadrupled. Globally online advertising will make up around 10 percent of the market spend and there are predictions that global consumption of media will be 80 percent digital by 2020, according to Carat media agency. Companies are no longer satisfied with a ‘website’, they want to develop social media press rooms online, which contain words, pictures and video in formats that are sharable across multiple platforms. A great example of this is the ‘digital snippets’ newsroom developed by the Ford Motor Company.
Brands must drive conversations and engagement
We no longer exist in a world where companies can dictate solely through an advertising monologue, what they want people to see and hear. In the business-to-business market it is exactly 10 years since the Harvard Business Review published an article heralding the role of e-Hubs as the new online marketplaces of the future. In a world where reputation is driven by online content and conversations, PR is the discipline, which has stepped forward and staked its claim to lead brands as they navigate this new world of conversation. The digital revolution means that the public are not just consumers of messages or brands; they are now themselves, generators of content and amplifiers of the message.
The Recession drives a focus on measurement
The marketplace and recession has driven a demand for research, and insights, which inform marketing and communications strategies. The European Public Relations Research and Education Association (EUPRERA) performs a comprehensive annual study of the attitudes and views of communications of more than 1800 professionals from across 34 countries. The group is senior with 58 percent
SPEAK EASY
having 10 or more years experience and holding senior positions of responsibility. In its study last year, 20 percent of senior European corporate communications practitioners saw research as a rising need by 2012.
Shifts in Communications Disciplines
EUPRERA’s research also shows that between 2009 and 2012, the priorities of European communicators will change significantly. Corporate social responsibility becomes one of the new top five disciplines and the practice of internal communications rises in importance to occupy the number two slot. In the same research three of the top five most important channels (web, online media relations, social media) will be digital by 2012 compared with only one today.
Cutting through the noise
The changing influence and impact of different channels of communications mean that companies are seeking new ways to get their message across in a world where consumers ‘graze’ for information, and then seek ‘trusted sources’ to advise them on purchases. Linda Stone, who in her seminal book, saw that we are increasingly living in a “world of continual partial attention”, predicted all this. Reaching through the noise that bombards consumers today to create cut-through for messaging is a primary challenge for any communications professional.
Shifts in trust give brands permission to be bolder
In the past 10 years there have been big shifts in the trust that people place in politicians, the media, non-governmental organisations and other opinion formers. Interestingly, brands now have high enough levels of trust from consumers to have permission from the public to campaign on social and environmental issues. The ‘Real Beauty’ campaign by Dove and the ‘Turn to 30’ campaign by Ariel are just two examples of this trend. The lesson is that brands, in many markets, can be more effective in driving consumer behavioural change than their own governments or even single issue campaign groups – and by doing so can create unique emotional bonds with their customers.
Digital Drives Marketing ‘Back to the Future’
The digital revolution, accelerated by the social media phenomenon, may be driving us ‘back to the future’. We are seeing the beginnings of a move back to a closer, more integrated approach to marketing communications where all the channels have an equal say over marketing strategy in a spirit of creative collaboration.
Not Just Words
This is a simple, but important point. Communicating through broadcast is no longer the preserve of traditional advertising and television medium. Everyone and any brand can broadcast their own message at anytime through the web. The eyeballs of business-to-consumer and business-tobusiness decision makers are firmly placed on the web. This is
reflected in data from the advertising industry, which shows it is adapting. The use of digital video advertising nearly doubled from 2008 (three percent) to 2009 (five percent) according to IAB’s 2009 US report. As a PR professional, I pride myself on crafting detailed messaging in the form of words. This will continue to be important, but we need to work hard to find different ways in which to help brands communicate messages with their audience online, in ways which entertain and engage.
The CMO AND PR
As a consequence of all these trends, PR and digital are now at the forefront of the minds of most marketing directors and chief marketing officers (CMO). More than 50 percent of CMOs are re-allocating traditional marketing spend to fund new digital strategies (according to a McKinsey and Company survey) and an Advertising Perceptions report found that more than 50 percent of marketers are increasing their digital budgets. This is one of the underlying drivers behind the blurring of the roles of brand communications and corporate reputation. PR has, and will continue to have, a more important role as part of the marketing mix. The very recent announcement by Unilever that it has combined its top marketing and communications roles into one role is a further demonstration of this trend.
So where does this leave us?
As a trained scientist working in a highly creative industry, I often find myself torn between a highly analytical approach to communications and a desire to help brands make big, bold and creative statements. In reality there is no tension between these two approaches. They are both right. But trends are moving fast in the world of communications, and my firm belief is that we must work hard to remember that there needs to be a balance between the art and the science of communications. Our organisation is more than 80 years old and we have worked in the region for more than 25 years, in all that time we have learned one truth. There is no ‘one-size-fits-all’ approach. Some of the trends affecting the region are mirrored in Europe and vice versa. It is clear too that Western markets are struggling to adapt to the new era of communications and overturn the marketing truths that have served them well for 20 years. There are clearly lessons that can be learned and there is an opportunity in rapid-growth markets to experiment with new approaches to communication, which could lead the world globally. The right answer for you individually, will depend on your country of operation; the sector in which you operate; the current competitive context for your company and a whole host of other factors. Of one thing I am certain. Opportunities present themselves unexpectedly and at odd times – just as they did for me all those years ago – and my advice in this brave new world of communications is to ‘seize the day’. No one person or organisation owns the digital revolution. It is, and will be, what you chose to make of it. JUNE 2010
73
BEHIND THE WHEEL
Flying Cars,
Anyone? By Andrew Newell
BEHIND THE WHEEL
- An image of Terrafugia Transition, the two-seater flying car. -
D
o not be surprised to see cars levitating into space to avoid traffic congestion. After all, there is already a vehicle that was originally designed as a car, but may turn into an aircraft – and legally at that. Massachusetts-based Carl Dietrich actually came up with his ‘Little Transformer’, a car that can turn into a light aircraft. Known as Terrafugia Transition, the two-seater car, which is considered as light aircraft, appears to look like just an ordinary car except for the automatic fold-up wings. Terrafugia Transition is a legally accepted road car. However, the manufacturers, it has been said, are working on other legal parameters that would make it a dual-purpose vehicle. Among the glitches that Terrafugia Transition is facing are issues concerning insurance of the vehicle. Initially, Terrafugia (as a light aircraft) has an 8.4-metre wingspan and can fly 805 kilometres on a speed of 185 kilometres per hour on one full tank of petroleum. On the ground, Terafugia (as a car) runs on an automatic transmission. It is equivalent to the size of an ordinary sedan and fits reasonably well inside a standard sized garage – making it cost friendly, as one who would own it would be spared from paying the hangar fees. This revolutionary new vehicle has attracted not just a small number of potential buyers, but Terrafugia (which remains a demo car come plane pending resolution to legal issues) already has forty orders in the bag.
