Me consultant august 2015

017 july-augusT 2015

InsIghT and analysIs fOr cOnsTrucTIOn sPecIalIsTs

In Practice

Consultants start to rethink CSR policies On Topic

Why mixed-use developments matter Insight

Corporate taxation and the construction sector

Simon Moon on why Atkins sets the standard for the Middle East

staying on cours e

Straight Access

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CONTENTS

July-August 2015

06 06

On topic

42

news And VIews frOm AcrOss the mIddLe eAst OnLIne news

CPI’s digital platform for construction news

09

28

On tOpIc

Contractual lessons from the 2008 crisis

16 16

In practice cOmpAny prOfILes, InsIghts And InterVIews

14 38

InterVIew

Simon Moon says that Atkins has never been better placed to set the standard in the Middle East

22

InsIght

Sustainable CSR practices of consultants and their impact on the built environment

28

prOfILe

Georges Roux of Steelcase explains how inclusively designed workspaces can help improve staff performance

32 32

16

22

On site AnALysIs, OpInIOns And snApshOts AnALysIs

ME Consultant finds out how mixed-use developments are changing the way regional developers view their projects

36

OpInIOn

Philip Janssens examines the relationship between BIM and effective project management

42

cOmpAny news

Damac launches Aykon Tower in London

48

fInAL wOrd

Davina Munro says reducing land acquisition costs will stimulate affordable housing development

32 July-August 2015 Middle East Consultant 3

WELCOME

Editor’s note Group GROUP CHAIRMAN AND FOUNDER DOMINIC DE SOUSA GROUP CEO NADEEM HOOD

Spread the Word

A

ddressing the gender imbalance within the GCC construction industry has been a key issue for the editorial team at ME Consultant for quite some time.

Regular readers will note that it’s a topic that we circle back to quite often, and while we don’t want to seem like a stuck record, we do believe that it is a vital issue that needs to be taken very seriously.

To its credit, the industry does seem to be taking note. Just this month, we have Simon Moon, CEO for the Middle East at Atkins, telling us that his consultancy is increasingly focused on tapping into an oft-ignored sector of the talent resource pool in the GCC – the educated, young and female segment of the Gulf Arab population.

While there are several female architects, engineers and project managers of note operating in the UAE and Qatar, there is still quite a way to go. In our conversations with the industry, we’ve found that the most common issue among women in the construction industry is a lack of support.

Atkins is again taking a leading role in addressing this, having launched a Women’s Business Network in the Middle East.

This is clearly an issue that Simon Moon is very passionate about. He reveals that when recruiting for its annual influx of graduates, the consultancy is careful to ensure that there is a strong female presence among the new recruits, believing that it is key to the continued diversity and success of the company.

I can only hope that this attitude continues to grow, and the signs are promising. Spreading the message from consultancies, into the contractor sector, and then onto construction sites themselves will be the next step, and that's where the real challenge will lie!

PUBLISHING DIRECTOR RAZ ISLAM raz.islam@cpimediagroup.com +971 4 375 5471 EDITORIAL DIRECTOR VIJAYA CHERIAN vijaya.cherian@cpimediagroup.com +971 4 375 5713

Editorial EDITOR GAVIN DAVIDS gavin.davids@cpimediagroup.com +971 4 375 5480 DEPUTY EDITOR DAVINA MUNRO davina.munro@cpimediagroup.com +971 4 375 5475 SUB EDITOR AELRED DOYLE

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Gavin Davids, Editor, Middle East Consultant

printed by printwell printing press LLC © Copyright 2015 CpI. All rights reserved while the publishers have made every effort to ensure the accuracy of all information in this magazine, they will not be held responsible for any errors therein.

4 Middle East Consultant July-August 2015

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1

EDITOR'S CHOICE

READERS' COMMENTS

Italian firm scores $852m deal to build Qatar

World Cup stadium Salini Impregilo set to build Al Bayt Stadium, scheduled for completion in September 2018

PHOTO GALLERIES

2

Three execs resign from Dubai-listed Arabtec,

Damac’s first UK property features Versace interiors

Reorganisation of UAE’s largest

The Dubai-listed developer recently unveiled Aykon Nine Elms, its first development outside the Middle East.

listed contractor continues

See photo galleries at: meconstructionnews.com/photos

acting CFO appointed

with resignation of senior staff including chief financial officer

3

Saudi’s Kingdom Tower: How world’s tallest

building will benefit Jeddah

“It was interesting to read that construction disputes in the region soared in value in 2014 (‘Middle East construction disputes rise in value by 88%’). Especially because one of the reasons behind this was said to be that the industry has recovered after the financial downturn, so contractors now have the funds to pursue legal claims. It seems it’s time to rejoice that the market is better, and then call in the lawyers…”

Name withheld, via email

Mounib Hammoud of the Jeddah Economic Company discusses

READER POLL

the impact of the 1km tower

4

Is the UAE’s summer midday work ban effective?

Germany’s Hochtief in $1.5bn deal for Riyadh

64% 14%

airport expansion International joint venture consists

VIDEO

of Hochtief, Shapoorji Pallonji MidEast and Nahdat Al Emaar

French architects plan vertical city in Sahara

5

$217.7m mixed-use development

OXO Architectes and Nicolas Laisné Associés have developed a concept for a sustainable tower in the Moroccan part of the Sahara.

along Dubai Creek

See videos at: meconstructionnews.com/videos

Site visit: Dubai Wharf project Gavin Davids visits the

Yes: It is ensuring workers’ wellbeing

Yes: But the hours should be extended

17%

5%

No: It is not enforced adequately

No: It is too disruptive to the industry

Log on for the latest from across the Middle East construction sector. Write to the editor at contact@meconstructionnews.com

6 Middle East Consultant July-August 2015

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09

contrActs solutions Construction disputes in the Middle East have risen 88% over the past year

On topic A

contrActs solutions

the devil’s in the detail Contractual lessons from the 2008 crisis

By Davina Munro

fter the 2008 global crisis sparked high-value disputes over stalled and cancelled projects in the Middle East, caution right from the contractual phase has been the only way forward. Seven years later, despite paying attention to the devil in the detail, disputes are touching uncomfortable levels once again.

The Global Construction Disputes Report 2015 by Arcadis indicates that the Middle East has seen disputes rise 88%, from $40.9 million in 2013 to $76.7 million in 2014.

In terms of value, the UAE stood out, recording disputes in the millions of dollars. Saudi Arabia also gained momentum, but in terms of increase in the number of disputes, it was Qatar that caught the eye.

Claims and legal experts have long stressed that most disputes arise from a lack of clearly defined deliverables and duties. One way of clearing the fog is through a clearly defined contract.

“We normally don’t get involved with disputes between consultants and developers, and focus instead on the contractors and developers, because that’s where the disputes generally are,” declares Allon Hill, partner at EC Harris. "What we’ve done is identify the five main causes for dispute in this region, the biggest and number one cause being failure to administer the contract."

"Early on, clients are happy to invest in resources such as ourselves for pre-contractual advice. But when that phase is over and procurements have finished, nomination of a contractor is done and a project has gone live, the investment to administer those contracts doesn’t exist as much as it should.

Developers then try to make do with administering contracts, which ultimately fails nearly on all instances," he says.

Hill highlights that failure to properly administer a contract is an issue that extends to consultants as well. “With consultants, it goes back to the quality of the document again, the contractual agreement July-August 2015 Middle East Consultant 9

on topic CONTRACTS SOLUTIONS

that the consultant is under and whether they themselves as a consultant have administered their own contract correctly with the ultimate client. The professional agreement or services agreement with a consultant must be administered with the same integrity as a contractor does.”

At the other end of the table, David Merritt, senior vice president and managing director of Middle East and Africa at Hill International, gives another two reasons. In his opinion, the rise in disputes can also be attributed to the non-payment or severely delayed payment of fees, and disputes over drawings and designs that lead to variations in jobs.

“There’s pressure to get started on-site here, so a lot of developers sell projects off-plan. The project is sometimes started on just a conceptual design, which isn’t uncommon, and then the consultant is brought on board later, which is problematic. Normally, when architects get involved at the initial stage, they come out with an outline design or a conceptual design and plan cost based on that. It all depends on what’s driving a developer’s priorities, which is normally quality, price and time. Time is more often given greater preference, and as a result quality suffers.”

From a legal standpoint, Saif Al Shamsi, founder of The Legal Group, agrees that while disputes involving consultants are minimal, they are mostly due to non-payment or late payment of fees. He also voices a few strong views of his own.

“Other factors that might lead to a dispute is the misinterpretation of cost, which is normally controlled during tendering. Another thing is the consultant should allow himself enough time to work on the design, because in many cases the consultant becomes very ambitious and wants to finish the design sooner than it normally takes, and that could pose a problem at a later stage.”

Al Shamsi points out that one way to tackle the failure to administer a contract is to engage an independent and fair cost consulting firm. “During

tendering, it’s always better to bring on board an independent cost consultant to prepare the tender and the condition of contract.”

“Cost consultation is not often the consultant’s field, so it is better to get a cost consultant on board early on so that he can prepare the best conditions for the contract and the best documents. Since a cost consultant is required to be present pre- and post-contract, it would be best to keep them in the loop while administering a contract as well.”

Clearly, tackling problems at the contractual phase, addressing unspecified administration and proper cost management can minimise dispute cases. But what are the big mistakes a consultant makes while negotiating a contract in the first place?

Hill says, “The two big errors we’ve noticed is setting unrealistic time scales for the start and end dates for a projects. We’re also seeing adverse commercial terms being signed by both parties that aren’t workable.”

“The commercial terms cover payment obligation and notices under the contract. What we don’t see in this region is any standard conditions of contract anymore. "They are generally bespoke conditions from the employer’s side and they are adverse towards other parties, whether it is the consultant or contractor or vendor. Because of the market and the crisis, we are still seeing contractors, vendors and consultants signing up to those conditions and not seeking independent advice externally on their own.”

In Al Shamsi’s opinion, paying closer attention to even a few microscopic terms can go a long way towards fool proofing a contract. “The scope of work has to be detailed throughout the contract.

There should be separate design stages, with a proper time frame for each one to avoid falling into default. The next would be to safeguard fees by insisting that they have intellectual property transferred to the developer only after payment.

$76.7M Middle East construction disputes in 2014 Source: The Global Construction Disputes Report 2015 by Arcadis 10 Middle East Consultant July-August 2015

on topic CONTRACTS SOLUTIONS

“Cost consultation is not often the consultant’s field, so it is better to get a cost consultant on board early on. Since a cost consultant is required to be present pre- and post-contract, it would be best to keep them in the loop while administering a contract as well”

Specifying administrative duties, having realistic time frames and a good cost management system in place can minimise disputes

July-August 2015 Middle East Consultant 11

on topic CONTRACTS SOLUTIONS

Have a threshold of amicable settlement terms and seek to mediate to help keep fees down in case of a dispute, says Hill.

The consultant should define the deliverables for each phase so that there isn’t any confusion and anticipation on the part of the client.”

Merritt agrees that insisting on advance payments in a contract is especially important in the Middle East, explaining that payment terms aren’t particularly onerous in the region.

“As claims experts, what we look for are 30-day payment terms that need a submitted invoice, after which it takes 30 days more to get paid. What some employers may try to do is get you to put your invoice in and say that in 60 days you will get paid. As a consultant, you should be reducing your exposure so that you’re not working too far behind on your payments.”

“The use of bonds can be particularly useful too, and it’s normally the employer who asks for bonds from a consultant or contractor, but maybe consultants can also ask for parent company guarantees in return."

Consultants should have separate clauses for suspension of work, how to treat it and the dues owed during this period, points out Al Shamsi.

"Another clause worthwhile including is mediation, so that at the first sign of a dispute you have a mediator who comes in and helps parties facilitate a settlement, which is quite effective.”

Renegotiating a contract is an alluring thought for many consultants, developers and contractors, especially after the meltdown in 2008. Unfortunately, not everyone is contractually or legally obliged to do so, as pointed out by Al Shamsi, Merritt and Hill. In fact, the UAE Civil Code states that parties to a valid contract may only alter it in certain limited circumstances.

Merritt explains: “There has to be a very good reason to renegotiate an existing contract that was probably signed only a few years ago. If it were contracts that were negotiated at the time of the crisis, then those contracts should be revisited and renegotiated. But the ones that were signed a few years ago are still valid, so whether the consultant likes it or not, they are still bound by those terms.”

“You’ve got to keep an eye on your cash flow and not let the developer get too far behind on payments.

Maintaining advance payments will help with good relations too” 12 Middle East Consultant July-August 2015

Consultants should consider asking for parent company guarantees the same way employers ask to use bonds, adds Merrit.

With the threat of another slowdown imminent in the not-so-distant future, learning from 2008 is essential. Hill says, "Try and stay away from having provisions that aren't conclusive. In the pre-contract stage what we're trying to introduce is setting key dates, milestones and flow charts so that everyone is clear on what they have to do."

Al Shamsi advises, “The consultant should have in his contract clauses for suspension of work, how to treat it and what his dues should be during this period. There should also be an understanding that if the consultant is asked to slow down his work, there should be a separate fee structure in place.

And my advice, if in the occasion a project is stalled for more than a year, is that the consultant should pull out. These terms are important.”

Merritt puts it down to the basics of ensuring “good housekeeping”. “You’ve got to keep an eye on your cash flow and not let the developer get too far behind on payments. Maintaining advance payments will help with good relations too.”

“If we are anticipating another bubble burst, I think people have learned lessons from before. I don’t think you should sign up for a contract that has fixed prices, but instead you could perhaps sign up for a two-year contract with an increase of rates every year at an annual percentage.

“Practise good housekeeping too, and make sure that your invoices are in on time, and basically look after your cash.”

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SPonSoRS

on topic DISPUTES

Middle East Disputes Dispute values (US$ millions)

Length of dispute (months)

2010

2011

2012

2013

2014

2010

2011

2012

2013

2014

56.3

112.5

65

40.9

76.7

8.3

9

14.6

13.9

15.1

The Middle East region saw disputes increase to their highest value since 2011, growing from $40.9 million in 2013. Overall, the amount of time taken to resolve disputes in the region crept by just over a month in 2014.

Dispute values (US$ millions) and Length of dispute (months) 120 90

Length

60 30

Value 2010

2011

2012

2013

2014

2014 Rank

Cause

2013 Rank

1

A failure to properly administer the contract

1

2

Poorly drafted or incomplete and unsubstantiated claims

New

3

A biased PM or engineer

New

4-

Failure to make interim awards on extensions of time and compensation

New

4-

An unrealistic contract completion date being defined at tender stage

5

Top fivE CAUSES of DiSpUTES iN MiDDLE EAST CoNSTRUCTioN pRoJECTS 2014

A failure to properly administer the contract remained the most common cause of dispute in the region, followed by poorly drafted or incomplete and unsubstantiated claims, which demonstrates the need to get the basics right. One striking statistic 14 Middle East Consultant July-August 2015

from disputes in the Middle East was that almost half of joint ventures ended up in dispute during the year, for the second year running the highest of any region covered in the report.

The three most common methods of Alternative

Dispute Resolution that were used during 2014 in the Middle East were: 1. Arbitration 2. Party to party negotiation 3. Mediation

on topic DISPUTES

Supplied by

The value of construction disputes in the Middle East has risen 88% to $76.7m over the last year, the biggest increase since 2011 how hAS ThE MiDDLE EASTERN ECoNoMy iMpACTED DiSpUTES?

In the years prior to the global financial crisis, construction in Dubai boomed, raising concerns over the scarcity of resources as price inflation peaked. However, the recession had an impact across the region with a dramatic stall in projects in the UAE in particular. Across the region, other countries also saw minor slowdowns, but recovery had started to take hold by 2011.

The response of the regional government to the Arab Spring protests drove large social infrastructure investment programmes and growing construction outside the UAE. Saudi Arabia alone dedicated $517 billion to transportation, energy and education projects. International events such as Qatar’s 2022 World Cup and the 2020 Dubai World Expo are also driving growth .

In spite of this, following the departure of some expatriate white collar labour, the pool of talent needed to deliver these programmes is limited.

This has exacerbated delivery constraints in some countries. The complex nature of the infrastructure investments, limits on human resources and the extensive use of joint ventures have raised the likelihood of disputes.

Regions recording an increase in the number of disputes over the last 10 years Qatar 800 600 400

Saudi Arabia

200

UAE 2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

ThE MiDDLE EASTERN pERSpECTivE

With risk comes reward and it has been said before that he who dares wins. Most contractors are aware of these maxims and are not risk-averse. Contracting is a risky business and that’s why, after undertaking a thorough risk analysis, most contractors will undertake projects that have a significant amount of risk. Before the economic crisis, the construction projects in the Middle East were becoming bigger and better, each pushing the boundaries in terms of build complexity, time for completion and cost.

Obviously, against this backdrop the contractors’ risk

profile increased dramatically, as did the rewards.

What brought the market crashing down was the unforeseeable, some would say, economic crisis.

This caused significant losses to all involved. The parties faced a dilemma whether to spend money in trying to recover these losses or to write them off and hang on to the money they had. Some did the latter while others put their claims on ice.

Thankfully, the Middle East construction market is back in full swing and contractors and employers are now seeing more liquidity in the market. With

this, though, parties who chose to park their losses now have the funds to pursue claims.

In 2014 we saw a number of high-value claims being initiated for projects that were undertaken in 2008-09 due to money now being available to pursue those claims. This would appear to be the main reason why the value of the claims has increased in the region. Also, due to their complexity, these claims have taken longer to resolve. We predict this trend to continue throughout 2015 as more parties have the required liquidity to pursue their claims.

July- August 2015 Middle East Consultant 15

IN PRACTICE SIMON MOON

Interview

STAyINg oN CouRSE

Simon Moon, CEO – Middle East for Atkins, tells Gavin Davids that the consultancy giant has never been in a better place to set the standard for the region

hE

fIRST

wEEk

of

JuNE

2015

SAw

international consulting giant Atkins release its global financial results for the year ending March 31, 2015. Of particular interest to observers in the region were the Middle Eastern results, which analysts predicted would be a major factor in the consultant’s overall growth over the last year.

They were not disappointed, with the figures showing that the Middle Eastern business had a strong overall performance during the financial year, with revenue up 28.7% to $337.1 million, a significant increase from 2014’s $262 million. In addition, operating profit was up 56.3% on last year, a consequence of the consultancy’s continued strategic focus on major projects and programmes in the rail, infrastructure and property sectors in the UAE, Saudi Arabia and Qatar.

With operations in the Middle East going from strength to strength, ME Consultant sat down with Simon Moon, chief excutive officer, Middle East, for Atkins, to discuss a wide range of topics – from his take on regional operations, to how the consultancy is looking to tap into an underutilised resource in the job market.