Other wannabes
There are also other private entities vying for a slice in the potential transport market. One is the Parajet Sky Car.
The Parajet Sky Car is basically a bug, with a large built-in fan on its back and a parachute-like device on top. This version of the car-plane comes in with a top speed of 161 kilometres per hour when used as a car and around 129 kilometres per hour when flown into the airstrips. It is being introduced in the market (although it is not yet commercially available) as a light sports aircraft. Another player is Pal V Europe BV. This is actually a three-wheeled gyrocopter, which is capable of both vertical takeoff and landing. It is said to be very agile, just like any other motorcycle. Its rotor folds up and is known to have the capability to fly very low, thereby requiring minimal burden on securing flying permits. There are several other automotive manufacturers planning mass reproduction of a similar flying vehicle, under the category of ‘light sports aircraft’.
Beating traffic burdens
These flying machines actually do wonders when it comes to beating the bumper-to-bumper traffic. Aside from trimming down travel time, it also keeps one away from the perennial traffic burden caused by the unregulated and continuously soaring number of land transport systems, which grows parallel with the population boom. No need to worry about being late to important appointments. No need to get mad over the road congestions. No need to yell at undisciplined road drivers on the loose. No need to worry about the exorbitant fuel consumption because of the roads’ standstill mode. All that is left to do is get to feel how it is to become a pilot or play the role of British Secret Service Agent James Bond 007, while doing the spy stuff.
JUNE 2010
75
INDUSTRY FOCUS – METRO & RAIL
Taking the pedal ofF traffic congestion A rush hour drive through downtown Doha can be a frustratingly slow experience these days. The congestion of the roads in the capital has become so excessive that is has become to be the main annoyance for people living in Qatar, according to a recent survey. In a bid to ease traffic, the Qatari government launched an extremely ambitious metro and ground rail project, which is scheduled to be completed in 2026. The construction of this project means that the frustrating state of Doha’s roads will ultimately become worse, before it gets better. David Poort investigates the mega railway plans of Qatar’s state-owned real estate investment company, Qatari Diar.
D
riving from the airport to the West Bay area takes only 15 minutes – well, maybe in the early hours of Monday morning around 3am it does. The same route during rush hour will keep you on the road for at least an hour, sometimes two. A recent survey, which included 5000 families, showed that the majority were unhappy with the situation on the roads in Doha, daily newspaper, The Peninsula, reported earlier this year. Qatar is experiencing massive growth that is characterised by a rapid population increase. In order to handle the rapid rate of development, the Urban Planning and Development Authority (UPDA) in coordination with other authorities and institutions in Qatar, has come up with a comprehensive Master Plan for Qatar. This national plan aims to provide a systematic approach to the development of an adequate and modern public transport system that will accommodate the future transport demands in Qatar. As part of this transport system, the Qatari government is planning to invest a staggering amount of US$40 billion (QR145 billion) in railway tracks in the next 15 years. At the centre of the plans are three major rail projects; a metro network within greater Doha, an above ground railway system covering Qatar, and links to the rest of the Gulf Cooperation Council (GCC) region. Qatari Diar and Germany’s national railway company Deutsche Bahn International (DBI), signed an agreement
- The sun set’s over Doha’s busy roads. -
INDUSTRY FOCUS – METRO & RAIL
Doha Metro
11
Network Map 31
1
Lusail - North
Lusail - Waterfront
Lusail - Centre
Lusail Towers
Lusail - OPC
Lusail - Energy City
12
North Gate
Al Waab 2
4
West Bay Central
Wadi Al Sad Medical City
Light Rail: Lusail - The Pearl Lusail - Center Lusail Towers
Wada
Qatar Sport Club
Education City Al Rayyan Al Rayyan South East 3 2 Qatarzone.com
West Bay South Al Bidda Al Diwan
Al Rayyan C-Ring
Doha Main Station
Al Adhwan B-Ring
Al Rayyan 1
Al Waab 1 Al Sadd
Al Waab 4
Abi Talib/ C-Ring
Al Rayyan South Abi Talib/ Al Qalifa Salwa 2
Najma North
Najma/ C-Ring
Al Matar/ C-Ring
4
Airport City North
Al Matar/ D-Ring
31
Najma/ D-Ring
Salwa 4
Al Sharq
Airport city
Salwa 3
Al Muntazah 1
Salwa 5
Doha East
Grand Hamad
Malik/ B-Ring
Muntazah/ C-Ring
Salwa 1
Doha Souq
21
Al Sadd C-Ring
Sports City
12
NDIA
Al Muntazah 2 Al Muntazah 3
Salwa 6
21
People Mover: West Bay Central Education City
Cultural Village
Al Duhail Al Jadeed South Al Rayyan Khalifa North Education City/ Al Jazira Future Hotel Education City/ Al Rasheed Arena
2
Long Distance Trains: Doha Main Station West Bay Central Doha South NDIA
Lusail - Marine District
Education City
Al Waab 3
Interchange Stations
Lusail - Marine/ The Pearl
Landmark Mall
3
Al Kharej Towers
Doha South
Al Muntazah 4
Ind. Area North
Al Wakra North
Al Muntazah 5
3
NDIA Rail Terminal
Al Wakra Centre
Ind. Area South
Al Wakra CC
12
Al Wakra South
11
Mesaieed
in November 2009 to form a joint venture, Qatar Railways Development Company (QRDC), for implementing, developing and managing the concept design of the railway plan in the Gulf region. Qatari Diar holds a 51 percent share in this joint venture while DBI holds the remaining 49 percent. “DBI has already been working on a concept for developing rail transport in the emirate on the Persian Gulf together with our partner company, Qatari Diar, since the autumn of 2008,” said Martin Bay, chairman of the DBI Management Board. “The newly formed company will now implement this sophisticated concept.” The railway transport and metro networks concept for Qatar is estimated to cost QR77 billion. DBI will contribute its expertise in setting up the railway infrastructure as well as providing consultancy services.