The first order of business is to ask him why operations in the Middle East have been such a resounding success. He puts it down to a fairly simple reason: “All the bits of the company have significant projects, but the amount of major projects that we have in the Middle East, 16 Middle East Consultant July-August 2015

if you look across [the region], we have three metro projects that we’re designing at the same time – in Riyadh and two in Doha, and those are pretty significant group-wise. Then as well, we’ve got the major roads and drainage programme in Qatar, and there’s also some of the big property projects we’ve got underway across the UAE. “There’s been a good set of results that I think signify the focus that we’ve had over the last three or four years, focusing on those major programmes across the region – in property, infrastructure and rail across the UAE, Saudi Arabia and Qatar. It’s very exciting and it shows good focus."

Despite speculation that the regional construction industry will suffer as oil prices continue to fall, Moon remains confident that Atkins will not be too adversely affected, due to the strategic decisions taken by the firm.

“We’ve not seen a massive impact as a designer at the moment. A lot of the projects that we’re involved in are government projects, even the property projects are being driven by government sentiment and aspirations. We’ve seen those continue to have a very strong commitment."

“If you look at Qatar, a lot of their major infrastructure going in there is around their vision for 2030. It’s the same in Saudi Arabia. So I think the major transportation programmes don’t seem to have been affected. Certainly not the current ones that are being delivered. And if you then look at the real need in Saudi Arabia for their economic

IN PRACTICE SIMON MOON

“A lot of the projects that we’re involved in are government projects, even the property projects are being driven by government sentiment and aspirations. We’ve seen those continue to have a very strong commitment” July-August 2015 Middle East Consultant 17

IN PRACTICE SIMON MOON

diversification, the work that we’re doing with the economic cities and so on, those don’t show any sign of having their budgets cut."

However, he does concede that there will be some sort of correction within each government, pertaining to the overall spending of the budget. He explains that it is because of global events like the fall in oil prices that Atkins remains resolute in focusing on projects that have long-term integrity and aren’t specific to one-off events.

“I think we’ve found a way to avoid any major downturns in the market,” Moon says. “But if the question is broader, can the Middle East continue with these low oil prices, without correcting their budget spend? I think that it’s unlikely.

Even though Saudi Arabia has clearly said that they have the reserves to continue, no matter what the oil prices are – and that’s probably true – but with the change in ruler, they’ve looked at what’s important and what the priorities are."

“Clearly security has increased in their priorities, social cohesion has increased in priority, and so has healthcare, education and proper transportation networks. Those things are, I think, underlying and have a real greater need. They will stay committed to them, rather than the short-term oil prices," he explains.

Meanwhile, Moon expresses satisfaction with the way operations in Dubai are proceeding, with the consultancy involved in a number of major projects, driven by major developers like Emaar and Meraas.

“Over the last six months we’ve talked to clients like Meraas and Emaar and seen some pretty significant schemes launched. If you look at the Deira Waterfront, you’ve got all these developments by Meraas around the drive of the canal, through to Jumeirah and Satwa.

"There are some really interesting projects that have a real purpose behind them in terms of creating more integrated places to live, work and play."

“We’re certainly involved in a number of those, even with Habtoor, on the Habtoor Residences project that will be on the canal. Then there’s the Prince Sultan Cultural Centre in Jeddah. These are the types of projects that we get really excited about being involved in. Those that have a bit more integrity about them, which look at how you can have a mixed-use development with some decent urban realm.

These are the types of things that we’re following, and I do see these projects continuing to come through, particularly in Dubai. There are some big schemes coming through there,” Moon says.

Qatar is another market with intriguing possibilities for Atkins, even with the uncertainty currently surrounding it thanks to the storm of allegations swirling around Sepp Blatter and FIFA. Despite this, Moon insists that the World Cup, whether or not it stays with Qatar, will not be a factor in Atkins’ operations in the Gulf state.

18 Middle East Consultant July-August 2015

Atkins' focus will continue to remain on the largescale, vital transport and infrastructure projects that are insulated from external factors, Moon says.

IN PRACTICE SIMON MOON

Atkins preliminary results Key performance indicators

2015

2014

Change

Revenue

$338.9m

$263.3m

+28.7%

Operating profit

$35.19m

$22.51m

+56.3%

Operating margin

10.4%

8.6%

+1.8pp

Work in hand

74.2%

62.7%

+11.5pp

Safety – accident incident rate (AIR)

36

53

-17

Staff numbers on 31 March

2,668

2,071

+28.8%

Average staff numbers for the year

2,421

1,985

+22.0%

Staff turnover

16.1%

16.0%

+0.1pp

fINANCIAl mETRICS

PEoPlE

“We’re very much focused on, as I said earlier, the types of projects that have something behind them, that’s more than a single event. If you look at the investment Qatar is making in the Metro system, in the local roads and drainage programmes, those are the projects connected to the national vision, and the World Cup just happens to be a milestone along the way. They’ve always been very clear on that. The work that we do with the Central Planning Office, which is at the heart of government in Qatar, is very much about properly planning that infrastructure spend over the long term, aligned with the national vision.”

Given the pipeline of projects that Atkins has in the Middle East, perhaps it’s time for the firm to step up its recruitment efforts? Not so, says the CEO. He explains that the consultancy’s delivery model is very much about exploiting regional capabilities, in tandem with the firm’s global capabilities. Though revenue growth is most definitely a target, regional staff numbers aren’t expected to increase.

“We use our design centres here in the region, as well as design centres around the group and in India. If you look at something like the Gold Line in Doha, for example, that’s being delivered with a strong team on the ground, with about 30 to 50 people in the city, close to the DMB contractor. Then we’ve got stations in design in Hong Kong, the UK and India.

That’s a more agile model for us, so that we don’t need to be putting a lot of boots on the ground in the Middle East.

“Having between 2,500 and 3,000 people is a good solid base. Any more than that and I think you expose yourself to the vagaries of the region. It also means that we can crank

in the best skills that we’ve got in design and engineering, from around the world.”

Despite not having fixed recruitment targets, Moon does reveal that the consultancy is making a concerted effort to target an under-represented sector in the employment market, that of the young GCC population. Getting employees from the region more actively involved in the firm’s operations is something of a personal mission for Moon, who explains that he sets annual hiring targets.

“Surprisingly, we find it easier to recruit nationals who are female, rather than male. They seem to be a lot more eager to go into the private sector and into professional organisations.

If you look at architecture, we recruit 20 to 30 graduates a year, and I insist that a quarter of those have to be nationals, and that 50% of the graduates have to be female.

“We actually find it easier, particularly in Saudi Arabia – which is really interesting. We get some really talented female Saudi Arabians wanting to join us. It’s mostly in architecture and engineering, but nevertheless, we find it quite exciting.”

While there are rules and regulations in place to encourage nationalisation, Moon insists that is not the primary factor driving recruitment of locals.

“This is more about the fact that I really believe that if you’re in those countries [in the GCC] and if you’re representing them, then you can be much more effective with clients if you have local professionals working with you.

So actually the diversity drive, both in terms of ethnicity and gender, from a nationals point of view, is quite exciting, and we’re doing reasonably well in that space.”

“We find it easier to recruit nationals who are female, rather than male. They seem to be a lot more eager to go into the private sector and into professional organisations” July-August 2015 Middle East Consultant 19

IN PRACTICE SIMON MOON

“We choose, very carefully, the types of projects that we get involved in, and the types of clients that are committed to improving construction safety”

Atkins can help set the standard for health and safety through its associations in the industry, Simon Moon insists.

Another passion project for Moon is the standards of health and safety in the region. He’s keen for Atkins to take the lead in the field and help set appropriate standards for the Middle East, both at government level and in the industry.

“When I came to the region about three years ago, one of the things that struck me in particular was the varying degrees of construction safety and worker welfare that exists across all the places we work in. I thought that we needed to – rather than avoid the issue – step into it. Given that we’re a strong player in this field and that we have a strong brand and reputation, we’ve got a chance to educate and change.

“We created something called the Atkins Minimum Requirements for Construction Safety, which is pretty straightforward. It just says that if you look at the global standards, but also the standards in the countries we work in, they’re pretty high. So let’s just tell clients to actually implement them.”

The major issue facing the construction industry’s health and safety standards isn’t actually the standards themselves, Moon points out. Of bigger concern is the actual

20 Middle East Consultant July-August 2015

implementation on-site, and this is where Atkins can have a lot more influence.

“We do a lot of design that we then take on to site supervision. So I’ve raised the bar pretty high in the way that we engage with contractors, the way that we go into our terms and conditions, and the criteria we put in there to make it very clear that we have the ability to really influence site safety.

“And then we choose, very carefully, the types of projects that we get involved in, and the types of clients that are committed to improving construction safety. We’ve done that at a working level with projects, we’ve shared those minimum requirements with the industry, and we’ve won various awards around that leadership,” he explains, justifiably proud of his firm’s achievements.

“It’s not a competitive position as far as I’m concerned.

We share that [knowledge] with all of our contractors and all of our consultant colleagues in the industry. In Qatar, we’re engaged pretty heavily through the Central Planning Office with worker health and safety. We’ve really helped the government define some standards for worker communities and have written those standards up, and now Qatar is actually using those to drive into the supply chain the higher levels of worker community requirements.”

As promising as these steps are, there remains a tremendous amount of work to be done, especially when it comes to making change at the ground level. While governments and major developers and consultants may understand and be willing to change the way worker health and safety is approached in the Middle East, the real challenge is implementing those changes at a working level.

Moon acknowledges that this will need continuous effort from not just Atkins but the entire industry, but he remains determined to see it through to the end. “If I talk to clients and professional organisations, both in the government and private sector, at a senior level, they absolutely understand this and put policies into place, and we help them do that.

Where you find the challenge is at the working level, when you walk onto a construction site and see how they’re actually implementing the intent that has been set out."