Doha Metro
1 2
The metro system planned for Doha will comprise four lines, 98 stations, stretching an overall length of 300 kilometres. The lines will include an east coast link, a high-speed link and a link to suburban regions of Doha. According to DBI, it will be one of the most advanced rail transit systems in the world. “We are proud and delighted that DBI has been chosen by the Qatari government as the partner for this ambitious infrastructure project. This once again proves that Deutsche Bahn’s expertise enjoys a great reputation throughout the world. Moreover, especially in the present difficult economic climate, such overseas projects also help to safeguard jobs
- As part of Qatar’s greater rail infrastructure project; a metro network will operate with links to the rest of the Gulf Cooperation Council region. -
inside Germany,” stated DBI chief executive officer Rüdiger Grube, during the signing of the deal in Berlin in November last year. The project was originally planned in 2007 in an attempt to boost the bid to host the 2016 Summer Olympic Games in Doha. The International Olympic Committee, however, chose Rio de Janeiro as the host city for the games. The Metro project is now central to Qatar’s dreams of hosting the 2022 football World Cup. Plans for the metro are still in the early stages, but it is reported that ground works for the project have already begun. If all goes according to plan, the metro lines will be completed in six years, a year longer than it took Dubai to complete its new metro line. Although Qatar has a well-developed road network, the residents of Doha should expect many road closures, as DBI and Qatari Diar are building the metro line and stations right throughout the city. Qatari Diar and DBI have pledged to keep the nuisance to the bare minimum, but excessive construction cannot be avoided while building such a massive project in the middle of an already crammed city. Qatari Diar was not immediately available for comment on this story.
Above-ground railway
In addition to the metro system, Qatar is also planning to build an extensive above ground rail network, linking Ras Laffan in the north of the peninsula via Doha to the New Doha Port in Mesaieed in the south. Another track will run JUNE 2010
77
INDUSTRY FOCUS – METRO & RAIL
- An image of one of Dubai’s metro trains. -
between the New Doha International Airport and Doha’s city centre, and a monorail system will link Lusail, Education City and the West Bay. Work on the above ground railway project will begin by 2012 and will be completed by 2026, according to DBI. During the first phase, the towers in West Bay will be linked to the monorail system, comprising only passenger trains. The ground rail network will cover a total distance of 345 kilometres and traverse the entire peninsula, with electric passenger trains running at up to 350 kilometres per hour.
Linking the GCC
The plans also include a 180 kilometre-long, high-speed line to Bahrain that will run over the 40 kilometre-long Qatar-Bahrain Friendship Causeway (QBFC) – one of the longest bridges in the world. In November last year, Qatar-Bahrain Causeway Foundation general manager Jaber Al Mohannadi said at an industry conference, that construction was initially scheduled to start in 2009, but the addition of rail lines delayed the project. Users of the bridge will also have to pay a toll, Al Mohannadi stated. QBFC is part of an estimated US$100 billion (QR364 billion) master plan to connect all six GCC members and to further strengthen trade ties among them. “Participation in this master plan is of strategic importance for DBI, as investments running into hundreds of millions of dollars are planned for the establishment and upgrading of rail infrastructure in the Arabian Peninsula in 78
JUNE 2010
the next two decades. DBI, therefore, believes that successful operations in Qatar would offer excellent prospects for securing further business in other Arab countries,” the company states on its website. Other contractors selected to carry out the project include France’s Vinci and Germany’s Hochtief AG. The project’s completion is expected in 2015. The latest official cost estimate of the causeway stands at US$3 billion (QR11 billion) to be shared between Bahrain and Qatar. Others, however, have estimated the project to cost between US$4 and US$5 billion (QR14.5 and QR18.2 billion). At a later stage, Qatar is planning to build a 100-kilometre long connection to Saudi Arabia, suitable for running at speeds of up to 200 kilometres per hour. The GCC railway network is expected to ultimately be connected to Turkey, providing a rail link between the Middle East and Europe. The GCC countries are currently carrying out their own feasibility studies on the proposed rail network linking the member states.
Construction
Currently, infrastructure, industrial and commercial projects to the tune of hundreds of billions of riyals are underway in Qatar, with buildings going up and roads being made everywhere. In the 2010-11 budget of QR117.9 billion, a lion’s share (QR43.5 billion) has been allocated to major projects of which at least QR35.5 billion will go toward upgrading infrastructure. Some of the major projects that will benefit from the budget will be the New Doha Seaport, the New Doha International Airport, roads, sewage systems, land reclamation as well as expansion of electricity and water networks. Constructing an intelligent railway transportation system that will link all these projects is at the core of further development of the Qatari peninsula. Without railway links to the rest of the world it would not make sense to build a deep-sea port, which is capable of handling some of the world’s largest containerships. All these projects will fill the Qatari roads with cement trucks and other heavy construction related traffic for decades to come. The residents of Doha will have to cope with living in the dust, noise and stress that comes with all this construction. Hopefully, by 2016, Doha’s residents will be able to escape the madness on the roads by taking the brand new subway. A ride from West Bay to the airport should, by then, only take 15 minutes.
how-to guide
E D I U G O T -
HOW
PROTECT YOUR NETWORK INFRASTRUCTURE DURING THE 2010 FIFA WORLD CUP
how-to guide
Could the 2010 FIFA World Cup bring your network to its knees? Following the first ever, online only, live streaming of the England football team’s 1-0 defeat to Ukraine, Nigel Hawthorn, looks into the implications that live online video streaming events could have on an organisation’s network infrastructure ahead of the 2010 FIFA World Cup.