“It’s really about winning hearts and minds, and making people aware that you can save money [through following high standards of health and safety]. A lot of people put it down to money, but actually we’ve got plenty of evidence that shows that if you have a safer place for people to work, and if you look after their health and welfare, then you actually get a more successful project. It’s all about educating them at that level. Clients certainly get that, but when you get to the working level, it’s about getting really good site supervision people or resident engineers that have the tenacity to hold the client to account about the working levels on sites,” Moon reiterates, as the interview comes to a close.

IN PRACTICE CorporatE SoCial rESponSibility

insight

22 Middle East Consultant July-August 2015

IN PRACTICE CorporatE SoCial rESponSibility

Sustainable CSR practices of consultants, and their impact on the built environment

July-August 2015 Middle East Consultant 23

IN PRACTICE Corporate SoCial reSponSibility

T

he idea that successful businesses can only exist in successful communities is by no means new or radical.

IN fACT, ThE EARly RooTS of SoCIAl

responsibility among corporates can be traced as far back as the eighteenth century, among the business practices of companies like Cadbury that are still booming today.

Fast forward a hundred years, and corporate social responsibility (CSR) has a foothold in every government, industry and business across the globe. The concept of CSR has also evolved from being just a philanthropic exercise to being about creating shared value that profits the environment, society and business alike. One method of accomplishing this is through a conscientiously devised sustainable business model.

Interestingly, consultants in the construction industry have linked CSR and sustainability to their core business. They've achieved this by nurturing budding architects and engineers right from the high school and university levels.

Atkins, for one, says it has always had a particular interest in sustainable design, believing that designing in a sustainable way should be the stock and trade of every consultancy, and has found a way to link that to their CSR initiatives.

“For Atkins, CSR is about mutual benefit as much as it is about anything else. It’s all about improving people's lives in the cityscapes that we're intervening in with clients,” says Simon Crispe, client director at Atkins. “What we’ve done for example, is build a relationship with British University in Dubai (BUiD). We've been working with BUiD for the last 10 years and support their Masters in Sustainability programme.”

A consistent CSR practice amongst consultants is engagement with the student community to generate new ideas and harness talent.

Simon Crispe, client director at Atkins.

24 Middle East Consultant July-August 2015

“What we do is, we work with their students in identifying challenges in the built environment that we encounter but haven't necessarily had the opportunity to research fully in our daily professional lives. We help them set topics that we would like to see researched, whether that may be researching the most efficient photovoltaic cell, or looking at ways to breathe life into existing concrete structures, or even looking at the optimum way of calculating a concrete mix that reduces the amount of embedded carbon.”

Focusing on universities as a venue for carrying out CSR initiatives is a recurring theme among consultants in the Middle East. RSP too admits that after extensive internal discussion, the best way they could give back to the community was to provide services to the education sector.

“Michael and I are involved in Canadian University in Dubai,” says Ralf Steinhauer, vice president of Hospitality and project director Middle East at RSP. “I have a part-time professorship there and Michael Magill, our design director, comes in for presentations and lectures and also as a guest jury. How we really want to help young students in the UAE is advise them on architecture, design and engineering in the real world and give them a sense of what work life is like after they finish their education.”

“This is something that we feel very strongly about, because life and work in schools and universities don’t necessarily prepare you for what’s coming next. I think why we can help with that is

Ralf Steinhauer, vice president of Hospitality and project director Middle East at RSP.

IN PRACTICE Corporate SoCial reSponSibility

because we are professionals and not pure academics. We convey what the reality of the business is and still have fun with it.”

Focusing on both the social aspect of its business and the education sector, Lacasa draws on its architectural expertise to nurture the talent of students. Their first CSR initiative started back in 2006 when the company was founded, with a scholarship programme in Palestine.

“Education has always been one of our brand values,” says Ayman Jaber, director of Brand and Marketing Solutions at Lacasa. “For one, we’ve been funding scholarships in Palestine for students who have good grades but aren’t able to afford education. The scholarships are on a yearly basis and we cover all of their tuition costs.”

“What we’ve done after that is start a design competition called Build Your Future in the UAE. When we first started planning this competition, we asked students how they would like us to participate and what kind of incentive they would like. What they said was that they’re afraid of not finding jobs when they graduate.

“Now obviously we can’t just hire everyone who graduates, so we thought of a competition that helped us pick the best of the best. What we’re doing is, we give them all a common brief. The brief is for a school that we’re building in Palestine right now, which is in its second phase. So they do the concept design for it, and if they win, we will actually use their design and they will help us develop it further. Secondly, we offer them a full-time placement in our concept department as soon as they graduate. For the first and second runner-ups, we give them a three-month internship, and obviously if they do well we hire them eventually.”

Initiatives like Build Your Future also help the consultancy space address the longstanding issue of a lack of talent, especially in the Middle East. Crispe also admits that Atkins have used their research programmes at British University to harness talent by providing internships and later taking on many students full-time after they graduate.

Ayman Jaber, director of Brand and Marketing Solutions at Lacasa.

Besides giving back through the education sector, sustainability and energy consultant AESG says there are other ways for a company to exist in harmony with the region. CSR is especially new in the Middle East, and the firm focuses on working with different participants in the construction sector to reduce their carbon footprint.

“Education has always been one of our brand values.

What we’ve done is start a design competition for students called Build Your Future in the UAE” “We work a lot with contractors, developers and design firms in the region,” says Nivine Issa, sustainability consultant at AESG. “We started doing CSR consulting in late 2013 as it is one of the core services we offer as a sustainability consulting firm. If we’re talking about architectural and design firms or even developers in the construction industry, I would say there are simple things that can be done for a more community and environment-conscious operation.”

“The first and most simple way of giving back to the community could be through internal supply chain management, basically making sure that raw materials such as office supplies are from responsible and environmentally friendly suppliers.

“Sustainable design would be the next focus point.

Nowadays, we’re seeing a very strong shift towards sustainable design with the enforcement of several regulations in the UAE,

Nivine Issa, sustainability consultant at AESG.

Ensuring office materials come through green suppliers is another simple CSR and sustainable practice.

July-August 2015 Middle East Consultant 25

IN PRACTICE Corporate SoCial reSponSibility

for example Estidama in Abu Dhabi and the Dubai Green Building Municipality Regulations. Sustainable design does not only ensure a cohesive functional operation of a building, but also helps reduce water and energy operational costs and subsequent maintenance costs.

“If you look at it, it’s actually a win-win situation because a sustainable design means that the company is reducing their costs and preserving the environment. We very rarely see environmental issues as money-making ventures, which is unfortunate because we don’t recognise the long-term impact.”

While good CSR practices definitely build the brand image of a firm, expand clientele and create a competitive advantage, measuring the impact of CSR and sustainability programmes and quantifying the return on investment has been a challenge.

Jaber declares, “There’s no direct way to quantify growth or impact on revenues with these CSR strategies. We’ve obviously seen our client base grow, but there’s no way of saying that we gained X number of clients specifically because of our initiative.”

Steinhauer agrees, “I think it’s hard to quote numbers; we mostly invest our time in it, so it’s hard to put that into a figure.

But it’s something that our clients appreciate, and it’s always been a great icebreaker with new clients because it adds to our credibility and respect in the community.”

Crispe explains that the programme at Atkins has helped them implement research data in actual client projects. “The RoI for us is the quality of information that we can bring to our business through these research topics, and we’ve been able to offer things to clients that come directly from the research that we do.”

“For example, for about four years we had a rig set up on top of our building in Bur Dubai and asked the students to test the long-term efficiency of PV cells from different manufacturers in the world. We had those tested to establish the impact of 26 Middle East Consultant July-August 2015

hot weather and a very dusty climate on these PV cells, and evaluated which ones performed well, which ones didn't and what different orientations worked best. This is the best example of a specific piece of research that now helps us.”

“We very rarely see environmental issues as moneymaking ventures, which is unfortunate because we don’t recognise the long-term impact” Issa too agrees that it’s very hard to measure the financial or social impact of CSR in figures in services firms, but recommends that companies adopt key performance indicators [KPIs] to monitor their resource consumption over the years.

This could mean monitoring things such as electrical and water usage, as well as paper usage for example. She says that many companies have now started adopting sustainability reporting to complement their CSR strategy, as it informs the public of the firm's activities and performance on an annual basis.

There are many benefits of marrying CSR and sustainable development, and despite not always being able to quantify them, consultants aren’t discouraged from innovating other means to give back. Lacasa proudly declares that it is trying to tie up with other organisations to raise funds to educate women and build schools in other countries. Atkins too is pioneering a global initiative, Future Proofing Cities, to improve the way cities are developed.

Build Your Future is a design competition

by Lacasa that uses a student's design to help build a school in Palestine.

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IN PRACTICE OFIS / SteelcaSe

Georges Roux says that a welldesigned workspace helps to nurture staff.

28 Middle East Consultant July-August 2015

IN PRACTICE OFIS / SteelcaSe

Profile

InclusIve DesIgn

I

ME Consultant speaks to Georges Roux from Steelcase about how inclusively designed workspaces can improve staff performance and efficiency n June of this year, ofis al GurG office

Furniture, the interior design and furnishing practice owned

by Easa Saleh al Gurg Group, held a special event to engage with local commercial architects, designers, consultants and decision-makers.

With the name Inclusive and Collaborative Design Practices, the event featured industry experts speaking about employee wellbeing, workplace efficiency and achievements as a direct result of having accessible, flexible, connected and purposedriven workplace solutions.

One of the main speakers was Dom Smith, founder of Disabled Entrepreneurs (UK) and brand ambassador for Muzo, the furniture brand that specialises in providing accessible furniture for physically challenged individuals.

As someone who lives with cerebral palsy, Smith shared his personal experiences and challenges in the working world.

The other main speaker was Georges Roux, a leading workplace architect from Steelcase, who shared his expertise on work environments designed to nurture physical, cognitive and emotional needs that help to foster engagement and collaboration.

Following the event, Roux made time for a one-on-one interview with ME Consultant, to discuss the event and how design plays an important role in employee performance.

What was the purpose of this event at ofis, and what core aspects did your talk focus on?

The talk was built around what we call the ‘power of place’, which means that today, most real estate managers consider that the building is just the cost centre. In fact, this is not the way you want to manage it. The best way to look at it is that instead of thinking about it as the cost centre, the building is

the first impact on the people who need to be more productive.

If you want to ‘seduce’ people in a company today, you need to meet with three ranked criteria which make the difference whether or not people do or do not join companies.

What are these three criteria? how does that tie into the overall performance of staff in an office?

If you want to bring in people through bonuses and wages, that’s the third position. If you want to bring in people with the flexibility that they can choose to work wherever they want, then this is the second position. And the first one is the look of the place that where you work.

We consider today, that a ‘sad’ building doesn’t help people to have interesting and creative ideas. So we have to give a lot of importance to the look of the space, but in order to proceed with that, we need to know many things.

First of all, a building seeds and nurtures what we call the ‘engagement’. It’s more of an implication. We see that engagement as the way in which people behave, with a lot of past history. People go to business, open discussions and are more creative and innovative. CEOs consider this to be the bottom-line issue today. Instead of understanding what they’ll buy as equipment, like chairs and tables, they just want to know how the business will perform tomorrow and how it will drive the company towards the future.

So engagement means that first of all you have to estimate how many people will be engaged in an office. In fact, the UAE has one of the highest engagement rates. Worldwide, we know that the engagement rate is 13%, in America it’s 30%, in this region it’s probably 26%, which is very good. If you go to Saudi Arabia, it does not exceed 9%, if you go to France, it's July-August 2015 Middle East Consultant 29

IN PRACTICE OFIS / SteelcaSe

One of the key points made at the OFIS event was the importance of creating workspaces in collaboration with the dayto-day users in the office.

“We consider today, that a ‘sad’ building doesn’t help people to have interesting and creative ideas. So we have to give a lot of importance to the look of the space” 8%, which is very low. You need to understand why they’re not engaged.

The second thing is that we need to organise a place where people have control of the space. Control is basically what they do with collaborative processes – whether it’s a space for a team meeting or a place they use to discuss private concerns.

Of course, this is not necessarily offered to people today, but what we want to do is specify a place which is more than an environment where you know you will produce something.

It’s a place which is a destination.

What do you pay more attention to? is it the executives who are paying for the space, or the day-to-day users who will be inhabiting it on a regular basis? What is the process for designing an office space?

We pay attention to the life of the people, through what we call the design thinking process, which consists of observing, understanding and synthesising.

Next, we go through the prototyping process, which is when people make mark-ups. They just imagine their life for tomorrow.

It’s hours of work where people provide what they will like to do collectively – for developing ideas, for storing ideas, for resting, for being alone, for being in teams. All of this is said through official documents. This phase allows you to make a prototype.

The next stage is shape of concept. At this point, people will just make some mock-ups, leave the mock-ups, test them and validate or not the solutions, and improve them. Once you’re done, you’re at the point where you can summarise what you’ve learnt through these phases, which allows you to write what we call the programming. The programming is just the roadmap for the future specifier or architect who will, just after designing the space and the outside signature, will just go in depth within the building now and adapt the future space to the real desires of the people. They will not invent anything from scratch, they start with very consistent information documents which have been created and co-designed by the whole community who will use it.

30 Middle East Consultant July-August 2015

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On Site MIXED-USE DEVELOPMENTS

Analysis

E H T US E D E X I M

32 Middle East Consultant July-August 2015

On Site MIXED-USE DEVELOPMENTS

de x i m w o h s e e h n t i g m in xa p e a o h r s n e r u s t e M r c a e a j n s o i t r n p e r Dav i m e p h t lo e w v e e i v d use evelopers way d July-August 2015 Middle East Consultant 33

On Site MIXED-USE DEVELOPMENTS

O

ver the last decade, mixed-use developments have moved to centre stage in urban planning, redefining the real estate landscape in the Middle East.

One-StOp-DeStinAtiOn DevelOpMentS

The diversity of risk involved in a mixed-use development is another factor that makes it a sound investment option for developers.

have mushroomed over every major city, bringing daily essentials like residential, hospitality, office space and retail all within a single address.

“You're looking at it as a place where the entire family can come spend time,” says Michael Connor, associate director at Faithful + Gould. “So you need a space where you can do shopping, where there are restaurants, casual entertainment, hospitality, maybe even a fine dining experience. Basically, you are looking at capturing the consumer so that the entire family can come down and maximise their time and experience.”

Another factor driving the increase in mixed-use developments is “the requirement to build new districts in a city”, says Dean McGrail, director of Property and Building at WSP | Parsons Brinckerhoff. “The Middle East has taken cues from around the world that when you want to keep an area vibrant throughout the week, 365 days a year, you have to have a development that does that. In the Middle East, you're building more and more cities and towns, so you need to bring a lot more revenue into every area.”

But the mixed-use concept, especially in the UAE, is by no means a recent phenomenon. “The idea of a mixed-use project is quite old,” notes Isam Ababneh, director of Projects at Union Properties. “Since 2004, the concept of having building communities has become popular. If you look at Abu Dhabi or Dubai, all of those buildings have a couple of retail shops downstairs and residential units upstairs, so they can be

34 Middle East Consultant July-August 2015

considered as very basic mixed-use projects. Nowadays, you have larger developments like Motor City, which has villas, a few buildings, a couple of retail units, etc – all these feature create a complete community so that the person does not have to go outside for anything, be it dining or shopping.”

Over the last few years, a large number of mixed-use developments have been made a part of urban planning, with their added value over standard single-use developments steering demand. Developers say one of the biggest advantages of a mixed-use project is the diversity of risk, which gets distributed over four elements – residential, hospitality, retail and office – ensuring that investments are spread out and developers are safeguarded.

Studying market demand to identify what mix works best in an area is crucial to the success of a mixed-use development.

One key element for nearly all mixed-use properties in the Middle East is retail, according to McGrail. “The mall becomes the focal point of any development nowadays, and around that mall you would have residential use, office space and maybe villa type of accommodation. It’s really developers and building owners looking to cut down on the transit time. If you look at the Marina, for example, you can go to the Marina Mall to shop and at the same time you could be going to the office and be living close by as well, so that’s really cutting down on commute time and making everything accessible.”

While the synergy of complementary uses may increase cash flow, securing steady revenues also largely depends

On Site MIXED-USE DEVELOPMENTS

on managing the facility and operations over the long run. Identifying key performance indicators, establishing performance management systems and balancing cost against quality is essential, especially in large mixed-use properties.

“From an operational cost point of view, the main thing would be setting a service charge,” notes Chris Bond, director of Consultancy at Mace Macro. “There are two things to keep in mind while doing this. First is what the market will bear, and the other is what is required to maintain the development to the standard needed for it to be fully functional for its design life. Now this could involve things like value engineering, when you’re looking at what the market will bear and what's required," he explains.

“Another factor is setting a realistic base for operational costs. For example, when we're talking to clients, we want to get a good understanding of what their objectives are and what their service quality is and then manage that expectation. So if they're looking for very high quality, they have to understand that that will cost them a lot more. When we do the design models, it's typically more than what they're expecting.”

There are a number of ways of keeping operational costs in check, says Bond. “You need to opt for things like multiskilling. For example, if you use security staff or resources to identify issues in the building and then report it back, you can keep operational costs down for a mixed-use development. You can also look at reducing the number of contracts you have, so for example, instead of having separate facilities management contracts for retail, residential and commercial, perhaps you

“The mall becomes the focal point of any development nowadays, and around that mall you would have residential use, office space and maybe villa type of accommodation” can get a single company to do all of that.”

Sticking to a budget goes a long way as well with mixeduse projects. As Connor points out, “The budget's got to be managed very carefully. You have to establish what the cost centres of your development are going to be and then control cost expenditure within that. Expect that there may be change, so that budget has to have an element of contingency, and there has to be robust change management so that that contingency is accessed for justifiable reasons.”

“At WSP | Parsons Brinckerhoff there’s a team that goes and looks at different areas of the design that could potentially be reduced to get the project back on budget,” says McGrail.

“That’s a very intricate and consulted process between all components of the design team that the developer, the engineer and the cost consultant need to look at. Sometimes the decision could even be to increase the budget, if there’s a

The long-term success of a mixed-use development also depends on setting a realistic base for operational costs.

July-August 2015 Middle East Consultant 35

On Site MIXED-USE DEVELOPMENTS

Chris Bond, director of Consultancy at Mace Macro.

Isam Ababneh, director of Projects at Union Properties.

Michael Connor, associate director at Faithful + Gould.

very valid reason for the cost of the development to be more than originally anticipated.”

Another element that challenges the financial feasibility of a mixed-use development is the initial cost of land. Ababneh stresses that land acquisition is critical to success. “Land prices in Dubai are quite expensive compared to the price of the end product. For example, if I sell a residential unit for 800 dirhams per square foot and my cost price is 300 dirhams per square foot, that makes up almost 40 to 45% of land cost, which is expensive.”