Access to live online matches
The World Cup in South Africa promises worldwide coverage like never before, with the BBC Sport website offering live video streaming of all matches. Though a small number of matches were shown online in 2006, this year the number of matches available across the web includes all matches that the BBC has the rights to. Probably more importantly, the success of the iPlayer and YouTube has led to an assumption on the part of users that the quality will be as good to the desktop. 80
JUNE 2010
This concept was fully supported by the director of BBC Sport Roger Mosey, who commented ahead of the World Cup in 2006: “We know a lot of online viewing is done in the office, so we suspect this will allow people both to do their job and to keep up with the very latest action.” Now, at the risk of sounding like a World Cup party pooper, we need to consider the impact on the organisation and the network from the amount of bandwidth that will be eaten up by employees watching live 90-minute matches on their desktop PCs.
how-to guide
Business critical apps, branch offices and employee productivity
With the games about to begin, IT managers from Afghanistan to Zimbabwe, of all sizes will be bracing themselves for the demands on their networks and Internet gateway, which will be potentially greater than anything in the past. Particularly with the inclusion of 31 teams from all over the world travelling to South Africa in a bid to battle the hosts and be crowned the world champions of football – employee interest will be charged. With no major time zone difference between Qatar and South Africa, employees are also likely to be watching in prime office working hours (24 matches scheduled between Monday and Friday afternoons). As workers turn to the web for live match coverage during work hours, organisations should certainly be wary about a potential drain on employee performance and productivity, but press forward to protect against a greater threat – the impact on branch offices and applications. Usually individuals are blissfully unaware of the performance implications that continuous live streaming has on the company’s Internet gateway or the wide area network (WAN) link that connects their branch office location to a corporate data centre or centralised Internet access point. An IT managers Internet gateway – its lifeline to the Internet – can quickly be fouled up by staff accessing live video streaming. In addition, slender WAN links to branch offices can be invaded by football fever, so that internal business critical traffic is impaired. This leads onto one of the most critical areas for the effects of employees turning to the web for the World Cup coverage, the branch offices. This is because many organisations’ Internet access is centralised and ‘backhauled’ inbound Internet traffic is delivered to branch offices over the WAN that links them to the data centre or headquarters. Therefore, the added load of multiple instances of a live match stream could swamp the WAN links to branch offices,
making business-critical applications and communication exceedingly slow or stop completely. Already these WAN links are under considerable strain, due in part to the centralisation of servers and applications away from the branch office. Performance of remotely hosted applications and files is sluggish at best, requiring WAN optimisation solutions to compensate for burgeoning network limitations. Continuous video streaming of live match access will exacerbate this situation.
JUNE 2010
81
how-to guide
What can Organisations do to manage World Cup fever?
There are a number of different approaches that IT managers can take in order to ensure that their Internet gateway is fully available for business use of the Internet, rather than overwhelmed by online World Cup fever. Certain organisations may take a strict approach by attempting to block web access to all known sites that stream the World Cup live. By using web filtering systems, IT management can block access to global sports sites, though users are likely to be unhappy and may still spend time attempting to circumvent the blocking. A second option would be to block the protocols used for streaming, however, this may include all Real, Microsoft and Flash streams – and in doing so, block internal streams, streaming news and standard parts of web sites, therefore, interfering with work-related web information. Instead of either of the above approaches, organisations may look to adopt a more flexible attitude that keeps employee morale high and minimises any World Cup disruption. IT management can improve their network infrastructure to reduce stream usage, optimise streaming data and allow users to time-shift the matches to be during normal breaks in the working day, as follows. * Firstly, bandwidth management devices at the Internet egress point can be set to define one stream provider as ‘approved’ and given a high priority (management then encourages employees to use that stream), other streams are lower priority or blocked. 82
JUNE 2010
* Secondly, appliances can be installed within the organisation’s network to split the streams – meaning that one stream request can be sent to multiple users simultaneously. This greatly reduces the upstream bandwidth required. * Thirdly, WAN optimisation appliances that support streaming data can be deployed between offices to cache and optimise the protocols between them. * Fourthly, many of the stream splitting appliances can also cache the streams, allowing users to time-shift and watch the game later. Happily, this does not mean installing four appliances, many devices can deliver multiple benefits in one. In this way, management can allow video content while minimising the load on the Internet gateway, or branch office, by caching locally through a proxy appliance. Employees are then contented and the World Cup should not impact access of business-related video or content on websites. In summary, the World Cup only comes around once every four years and should be cherished. However, while we all want to keep abreast of all the latest action, organisations may want to stop and consider the impact that the World Cup could have on their network resources, and look at sensible ways in which to manage this down to an acceptable amount. Above all, whether it is England versus Brazil on a Wednesday at midday or Denmark versus Ivory Coast Monday at 3pm, organisations must ensure that nonessential application traffic does not interfere with crucial business operations.
TECH TOOLS
TheEDGE picks the best tech’ items hitting the shelves this month. Calculating minimal waste Aimed at small office and home office users, the X Mark I Print joins Canon’s unique range of calculators built using recycled product materials. This brand new 12 digit AC/DC powered calculator, features a bottom case assembled from materials originally used in Canon’s range of photocopiers – a unique Canon concept that results in minimal waste. It also features a sleek, finely contoured design similar to the original X Mark 1, with the popular PC feel keypad developed to incorporate a larger ‘plus’ key as a result of user feedback. Combining style with functionality, the X Mark I Print launches as the first X model to feature an integrated print roller and a clear backlight display. The model will be available in a choice of black or white, with a glossy finish adding to its all-round premium feel and comes at the price of QR110. www.canon-me.com
OUT OF SIGHT, OUT OF MIND The CableBox from BlueLounge aims to solve the dilemma – where you have to combat a whole bunch of snaking wires that seem to have a life of their own, rearranging themselves whenever you are not around and creating a tangled mess in the process. The CableBox helps minimise that as it conceals cable clutter, coming in a minimalist design. All you need do is stuff the spaghetti of cables within and you have a much neater workspace. Available in Mini Blue and Large Black or White colours for QR160 and QR260, respectively, either model will sport rubberised padding that protects floors as well as openings on either end. BlueLounge products are not available in stores in the Middle East yet, but can be easily ordered online. www.bluelounge.com
Portable Fort Knox For the highly paranoid among us, LaCie announced what it says is the safest mobile hard drive on the market – the LaCie Rugged Safe, which offers multiple levels of data protection. The Rugged Safe features unbreakable 128 bit advanced encryption standard (AES) hardware, the safest biometric authentication technology, and a shockproof enclosure. Designed for people on the go, the LaCie Rugged Safe is bus-powered through USB or FireWire and is compatible with Mac or PC. Where other safe products require software installation on every workstation, the Rugged Safe is plug and play. Once configured, it grants users access to their data on any computer, with just a single finger swipe. More than just a superior solution for portability, it combines a 128 bit AES encryption engine with biometric fingerprint access to prevent unauthorised access. For QR690 professionals can protect and share sensitive files or intellectual property with up to 10 registered users. www.lacie.com JUNE 2010
83
LIFE & STYLE
This month TheEDGE takes a look at some of the most sought after products and helps you to stay in touch with the latest tech’ hitting the streets.