“Another issue that contributes to the land cost is how much is being paid to prepare the land to receive the product. This includes fees paid for infrastructure in terms of RTA fees, cost sharing, etc, which is ultimately added to the land price.”

A little respite from the authorities in terms of reviewing cost could propel the growth of such projects and increase developer margins in the process, Ababneh says. “What needs to be understood on the part of the authorities is that developers will only create something if they make money.

Even if the developer makes a 20% profit, that money is distributed over four years and it comes with a lot of risk.”

“The market may change by then in terms of construction cost and sale cost. No one can predict the prices going forward or if the market is capable of absorbing the supply. So if I'm paying 2% for land acquisition costs and many other things as well along the way, I'm just about making 5% per annum, which is not a lot. So the amount of money paid at the initial stage has to be minimised.”

Dean McGrail, director of Property and Building at WSP | Parsons Brinckerhoff.

Return on investment (RoI) for a mixed-use development varies depending on the individual elements. Ababneh says, “For example, when I look at my return on investment for retail, I would obviously be looking at the rental portfolio, in which case I will measure it over a certain period and an RoI of 7 to 8% would be okay. We mostly measure this using the internal rate of return, and that should be around 10%.”

External funding is often needed due to the sheer size of a mega mixed-use property, but securing capital is not really an issue if the developer has a good track record, says Ababneh.

“I think lenders are looking for a 50:50 opportunity or a 40:60 opportunity for contribution. They also look for a company who has credibility and strong financials. They are willing to finance a project even up to 50 to 60% as long as they are sure that it will be successful in the long term.”

Despite the challenges of maintaining a budget, keeping operational costs in check and coping with rising land prices, the added value of mixed-use developments outweighs any negative sentiment, and they will only grow in importance as the market and region matures.

Connor agrees, concluding that “The planning authorities are quite sensitive to the needs of the communities. They will therefore have to make sure that there is connectivity between people and that they live in a place where they can look at different ways to spend their leisure time. So on that basis, there will always be a need for continual opportunities to foster that level of community.”

“The planning authorities are quite sensitive to the needs of the communities. They will therefore have to make sure that there is connectivity between people and that they live in a place where they can look at different ways to spend their leisure time” 36 Middle East Consultant July-August 2015

C

M

Y

CM

MY

CY

CMY

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On Site PhiliP Janssens

Opinion

Philip Janssens studied electro mechanics and has worked for Victaulic for more than 15 years. He is currently manager of Construction Piping Services (CPS).

BIM and efficient building Adoption of Bim has picked up pace globally primarily because it makes the planning and execution process more economical From pre-planning and design stages of a project to operation and maintenance of installed building services, Building Information Modelling (BIM) systems offer considerable advantages and benefits.

The imporTAnce of Bim

BIM is a process that enables architects, engineers, contractors and owners to collaborate throughout the lifecycle of a building, from the earliest design concept to demolition of the building. It works on the principle of spending time and effort at the very outset to reduce the risk of problems on-site that can be difficult to resolve, cause delays and incur additional costs.

More than just 3D drawings, BIM concepts include collaboration between trades that have previously worked independently. Using software such as Revit, a 3D computer model can be created that represents the physical and functional characteristics of a facility. This becomes a visual communication tool shared by all stakeholders that can be used to effectively manage project information for consistent, accurate and coordinated models.

In practice, each partner owns their own model. The coordination team brings together the models, integrates the information and carries out clash detection to identify any pipe collisions or interferences within the model.

Once clash detection is run, trades will come together in coordination meetings to discuss and trouble-shoot issues found in the models.

38 Middle East Consultant July-August 2015

This allows open communication and quick resolution during the planning stages.

Since this forms a reliable basis for decisions regarding design details, scheduling and clash detection, BIM-led projects can be planned and executed more quickly, economically and sustainably. eArly AdopTers And legislATion

Although the concept of BIM got off to a slow start, it is now gaining ground globally, including in the Middle East. Regulation in many US states has led to a doubling of BIM adoption over the last five years, while the Netherlands has seen a threefold rise from under 10% to over 30% of projects using BIM in the same period.

The greatest rate of increase, however, has been in the UK, where BIM-led initiatives have risen from under 5% to over 30% of building and infrastructure projects. BIM is now standard practice for many leading construction companies, and as its use gathers pace, supply chain companies are responding.

There is also a recent EU directive to encourage, and even mandate, its adoption in member states by 2016, and the UK, the Netherlands and Norway have already made BIM mandatory for publicly-funded building projects. sTAndArdisATion And scheduling

Compared with traditional building contracts, BIM creates standardisation and a level playing field for all, making cost estimates more accurate and comparison of quotes easier. The traditional bidding process starts with conceptual designs submitted by the consultant, on which contractors base their quote. This often requires bidding contractors to seek more information from the engineering office, make assumptions or take on a large amount of responsibility.

On Site PhiliP Janssens

Having all the information contained clearly and accurately within the model in advance means the job can be priced easily, helping owners to compare bids and reducing risk for clients and contractors alike. Changes can still be made at a later stage if required, but unnecessary change orders that can add significant cost to the project and delay completion are eliminated.

Similarly, BIM helps keep projects on track due to its work scheduling capability. The model can be used to map a timeline for construction that shows when and in what sequence components need to be installed. As a result, downtime is avoided, productivity is boosted and owners can see how quickly the work will progress.

Further down the line, BIM can advise what maintenance is needed – when a component needs to be replaced or a piece of equipment serviced. For instance – helping owners draw up a maintenance schedule to ensure optimum system performance and thereby contain costs.

This facility can be especially useful for retrofits.

It is a prime enabler for lean construction that can be relied upon to facilitate prefabrication, since contractors can use the 100% correct model to determine cut lengths of piping and start prefabricating assemblies with total confidence. Just as prefabricating in ideal conditions off-site delivers greater efficiency on-site, using BIM removes uncertainty and eliminates problems during construction and installation. The philosophy is the same: spend time at the earlier stages to reduce problems and time spent in the field where the risk is greatest. conTinuous improvemenTs

Where changes are needed, they can be made safely, quickly and easily. For instance, if an elbow needs to be moved to avoid hitting another component, this can be done in minutes using the model but might take hours in the field.

Clicking on a component identifies the product and gives dimensions.

If the designer changes the diameter, the component also changes and the layout drawing and bill of materials are automatically updated.

This would be much more complicated, timeconsuming and costly using another method.

With BIM software programmes such as Revit, users can draw all piping and other disciplines from the building, to the ducting and

electrical work in one model and co-ordinate to ensure there are no collisions or interferences between the different systems or trades. The 3D model is a powerful visual representation of how a building and its services fit together – useful for contractors and engineers to walk clients through so that they can see how things are positioned.

It confirms, for example, that prefabricated sections can be dropped in as required and that there are clear access routes for maintenance staff or otherwise clearly shows if there are clashes, in a way that would not be possible with other methods. Where changes are needed, they can be made safely, quickly and easily. For instance, if an elbow needs to be moved to avoid hitting another component, this can be done in minutes using the model but might take hours in the field. mAnufAcTurers And Their role

Leading manufacturers in the pipe-joining sector have taken steps to allow users to effectively integrate products into BIM software systems.

At an individual project level, company experts work with designers who include systems in their drawings to help them understand how products can be best used and routed in specific software.

For example, Victaulic works with major BIM software manufacturers including Autodesk, Bentley, Progman and Stabiplan to ensure that its products can easily be used within their packages, such as AutoCAD, Revit MEP, Fabrication, MagiCAD and StabiCAD. Projects that have produced drawings using the extensive Revit BIM-enabled Victaulic CAD library include the London Heathrow Airport New Terminal 2 – a recent Building Services Project of the Year finalist – and the Weggeler Centre, Almelo, a flagship BIM project in the Netherlands.

Just as CAD and prefabrication revolutionised design and construction and became the industry norm, so BIM is set to become the standard practice globally for the efficient wholelife management of building projects.

With a growing number of products and increased support available to partners, the way forward to project success is clear. Using BIM to focus on design detail and pre-construction work delivers right-first-time results on the job and allows easy maintenance and smooth operation for the life of the building.

July-August 2015 Middle East Consultant 39

On Site CRAIG GIBSON

Opinion

Craig Gibson works with Omnium International. He is dual-qualified in law and quantity surveying.

Asking taxing questions Corporate taxation in the uAe is in the news again. Craig gibson takes a close look at what it could mean for the construction industry Interest in United Arab Emirates taxation has been aroused again by the undersecretary at the Ministry of Finance, Younis Haji Al Khouri, stating that a draft of corporate taxation reforms is likely to be finalised in Q3 2015.

The UAE public seems to discuss tax in the UAE periodically – understandably, since it could influence whether many of us, or our employers, continue to consider the great nation of the UAE to be our home.

oil companies and foreign banks are forced to pay corporate tax, at levels of up to 55% and 20% respectively.

Despite each emirate being able to apply corporate tax independent of its neighbours, they all appear to recognise the collective strength of a unified strategy.

A similar understanding appears to be in effect at Gulf Cooperation Council level. Other than Bahrain and the UAE, all the GCC countries impose a general tax on companies. Perhaps the UAE is looking to capitalise by realigning that general tax with the GCC collective. However, I do not think it would be to the UAE’s benefit to enforce a wider corporate tax policy in isolation from other GCC countries, as it would compromise the UAE’s competitive edge. double TAxATion

Timing And FrAming

Two notable points regarding Al Khouri’s announcement are its timing and its framing.

Firstly, the IMF is a vociferous supporter of the UAE introducing excise taxes and a more standardised corporate tax policy, and it is to the IMF that the UAE will this year post its first fiscal deficit since 2009. Secondly, he stopped short of suggesting a timeframe for implementation.

It is important to recognise that the UAE already has corporate taxation legislation in place; the current musings concern the development of the legislation, not the embryonic introduction of it.

TAxATion

Corporate tax in the UAE is not currently a federal matter, it is dealt with at emirate level.

So there are policy differences between emirates, and in theory each is entitled to enforce such taxation as it sees fit. In practice however, only 40 Middle East Consultant July-August 2015

The UAE has bilateral treaties with a number of countries to restrict double taxation on companies doing business in the UAE. This means that the taxation on remittances a company makes to its global head office is offset against the equivalent taxes it is liable for in the UAE. This makes the UAE an attractive place to do business, even more so when one considers that the UAE does not, in practice, demand those taxes for which the company is liable.

This is relevant to the majority of businesses in the UAE, but for the purposes of this article I will focus on manufacturing companies and suppliers.

Insofar as the implementation of double taxation practices remains the same between the UAE and the country a material is sourced from, the price of the material is not greatly impacted by the enforcement of a corporate tax policy within the UAE. This is because the first principles of said material cost remain unaffected in their country of origin.

On Site CRAIG GIBSON

Countries the uAe has double taxation treaties with Africa

Asia

Europe

Middle East

N America

Australasia

Algeria

China

the Philippines

Belarus

Germany

Romania

Jordan

Canada

Egypt

India

Singapore

Belgium

Greece

Spain

Kuwait

New Zealand

Morocco

Indonesia

South Korea

Bosnia

Italy

Switzerland Lebanon

Sudan

Japan

Sri Lanka

Bulgaria

Malta

Turkey

Tunisia

Malaysia

Thailand

Finland

the Netherlands

Pakistan

Turkmenistan

France

Poland

Syria Yemen

operATionAl CosTs

CommerCiAl ACumen

The operational costs of companies in the UAE merit greater consideration. The increased administrative costs associated with enforced corporate tax would probably not drive those companies out of the UAE, but they would be forced to optimise their operational costs. This would lead to smaller workforces, smaller staff remuneration packages, more stringent payment terms with suppliers, etc.

This could lessen the pull factor of the UAE as an international expat destination, and businesses with global operations may shun more onerous payment terms, particularly considering payments terms in the GCC are already very unfavourable to providers.

Ultimately, companies already established in the region would not likely depart, as the costs associated with such relocation are gargantuan, without factoring in associated costs of loss of productivity, start-up and business development costs elsewhere. Therefore, these costs would be absorbed.

This absorption, however, may lose the UAE some of the region’s most sophisticated minds, who may no longer consider the UAE to be as attractive a hub to live and work.

Nonetheless, let’s give industry leaders and decision-makers the credit they deserve by recognising that the greatest impediment to the enforcement of amended corporate tax legislation is commercial acumen.

The ten largest general construction contractors in the UAE are private companies that are not obliged to disclose all their finances. Many of the largest international contractors, which operate in the UAE as joint-venture partnerships with local companies, dilute their earnings within an international division of the company so that the performance figures of the company acting within the UAE or region are malleable depending on their business objectives and strategy.

At the other end of the spectrum, smaller, familyrun construction companies founded on building skills cannot afford the resources, technology or time to navigate a complex taxation framework.

The USA found that three quarters of 2014 tax return respondents complained they lacked the resources to file accurately. Bearing in mind that this is a country whose founding father Benjamin Franklin wrote in 1789 that two of life’s certainties were death and taxes, rushing the topic does not look likely to benefit the UAE.

more sophisTiCATed ACCounTing prACTiCes

sTATus Quo

I must note, however, that the garrulous orgies of the region’s most intellectual soirées are clamorous in their encouragement of more sophisticated accounting practices in the UAE. As undoubtedly recognised by Al Khouri, there are a number of benefits, including improved accountability and greater corporate governance. More intricate accounting and taxation practices would also lead to greater tax-deductible incentives, which would probably benefit charities and improve the lives of the most vulnerable in our society.

Aggressive taxation would be such a tectonic shift of the UAE’s business landscape that it would wreak havoc in the construction industry, an industry which the UAE government has successfully cultivated as part of the UAE’s development beyond oil and gas.

I consider Benjamin Franklin’s hypothesis regarding the unavoidability of death to be empirical, but I am not sure that corporate tax in the UAE is as imminent as the public’s next wave of interest in the possibility. It appears wise that the UAE’s leaders are not in a rush to change the status quo.

July-August 2015 Middle East Consultant 41

on site roundup

Update Dubai’s Damac launches Aykon tower in London; units start at $1m Damac Properties recently launched Aykon Nine Elms in London, its first development outside the Middle East, where it plans to market properties starting at an initial $1 million.

The Dubai-listed property developer holds a 20% stake in the project, which is set to be built in the UK capital. The rest is being held by Damac's chairman and founder Hussain Sajwani.

“Aykon Nine Elms is our first project outside the Middle East,” Sajwani said.

Billed as “London’s first fashionbranded residence”, the 50-storey Aykon tower, due for completion in 2020, will feature interiors by Versace Home.

The luxury tower is being developed

by Dico UK Property Holdings, a wholly owned subsidiary of Damac International, which is 20% owned by Damac Properties.

It will include 360 units, including 90 ‘affordable’ or lower-cost units,

ranging from one to three bedrooms and penthouses. Amenities will include a gym, indoor swimming pool and spa.

Prices range from $1 million to $6.2 million, Damac executives said, although the penthouses and ‘affordable’ units have not yet been priced.

The project has been launched to UK-based investors with an international launch pencilled in for a later date.

The development is located at the heart of the UK capital’s Nine Elms regeneration area, which will also be home to the new US embassy.

Companies working on the project include architecture firms Kohn Pedersen Fox Associates, while the consultants include Turner & Townsend, JLL and WSP, Damac said in a statement.

Damac Properties has delivered 14,000 units in the Middle East and has another 37,000 in the development pipeline, Sajwani added.

Carillion JV wins $125.3m deal for BP Oman project Carillion’s joint venture in Oman has won an $125.3 million contract from British Petroleum (BP) to build an accommodation complex and operational base for its Khazzan gas project.

The contract awarded to Carillion Alawi involves the construction of accommodation facilities for 250 personnel, as well as an operational base and other infrastructure buildings in the Khazzan gas field, approximately 350km south-west of Muscat.

Work on the project is expected to start in September this year, and is scheduled for completion in mid-2017, the UK construction firm said in a statement.

“We are delighted to have been selected by BP for this important contract, and we look forward to working with BP in Oman,” said Carillion chief executive Richard Howson.

42 Middle East Consultant July-August 2015

Carillion, which reported a profit of $223.5 million on revenues of $6.4 billion last year, said in a separate statement that it expects revenue of its Middle East construction-services division in the first half of 2015 “to increase substantially” compared with the same period in 2014.

Apart from Carillion Alawi, the UK builder’s other joint ventures in the Middle East include Al-Futtaim Carillion (active in Dubai, Abu Dhabi and Egypt) and another with the Qatar Building Company.

Al-Futtaim Carillion in February secured two contracts from Meraas at a combined value of $595 million. One was a mixeduse development on the Dubai Creek waterfront, the other for the construction of La Mer in Jumeirah, a mixture of retail and public facility buildings.

on site roundup

Van Oord wins $150m contract for Deira Islands Dubai real-estate firm Nakheel has awarded a $150 million contract to marine engineering contractor Van Oord to construct 23.5km of coastline and breakwaters at its Deira Islands project.

The two-year contract for the 15.3 square kilometre waterfront district includes the construction of beaches, quays, rock edges and breakwaters.

Stage one will involve 8.5km of beaches, 3.5km of quay walls and 9.5km of rock revetments at two of the four Deira Islands.

The 4.5 million sqm south island will accommodate 500 yachts

and boats on a 4km stretch of waterfront; Van Oord will also build 2km of breakwaters to protect the newly created basin and beachfront.

Deira Islands will add about 40km to the Dubai coastline, and is set to include hotels, serviced apartments, mixed-use developments and marinas.

Nakheel and Van Oord have in the past worked on projects that have added around 300km to Dubai’s coastline.

Projects included dredging and coastal work on the Palm Jumeirah and The World.

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www.balmoraltanks.com July-August 2015 Middle East Consultant 43

on site roundup

UAE legal expert calls for specialised construction law

LebAnese firm to buiLd Kidzmondo theme pArK in riyAdh Lebanon-based Kidz Holding, founder of the KidzMondo theme park concept, has announced plans to open its first attraction in Riyadh, in partnership with Saudi contractor Abdul Rahman Saad Al-Rashid and Sons.

The first KidzMondo theme park will require an investment of $133.3 million and is scheduled to open in the first quarter of 2017, followed by more parks in other major cities throughout Saudi Arabia.

“We have always regarded the GCC countries, especially Saudi Arabia, as a strategic market for our innovative educational and entertainment projects,” said Ali Kazma, chairman of Kidz Holding and creator of the KidzMondo concept.

KidzMondo’s educational theme parks are miniature cities dedicated to children aged between 2 and 14, which allow them to learn more about different occupations and trades.

44 Middle East Consultant July-August 2015

A specialised law governing UAE construction is required, a leading arbitration expert has said, warning that the current legislation has lagged wider developments in the sector.

Dr Habib Al Mulla, chairman of Baker & McKenzie Habib Al Mulla, one of the region’s biggest law firms, said the legal system is not sufficiently developed to support the construction industry.

“The UAE, with the size and volume of the construction projects going on, would benefit a lot – as an industry and as a state and country – from having a specialised construction law enacted,” he told ME Consultant .