Intelligent resolution technology Panasonic has launched a new range of full high definition (HD) camcorders with liquid crystal display (LCD) touch screen. The camcorders feature 35.7 millimetre wide-angle lens with 25 times optical zoom, and 1920 by 1080 resolution, which is the highest in the camcorder market. They are capable of achieving 1.3 times higher resolution than conventional camcorders, and the intelligent resolution technology ensures that all three models record five mega pixel images. The hybrid HS60 records onto its 120 gigabyte (GB) internal hard drive, while the TM60 features an internal 16-GB hard drive and SD card slot to boost memory capacity. The SD60 records directly to a SanDisk-card. The HS60 will set you back QR2600 and will be available in Qatar this month. www.panasonic.net
Zoom in on the details The Canon PowerShot SX210 IS delivers the ultimate package of looks and advanced features, including an 14 times optical zoom in a sleek and compact, metal body. Available in three colours – gold, purple and black – there is a model to suit every style. Small and light enough for everyday use, the PowerShot SX210 IS also enables you to shoot high-quality HD video footage in stereo sound. For those keen to develop their photographic skills, switching to manual mode gives you greater control to experiment with different settings, while the new Smart Shutter mode allows you to remotely control the shutter simply with a smile or even a wink. The camera will set you back QR1270 and is already available in Qatar. www.canon-me.com
Next Generation of Camera The new Samsung NX10 marks the start of the next generation of cameras. The NX10’s innovative technology provides ‘best in class’ features with a large APS-C size sensor, bright screen and fast auto focus to give users ultimate performance. The Samsung NX10 is an innovative digital camera that provides users with optimum image quality in a sleek, compact body. Delivering creativity without compromise, users can now be as creative as they want on the move, without having to compromise perfect images. The Samsung NX10 will be launched in the Middle East this month and costs QR2500. www.samsung.com 84
JUNE 2010
LIFE & STYLE
Ultimate race toy This new game controller from Thrustmaster is the ultimate racergame addict’s toy for PlayStation3. Thrustmaster introduces this limited edition Ferrari racing wheel/cockpit under the name of the Ferrari Wireless GT Cockpit 430 Scuderia Edition. It is equipped with wireless connectivity and has 50 hours of battery life. The controller is made from metal, so it is pretty heavy, which give the idea of stability. The Ferrari Wireless GT Cockpit 430 Scuderia pratically copies the sensation of driving a real Ferrari 430 Scuderia car. Thrustmaster is shiping the Ferrari Wireless GT Cockpit 430 Scuderia Edition for QR900 internationally. www.thrustmaster.com
Goodbye iPhone, hello EVO The next-gen iPhone has a competitor, and its name is the HTC EVO 4G. Coming this summer from Sprint, this killer device boasts a huge 4.3-inch display, a blazing one gigahertz Snapdragon processor, and an eight megapixel camera that can record 720p video. But what really makes the EVO 4G stand out is that it’s the first 4G phone, offering speeds between three and six Megabytes per second in an increasing number of places around the world. HTC EVO 4G costs QR727 and will be available in the Middle East this month. www.sprint.com
Back to the ’70s Grundig’s Audiorama 9000 is a disco-ball speaker with an incorporated treble system, which provides clear 360 degrees surround sound. The Audiorama 9000’s mid-range speakers form a closed bass system that enables fast impulse processing for crisp bass sounds, which is supported by an anodised aluminum membrane that provides maximum stiffness. The Audiorama 9000 will be available in either a choice of black or white for QR4900. www.grundig.com
JUNE 2010
85
LIFE & STYLE
GONE FISHIN’
With its clear waters, generally calm seas and a wide variety of fish, the Persian Gulf makes for the perfect fishing ground for deep-sea fishing enthusiasts. Whether you are an expert or a novice, you will enjoy this ‘out on the water’ experience. Fishing in Qatar is an addictive activity. Over the years it has become one of the most popular pastimes of the Qatari locals, but nowadays more and more expatriates and tourists are also discovering fishing as a relaxing way to spend their leisure time. You will find a great variety of fish in the waters of the Gulf. The most common species include hammour, kingfish, queenfish, barracuda and trevally fish. If you are lucky you may even see dolphins on your fishing trip, swimming right next to the boat. Since fishing in Qatar is a hit among the tourists, many hotels and resorts have their own fishing vessels and provide all the necessary equipment. One of the best places to book your fishing trips is found in the Admiral’s Club next to the Ritz-Carlton hotel. Fishing enthusiast can choose from three vessels; a 26-foot sport fishing boat for up to six people, or a 33-foot Gulf craft, which takes up about a dozen people. For corporate outings there is a 46-foot boat that can take up to 40 people. It is possible to book trips for just a couple of hours, half days, or complete fishing excursions. A good way to spend a day on the water is to combine the fishing with a visit to Banana Island, which is located seven kilometres offshore from Doha. The island is a perfect place for swimming and to barbeque the day’s catch. 86
JUNE 2010
Looking at the popularity of fishing in Qatar, the government has improved the facilities to make the activity all the more enjoyable. As with all other water sports, there are certain rules and regulations attached to fishing in Qatari waters. Qatar pays special attention toward its fishing reserves and to protect them, the state has defined restricted areas where fishing is not allowed. The tour guide will make sure these areas are avoided. A good sportsperson never catches more fish than necessary for the skillet; they would throw back into the sea any fish that were small fry, so they can grow to the minimum catch size . To avoid the high temperatures of the onset of summer, venture out to sea as early as possible, or for a truly thrilling experience, ask if the operator facilitates fishing trip at night. Fishing in Gulf waters is a unique and relaxing experience that will leave you with good memories. The crystal clear and pristine water of the Gulf will make the experience of fishing in Qatar all the more memorable. For more information: Contact John Martin on john.martin@fsmail.net Or visit the Admiral’s Club next to the Ritz-Carlton hotel Phone: +974 484-8000 www.ritzcarlton.com
LIFE & STYLE
TAKE OFF TO TOKYO By Kelly Lewis
T
okyo is the buzzing capital of the eastern world and is a city that is full of surprises. Home to Kabuki and Pokémon, Sumo and Sega; low crime rates, cell phones, the world’s largest metropolitan economy, punctual trains and sky-high prices; the Japanese capital is a city where East and West collide, and coexist. TheEDGE was privileged to be onboard the Qatar Airways’ Airbus A330, which made its inaugural flight to Tokyo at the end of April. After being pampered in business class for the 13.5hour journey, we arrived in Godzilla’s playground – a city that boasts the world’s most populous metropolitan area, housing 39 million people (including the Greater Tokyo Area). Effortlessly blending the past, present and the future, Tokyo is a city that defies definition. Cuttingedge technology glitters beside ancient temples, loud neon lights bathe kimonoclad women, shining skyscrapers tower
above remarkable Shinto shrines and streets clad with eateries display cuisine that will temp any palate. The city’s business districts are amassed with soberly dressed ‘corporate warriors’ and the demure young secretaries known as ‘office ladies’. Tokyo’s architectural anarchy juxtaposed with cherry blossom tranquillity and the sheer crush of humanity, however, can be somewhat overwhelming. Amid the frenzy of consumerism, brash electronics outlets are crammed next to refined upscale boutiques and hordes of giggling schoolgirls swoon over pop idols, and the latest fashions in glitzy emporiums. But for all its cutting-edge modernity, Tokyo’s eternal metropolis remains fiercely proud of its ancient roots. Lively neighbourhood festivals fill a regular spot on the events calendar, people frequent their local shrine or temple, they come together to share a traditional Japanese tea ceremony
and welcome the passing seasons in passionately manicured gardens. And, at the core of the city’s lively centre lies the serene and enigmatic Imperial Palace – the inviolate home of the emperor and a tangible link to the past. However, at first glance the city’s beauty and traditions are cast into shadow by its modern exterior of searing neon, overhead cables, heavy transport infrastructure, with freeways often clogged with bumperto-bumper traffic. Without warranted inspection, Tokyo can come across as the stereotypical urban nightmare. But closer investigation, away from the hustle and bustle, will reveal a world of hidden delights. Tranquil backstreets are lined by quaint stores lurking among wooden houses that are fronted by neatly clipped bonsai trees; dare to venture beyond the hi-tech emporia, and you will discover temples and shrines where the trappings of contemporary Japan dissolve in wisps of smoking incense. Amid the confusion of heaving traffic, dazzling neon signs and a congestion of humanity packing subways and sidewalks; in the crush and rush Tokyo remains, remarkably, one of the world’s safest cities, and is alive with locals who are only too willing to spare the time and effort to assist a stranger. Tokyo does have the reputation as being one of the world’s most expensive
LIFE & STYLE
cites, however, it is a reputation that is in part, both true and false. Visitors to Tokyo will be pleasantly surprised by how affordable many things are. Cheap-and-cheerful izakaya (bars that serve food) and casual cafés serving noodles and rice dishes are plentiful, the metro is a steal, and tickets for a sumo tournament (in season) or a Kabuki play can be bought for the price of a few mere drinks. Many of the city’s highlights are free; among these you can choose from a stroll through Akihabara (Electric Town), a visit to the tranquil wooded grounds of Tokyo’s premier shrine Meiji-Jingu and the adjacent fashion mecca of Harajuku; the frenetic fish market at Tsukiji; or the crackling, neon-saturated atmosphere of Shinjuku or Shibuya. By simply walking the streets of this hyperactive city, you will certainly feel its undeniable and energising pulse. Harajuku is one of Tokyo’s most significant fashion and shopping regions, which is made famous for its Harajuku Girls and Harajuku fashion – Harajuku Girls is a term to describe women and teenaged girls in Harajuku, who wear a style of clothing that originated in the street culture of major cities in Japan. For the young and fashionable teenager, Harajuku is the place to be seen on the weekends and is practically a necessity, but for visitors it provides an eye opening and colourful way to spend a few hours. Essentially Tokyo’s youth flock to the hub, kitted out in the latest fashion where they hang out with friends. Many of them come with the hope of being snapped by one of the many magazine photographers who mingle in the crowd. Failing that, there are lots of Western tourists more than happy to take their pictures. The more one explores Tokyo the more it becomes obvious that one cannot judge a book by its cover. Inside the modern buildings the cultural life of Japan is very much alive
and well. Interiors reflect the tranquil minimalist Asian style and taste of Japan. The city is an exuberant experience for visitors. It also hosts many museums and is the largest repository of Japanese art in the world. But then, of course, it would take forever to exhaust the shopping possibilities in this megalopolis. Roppongi Hills has carved a name for itself as Tokyo’s ‘heart of hedonism’ and it was there where we made our base for the duration of our Japanese adventure. The Ritz-Carlton was our host and wined and dined us, surrounded us with its extravagant decor and spoilt us with its panoramic 53-storey-high views – the tallest skyscraper in Tokyo. Roppongi has become one of Tokyo’s most popular hot spots, with official figures claiming 100,000 visitors on weekdays, rising to 300,000 on weekends. Roppongi is designed as a ‘city within a city’, housing more than 200 cafés, restaurants and shops, copious clubs and bars, an abundance of Conran-designed serviced apartments, a major art museum and several parks. However, it also plays home to sleazy revelry. But if a night of debauchery does not appeal, Roppongi has plenty to offer on a culinary level. Tokyo as a whole is an unbelievable and unbeatable city when it comes to food. The city has a total of 261 Michelin stars, more than any of the cities Michelin covers in 23 nations, which is testament to Tokyo’s passion and perfection for outstanding fine dining. However, you do not have to venture into a Michelin star restaurant
to find culinary bliss in Roppongi as international crowds bring their international palates, and Roppongi boasts a greater variety of food than any other part of the city. For good sight seeing in Tokyo, venture a short distance southeast from Roppongi intersection to where Tokyo Tower is situated; taller buildings with more superior views may now trump it, but it firmly remains as one of the city’s iconic structures and makes a perfect platform for souvenir photos. Of course a trip to Tokyo would not be complete without a visit to the famed Mount Fuji. Situated just West of Tokyo, Mount Fuji is a distinctive feature of the geography of Japan and can be seen on a clear day from far afield. However, you will have to be selective on when to visit, or expect to see a glimpse of Mount Fuji as clouds and poor visibility often block its view. Additionally, the temperature is very low at the high altitude, and the cone is covered by snow for several months of the year – locals say if you get a clear view of the mountain you can consider yourself lucky. Visibility tends to be better during the colder seasons of the year than in summer, and in the early morning and late evening hours. Tokyo is a place that truly offers visitors a smorgasbord of things to do, see and of course, eat. But the trick to really embracing this flamboyant city is to take it in at leisure, approach it with patience, an open mind and make sure to pack comfortable walking shoes. JUNE 2010