While the UAE’s construction industry is developing at a rapid pace, Al Mulla said he was concerned that the legal framework was lagging.

“The UAE’s legal framework, when it comes to construction, has not developed at the same pace, in the

same depth and in the same manner that the construction industry has developed,” he said during an interview at his office in Business Bay in Dubai.

While there are provisions within the civil code that deal with construction, Al Mulla said that the code was introduced in 1985. It was based on civil codes in Jordan and Egypt, which were themselves introduced at least a decade prior to the UAE civil code.

Given the developments in the market that have occurred since, there needs to be dramatic changes made, he said.

“There needs to either be a substantial development in the construction sector, in the civil code, or in fact, have a [specialised] construction law,” Al Mulla said.

“If it happens, I think that it will support the UAE’s position as a forum of choice for resolution of construction disputes in the wider MENA region.”

on site roundup

Arcadis wins $22.5m Doha Metro design contract Arcadis has won a $22.5 million contract from Qatar Rail to carry out design work for the Gold Line of the Doha Metro.

The global design and consultancy firm says it will provide architectural, branding and construction consultancy services for the project, following its earlier involvement in the Red Line South.

Design is expected to take one

year, and construction support an additional two years.

Doha’s Gold Line is one of four lines under development for the planned 354km metro network. The $3.5 billion project includes 32km of bored tunnel along with 10 of 13 new underground stations, as well as services buildings, tunnels and entrances, in addition to landscaping, traffic and utilities works.

The remaining three stations of the Gold Line have been priced separately and may be assigned to Arcadis later.

“The design element of the metro line will be absolutely critical to Doha and its community. We believe that Doha’s projects are becoming more advanced as the market matures,” Sameer Daoud, Arcadis’ infrastructure global business leader in the Middle East, said in a statement.

UK firms hit by cost overruns on $8.4bn project Balfour Beatty and Kier are suffering major cost overruns and project delays over the $8.4 billion rail scheme to link Hong Kong with the Chinese mainland, it has been reported.

According to a report released by masstransit operator MTR, two of the three major problem contracts on the GuangzhouShenzhen-Hong Kong Express Rail Link project include joint ventures involving the UK-based construction giants, a report by Construction Enquirer said.

An MTR report revealed that the 23km rail project is now nearly a third over budget at $10.89 billion and is expected to be delivered in the third quarter of 2018, three years behind schedule.

Problems have reportedly arisen in the contract to deliver the West Kowloon Terminus Station North, according to the MTR report quoted

by Construction Enquirer. Australia’s Leighton and local contractor Gammon

– in which Balfour Beatty holds a 50% stake – were the firms tasked with the delivery of the $1.12 billion station.

Kier’s $186.8 million contract with joint-venture partners Kaden and OSSA for a 2.6km tunnel has also run into problems, it was reported.

Balfour Beatty and Kier did not immediately respond to a request for comment when contacted by MEConstructionNews.com.

July-August 2015 Middle East Consultant 45

on site roundup

HSBC: Arcadis global capex programme manager The Dutch consultancy Arcadis says it has won a five-year contract as manager of HSBC’s global capital expenditure programme.

HSBC’s current property portfolio exceeds 50 million square feet, with Arcadis now responsible for the oversight, assurance, planning and control of capital projects.

Its target will be to keep cost in check, improve performance, control risk and reduce

HSBC’s environmental impact in a sustainable manner, Arcadis said in a statement.

Arcadis will also be the primary service provider for project management, cost management, health and safety, sustainability and risk management of capital projects in Europe, the Middle East and Asia-Pacific.

“Our ambition is to help HSBC transform its capital expenditure delivery in order to

create sustainable competitive advantage for its business. Our teams will deliver the consistency and assurance of outcome that HSBC can rely on to enable it to succeed,” said David Sparrow, global director of Arcadis’ multinational client programme.

Earlier this year Arcadis was appointed

by Lloyds Banking Group to run its design and construction functions.

Italian firm to build Qatar World Cup stadium Italian construction firm Salini Impregilo has scored an $852.6 million contract to build a stadium in Qatar for the 2022 World Cup. The Al Bayt stadium will be constructed in Al Khor. The contract – of which $792 million will be for construction and the rest for operation and maintenance – covers design and construction of the sports complex.

Salini Impregilo, in a joint venture with Oman-based contractor Galfar and Italy’s Cimolai, beat out competitors from France, Austria and Asia to win the contract. The project was awarded

46 Middle East Consultant July-August 2015

by government foundation Aspire Zone, responsible for developing sports infrastructure in Qatar.

The scope of the 200,000sqm project includes construction of a stadium, an auxiliary building for security and administration and a centre for electromechanical and distribution works. Set for delivery in September 2018, the stadium will be able to accommodate 70,000 spectators when complete.

According to a statement by Salini Impregilo, the stadium’s design is inspired by the Bayt Al Sha’ar, the

black and white tent traditionally used by nomadic people in Qatar.

The design is said to reflect Qatar’s cultural and historical heritage.

The project will also use modern construction techniques and environment-friendly materials in a bid to be more sustainable.

When building the complex, particular attention will be paid to providing ideal climatic conditions for players and spectators at the 2022 World Cup, set to be held during November and December, as per a March announcement by FIFA.

on site roundup

UK property firm Chestertons launches in Saudi Arabia

QAtAr shuts 42 worK sites for middAy breAK vioLAtions Qatar has shut 42 sites found to have violated the midday break law, which bans outdoor work from 11:30am to 3pm during the hot summer months.

The Ministry of Labour and Social Affairs said this week it had shut down the sites for failing to comply with the schedule in force from June 15 to August 31, the Peninsula reported.

The move follows 475 surprise raids on work sites across the country.

Companies in breach of the rule could face closure for up to one month, the ministry has warned.

In the UAE, 10,430 firms had been inspected as of July 8, said the Ministry of Labour officials. Only 11 establishments were found to be violating the UAE’s midday break law, a compliance rate of 99.88%.

UK property firm Chestertons has launched in Saudi Arabia through a joint venture with MEDAD Valuation International.

The new JV, Chestertons Saudi Arabia Property Limited, has begun operating out of offices in Riyadh, Jeddah and Al Khobar, according to a company statement.

The firm will provide valuation and consultancy services for property companies, banks and financial institutions; corporate valuations for owner-occupiers; and retail mortgage valuations for bank lending purposes across all asset classes, said Simon Gray, managing director of Chestertons MENA. It will also provide feasibility studies, development consultancy and market research to its clients in the Kingdom, he added.

In addition, the firm will also offer services such as industrial appraisals of plant and machinery, production facilities as well as power plants

and power generating equipment.

Appraisal services for vehicles and heavy equipment – including automobiles, trucks and trailers, buses and construction – will also be provided for banks, financial institutions and leasing companies.

“We intend to combine our regional and international strengths with our partner's local expertise to serve our valued customers in Saudi Arabia,” Gray noted.

“Valuations undertaken by a reputed third party independent company aids investors across the Kingdom to understand the market and also, in case of disputes, assist them with support according to the international accounting guidelines.”

In addition to offering valuation services, Chestertons Saudi Arabia will also cater to Saudi investors looking to invest in London’s residential market, working in conjunction with its network of offices across the English capital.

July-August 2015 Middle East Consultant 47

On Site DAVINA MUNRO

Final word

Davina Munro is the deputy editor of Middle East Consultant and also writes for MEConstructionNews.com

Lowering the cost factor Reducing the cost of acquiring land along with other initial expenses will incentivise developers to build more affordable housing units The first time I ever set foot outside India was on a holiday to Dubai in 2008. This was back when I was in college, and I clearly remember being in awe of everything I saw in this city, from the Atlantis Hotel on the Palm to the Aquarium in Dubai Mall and Ski Dubai in Mall of the Emirates.

Seven years later, this city still fascinates me, and the chance to write about the people and organisations that have made the Middle East skyline so incredible is an opportunity I could not pass up.

In my first issue at Middle East Consultant, I was quite keen to learn more about mixed-use projects in the Middle East, since they are a popular choice for construction here. While all my conversations with consultants gave me interesting insights into what goes into making these world-class destinations, I was surprised to learn that the cost of acquiring land for construction is so high that it leaves developers with no impressive margins.

Now, considering the government’s ambitions to make Dubai into a globally renowned city, easing up the process and the cost of acquiring land should be prioritised. After all, making a good profit at the end of the day is the ultimate 48 Middle East Consultant July-August 2015

goal of any business, and if the initial costs are almost as much as the end product, it will hardly motivate firms to invest further into that particular sector.

In fact, one particular area suffering as a result of high land costs is affordable housing.

I’ve learnt that while a majority of developers agree with the need for low-cost developments, construction of medium and luxury properties fetches them a better return on investment.

With the number of middle-income earners rising, especially in Dubai, the demand for affordable housing has driven many expats to take up residence in neighbouring Sharjah and Ajman instead.

But all isn’t lost for these middle-income tenants just yet. The recent announcement by Dubai Municipality to formulate plans to make affordable housing mandatory for developers will not only benefit residents and bring down rental prices, but is also sure to spur investor interest. Dubai Municipality has even gone ahead and set aside several hectares of land in Al Quoz 3 and 4 and Muhaisnah 4 for developers to set up affordable housing options.

But even if this new law is introduced, the rising cost of land will continue to offset any benefits if not addressed. I highly doubt that it will have a great impact on the larger developers at all, but medium and small real estate companies will surely take one on the chin when the law is officially passed.

Personally, I feel that for economies to truly thrive, one must ensure that the vital middle and lower income groups are not left struggling. After all, it is they who put in all the hard labour on the ground to build what we live and work in today.

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