89
EVENTS & CONFERENCES
June 8 – 10 Intelligence, Regulations AND Solutions in Arab Financial AND Stock Markets Mövenpick Hotel, Beirut, Lebanon The main objective of the conference is to create a platform for stock exchanges, clearinghouses, regulatory authorities, brokerage houses, investment banks, commercial banks and financial institutions to discuss major topics of mutual interest, with international and regional consultants and solution providers. www.managementmix.com
Ju n e 11 –12 Realty Ind ia 2010 The Regency Hall, Doha, Qatar comprehensive Realty India is a key event and ther builders toge gs brin ch whi exhibition on property, case their show to a Indi ss acro from and developers The twoons. ituti latest projects and financial Inst ractors, cont ral gene s, itect day event will attract arch erty prop rs, vato reno , ders buil s, interior designer managers and more. www.realtyindiaqatar.com
J u n e 13 –1 6
National S ecurity S ummit Middle Le Royal Mer idien, Abu Dha East 2010 bi, United Ara The summit b Emirates will deliver a comprehen address the em sive agenda erging threat to s, critical stra the latest tech tegies and de nologies to he liver lp end users barriers to to overcome information the sharing betw agencies, and een governm internationa ent l security agen www.nationa cies. lsecurityme.co m
90
JUNE 2010
J u n e 14 – 16
Summ it PCA Plastics G st r Fi e Th b Emirates ubai, United Ara Summit will bring Grand Hyatt, D tics l GPCA Plas akers in The inaugura d decision-m an s er ad le t gh d processing together thou converting an tic st as pl , al ic for Middle Ea the chem ide a platform ry ov st pr du in ill w s It tic arena. the plas rticipants in age of and global pa actices in an pr st be d an s ea singly id ea ge cr s and in to exchan stry dynamic du in g in ng fast-cha y. accountabilit exacting social stics.com www.gpcapla
June 20 – 23 Marine AND Coastal Engineering Middle East Summit Millennium Hotel, Doha, Qatar Marine and Coastal Engineering Middle East will bring together key stakeholders from a diverse range of cuttingedge marine projects, representing a unique opportunity to benchmark the region’s leading marine developments. www.coastalengineeringme.com
June 20 – 24 The 14th Annual Compensation AND Benefits Forum Dusit Thani Hotel, Dubai, United Arab Emirates The forum will aim to address key management challenges by focusing on how to manage employee expectations and keep benefits innovative in a changing and cost-contained environment. The case study based conference will also host a range of keynote speakers. www.iirme.com
CONSTRUCTION & TENDERS
Qatar Projects Update New Doha International Airport German industrial conglomerate ThyssenKrupp Nirosta received a contract to supply 100 metric tonnes of stainless steel for the construction of the New Doha International Airport. The steel will be used for the façade of the new passenger terminal, which will be mainly glass interspersed with stainless steel. Qatar is currently building the new international airport on a 22 square kilometre site next to Doha’s old airport. When it opens in mid 2011, the new airport will be able to handle roughly 24 million passengers a year. The New Doha International Airport will be one of the first in the world designed specially to handle modern superjumbo aircraft like the Airbus A380, for which an extra-long 4850-metre runway is planned. Qatar is investing around US$14 billion (QR51 billion) in the new airport.
Doha South Sewage Larsen and Toubro have awarded a US$32 million (QR116.5 million) contract to ITT Corporation for the Phase II extension of Qatar’s Doha South Sewage Treatment Works. The contract covers the design and supply of an additional eight sequence batch reactors (SBR), which will increase the wastewater treatment capacity of the Doha South plant by 92 million litres per day. Also included is the addition of an ultra-filtration plant designed and supplied by ITT, which will produce a high standard of treated effluent, suitable for reuse in irrigation. With Phase I operational and upon the completion of Phase II, the plant will have a total capacity to treat 187 million litres of wastewater per day. This will be the largest wastewater treatment facility using SBRs combined with ultra-filtration in the Gulf Cooperation Council (GCC) region.
JUNE 2010
91
CONSTRUCTION & TENDERS
92
Musheireb Development A joint venture between Hyundai Engineering and Construction Company and HBK Contracting Company has been awarded the main construction contract of Phase 1A of the Musheireb Development, formerly known as the Heart of Doha. This US$5 billion (QR18 billion) development covers an area of 750,000 square metres and will be divided into several districts, including a residential and mixed-use quarter, a retail quarter, a heritage quarter and a commercial area called the Headquarters Gateway. It will also include a shopping mall, hotels and entertainment area. Turner Construction International is the project manager for Phase 1A.
Television Complex TAG Engineering and Consulting Company has been awarded the main construction contract for the refurbishment of the Doha Broadcasting and Television Complex. The scope of work includes reconstruction of external works including perimetre fencing and hard and soft landscaping. This will necessitate controlled demolitions of designated buildings, fence, landscaping and other miscellaneous structures with adequate care and protection of existing services. The US$33 million (QR120 million) project will run until the second quarter of next year.
Qatar National Museum Eight contractors have prequalified for the tender of the main construction contract of the new Qatar National Museum. The new museum will be next to the existing one located on the Corniche. The project is expected to cover an area of 150,000 square metres. Construction is expected to begin in the first quarter of next year and is estimated to continue until 2014. It is not yet confirmed how much money is involved in the project. Qatar Petroleum is managing the construction of the project on behalf of the Qatar Museum Authority.
Education City â&#x20AC;&#x201C; Islamic Studies Centre The Qatar Foundation for Education and Community Development issued a tender for the construction of the new Islamic Studies Centre at Education City. The project will cover an area of 55,000 square metres. The main construction contractor is expected to be announced in September of this year. The centre will be completed in 2012. The costs of the project are yet to be confirmed. Qatar Petroleum is managing the construction of the project on behalf of the Qatar Foundation for Education and Community Development.
JUNE 2010
construction & tenders
Power Generation & Distribution
Substation Modification & Refurbishment Project
Reservoir Capacity Upgrade Project
Description: Carrying out extension of lowvoltage, underground electricity network and service connection on call-off contract for an electricity and water authority. Closing Date: June 16 Client: Qatar General Electricity and Water Corporation Phone: +974 484 5111 Fax: +974 484 5191 Email: aalnajjar@kahramaa.com.qa Website: www.km.com.qa Tender No: GTC-351/2010 Bid Bond: QR600,000 Tender documents can be obtained from: Water Network Affairs Section, Field Services Department, seventh floor, Building 2, Qatar General Electricity and Water Corporation, Dafna, Qatar.
Description: Carrying out modification and refurbishment of primary substations for an electricity and water authority. Closing Date: June 13 Client: Qatar General Electricity and Water Corporation Phone: +974 484 5111 Fax: +974 484 5191 Email: aalnajjar@kahramaa.com.qa Website: www.km.com.qa Tender No: GTC-341/2010 Bid Bond: QR360,000 Tender documents can be obtained from: Water Network Affairs Section, Field Services Department, seventh floor, Building 2, Qatar General Electricity and Water Corporation, Dafna, Qatar.
Description: Carrying out upgrading of reservoir capacity for an electricity and water authority. Closing Date: June 11 Client: Qatar General Electricity and Water Corporation Phone: +974 484 5111 Fax: +974 484 5191 Email: aalnajjar@kahramaa.com.qa Website: www.km.com.qa Tender No: GTC-323/2010 Bid Bond: QR1 million Tender documents can be obtained from: Water Network Affairs Section, Field Services Department, seventh floor, Building 2, Qatar General Electricity and Water Corporation, Dafna, Qatar.
Industrial & Special Projects Description: Engineering, procurement, installation and commissioning of replacement cranes for a petroleum company. Closing Date: June 13 Client: Qatar Petroleum Phone: +974 440 2000 Fax: +974 483 1125 Email: marketing@qp.com.qa Website: www.qp.com.qa Tender No: GT10104500 Bid Bond: QR1.1 million Tender documents can be obtained from: Materials Department, Qatar Petroleum, Navigation Plaza Building, C Ring Road, ground floor, room 30, Doha, Qatar.
QATAR TENDERS
JUNE 2010
93
CONSTRUCTION & TENDERS
Telecommunications
Housing Projects
Mosque Maintenance Works
Description: Engineering, procurement, installation and commissioning of GDS Supervisory Control and Data Acquisition system for Qatar Petroleum. Closing Date: July 4 Client: Qatar Petroleum Phone: +974 440 2000 Fax: +974 483 1125 Email: marketing@qp.com.qa Website: www.qp.com.qa Tender No: GT10104600 Bid Bond: QR3 million Tender documents can be obtained from: Materials Department, Qatar Petroleum, Navigation Plaza Building, C Ring Road, ground floor, room 30, Doha, Qatar.
Description: Carrying out installation of (6 Nos.) steel staircases and sunshade for Qatar Petroleum. Closing Date: June 14 Client: Qatar Petroleum Phone: +974 440 2000 Fax: +974 483 1125 Email: marketing@qp.com.qa Website: www.qp.com.qa Tender No: ST10102700 Bid Bond: QR20,000 Tender documents can be obtained from: Materials Department, Qatar Petroleum, Navigation Plaza Building, C Ring Road, ground floor, room 30, Doha, Qatar.
Description: Carrying out maintenance work of mosque for the Islamic Affairs Authority. Closing Date: June 16 Client: Ministry of Endowments and Islamic Affairs Phone: +974 446 6222 Fax: +974 446 6266 Email: awqaf@awqaf.gov.qa Website: www.islam.gov.qa Tender No: 17/2010-2011 Bid Bond: QR22,500 Tender documents can be obtained from: Ministry of Municipal Affairs and Agriculture, Doha, Qatar.
Sewerage & Drainage
Oilfield Development
Municipal Services
Description: Provision of consultancy services for Inner Doha Resewerage Implementation Strategy. Closing Date: June 17 Client: Public Works Authority Phone: +974 495 0000 Fax: +974 495 0999 Email: info@ashghal.com Website: www.ashghal.com Tender No: This tender is in prequalification stage. Tender documents can be obtained from: Website of Public Works Authority. Eligible firms should return the completed pre-qualification documents to the following address: Public Works Authority, Contracts Department, 10th floor, Ashghal Tower, PO Box 22188, Doha, Qatar.
Description: Provision of consultancy services for emergency management plans to a petroleum company. Closing Date: June 13 Client: Qatar Petroleum Phone: +974 440 2000 Fax: +974 483 1125 Email: marketing@qp.com.qa Website: www.qp.com.qa Tender No: LT10104200 Bid Bond: QR120,000 Tender documents can be obtained from: Materials Department, Qatar Petroleum, Navigation Plaza Building, C Ring Road, ground floor, room 30, Doha, Qatar.
Description: Supply of step frame carrier trailer and ISO framed LPG tanker for a petroleum company. Closing Date: June 17 Client: Qatar Petroleum Phone: +974 440 2000 Fax: +974 483 1125 Email: marketing@qp.com.qa Website: www.qp.com.qa Tender No: STC/ST10MT0130 Bid Bond: QR20,000 Tender documents can be obtained from: Contracts Department, Corporate Division, Qatar Petroleum, Royal Plaza, G Wing, fourth floor, room G 11, Doha, Qatar.
QATAR TENDERS
94
JUNE 2010
Classifieds
www.eurodollarrentacar.com
JUNE 2010
95
SUBSCRIPTION
SUBSCRIPTION FORM 2010 TheEDGE is Qatarâ&#x20AC;&#x2122;s dedicated monthly business magazine.
TheEDGE incorporates a mix of industry news and analysis, in depth features, special interviews with key business decision makers, economic insight and market activity reports, and tips for how you can improve your day-to-day business operations. TheEDGE will not be available on the news stands, but will be delivered straight to the door of the targeted business community. To ensure you keep up-to-date, with what is happening in Qatarâ&#x20AC;&#x2122;s business landscape, fill in the subscription form (below) to receive TheEDGE on a monthly basis. Subscription is FREE (in Qatar). Forms are to be addressed to the Subscriptions Department at: TheEDGE Subscriptions Department Firefly Communications 11th Floor, Jaidah Tower PO Box 11596 Doha, Qatar
Last Name : First Name: Address: Company: Designation: P.O.Box: Area Code: City: Country: Tel: E-mail: Date and Signature: 96
JUNE 2010