MODUS Asia Edition Q1 2016 by ROF Media

MODUS ASIA Q1 2016 RICS.ORG/MODUS

rics.org/modus

ASK THE BIG QUESTIONS

Q1 2016

BEWARE, ALL WHO ENTER Balancing risk with reward in real estate investment / 20

IN THIS ISSUE Asia’s future cities 16 / The real value of ideas 30 / How resilient is your city? 38

Contents MODUS ASIA Q1 2016 RICS.ORG/MODUS

“The quality of the urban fabric is one of the biggest subjects for the next generation. It goes from the grand scale, with connectivity and infrastructure, right down to the building”

06 DIFFERENCE OF OPINION Is Hong Kong’s housing market now overinflated and ready to burst? We hear two points of view 07-15 NEWS IN BRIEF Essential industry news, advice and information for RICS members 08 THINKING: RAEFER WALLIS The co-founder of AOO Architecture urges us all to join the rammed-earth revolution 13 PRESIDENT’S COLUMN Martin J Brühl FRICS ponders the true meaning of acting in the public interest

16 GROWING PAINS Planning for Asia’s cities of the future 20 COVER STORY Greater returns or stable income – managing risk in real estate investment 26 TAKING IT TO THE NEXT LEVEL Meet the first RICS-certified BIM Managers 30 WEALTH OF IDEAS Putting a value on intellectual property 34 TIME TO MIX THINGS UP How can we sustain our insatiable appetite for the hard stuff? 38 COME HELL OR HIGH WATER What constitutes a resilient city? 42 NO GREAT SHAKES Christchurch making slow progress five years on from devastating earthquakes

Foundations

Features

Intelligence

BEN CHA, GROSVENOR ASIA PACIFIC SMART CITIES, P16

44-45 CAREERS Negotiating the right pay package; Arcadis’ Phil Moss FRICS 46 BUSINESS Are your systems at risk from hackers? 47 LEGAL 101 Learning to swim in the flood of water-related services companies 48 BRAIN GAIN Effective risk management strategies 50 MIND MAP Anshuman Magazine FRICS, Chairman of RICS South Asia, on India’s smart cities PLUS 48 Events

Views expressed in Modus are those of the named author and are not necessarily those of RICS or the publisher. The contents of this magazine are fully protected by copyright and may not be reproduced in any form without the prior permission of the publisher. All information correct at time of going to press. All rights reserved. The publisher cannot accept liability for errors or omissions. RICS does not accept responsibility for loss, injury or damage or costs that result from, or are connected in any way to, the use of products or services advertised. All editions of Modus are printed on paper sourced from sustainable, properly managed forests. This magazine can be recycled for use in newspapers and packaging. Please dispose of it at your local collection point. The polywrap is made from biodegradable material and can be recycled.

Q1 2016_MODUS A SI A 03

A world of value in every square. To deliver exceptional value, we look at your real estate needs from every angle. Combining in-depth local knowledge with far-reaching global insights, our teams find the real estate opportunity thatâ&#x20AC;&#x2122;s right for you. Down to the last square metre. jll.com.hk

Feedback USEFUL RICS NUMBERS CONTACT CENTRE +852 2537 7117 Enquiries / APC guidance / Subscriptions / Events / Training / Bookshop REGULATION HELPLINE +852 2116 9713 CONFIDENTIAL HELPLINE +44 (0)20 7334 3867 DISPUTE RESOLUTION SERVICES +44 (0)20 7334 3806 UK SWITCHBOARD +44 (0)20 7222 7000

TAKE GOOD CARE Sir, As a surveyor who worked for 37 years in a local authority, devising adaptations with social services, I have, even in retirement, a passionate interest in the subject of later-life housing (Search for a silver lining, p34, Q4 2015). In particular, having also cared for my late mother, it became clear that a large problem in keeping the elderly in their own home is giving authorised access to carers. Based on my experience, I have devised a control-centrebased access control system that is subject to a patent (pending). I would be most interested in any suggestions on how this project could be taken forward, perhaps to the benefit of LionHeart members? CR Newton AssocRICS, Cheltenham, UK MEMBERSHIP BARD Sir, Readers may be interested to know that in November 2012, the RICS awarded the title of Honorary Chartered Surveyor to the Scottish poet, Robert Burns, the only posthumous membership granted by the Institution so far. As 2016 is the 400th anniversary of the death of the much greater English bard, William Shakespeare, it would be more than fitting for the RICS to grant him membership, too. Anthony H Ratcliffe FRICS, London Thank you for your letter. Although Modus has no official position on the relative merits of both these great British bards, we can at least argue that Burns’ training as a land surveyor probably better qualifies him for honourary membership than dear old Bill.

Join the debate If you have any comments on any of the stories on Modus Asia, the editorial board welcomes you to send them in – in Chinese or English. We will publish them in their original format with an English translation. Get in touch at editor@ricsmodus.com 如对亚洲版 Modus 的内容有任何回应，欢迎以中文或英文电邮至编辑委员会。阁下之意见将以原文（辅以英译本）刊登。电邮地址为 editor@ricsmodus.com。

@RICSnews // #RICSmodus @WeatherupSJ Interesting Article on

@LinkedIn in this months Modus Excellent Tips and Ideas to make the most out of your Profile. #RICSmodus @Rachael_Hogg2 Reading through the

latest issue of #RICSmodus over a nice leisurely Saturday morning coffee. Some really interesting topics to think over! @Oxford_Urban Congratulations on 50th issue of #RICSmodus magazine! @Mone_87 The only post I like to

see through my door. @RICSnews #RICSmodus #RICSconstructionJournal #GeekMode @jakesoden Bit of reading in the garden while the suns out. @RICSnews @RICSCPD @RICSNorth #modus #buildingsurveying @CalcoQS Interesting to see how the #power sources have changed in recent years via @RICSnews

BEARING IN MIND Sir, With the distressing statistic that men in Britain aged 20 to 49 are now more likely to die from suicide than any other cause of death, I wonder if there is room in the pages of Modus to bring attention to the issue of mental health and our profession. Mental health is something we hardly discuss – in public or private – which is a significant part of the problem itself. I live with a mental health condition that was aggravated in 2015 by the stress of my APC final assessment. Deciding whether or not to tell your colleagues about your problems can be difficult, but the support of my employer, the Portman Estate, has been vital to my recovery. Undoubtedly more needs to be done to raise awareness of mental wellbeing. LionHeart offers services including trained counsellors and legal advice, while Modus provides a way to reach RICS members and encourage them to talk about the issue. As a profession we should be standing together to end the stigma of mental health-related problems. Greg Walsh MRICS, London

MODUS ONLINE

Read the latest and all previous issues of Modus Asia at rics.org/modus. To unsubscribe your hard copy and receive a digital edition only, email your name and/or membership number to ricsasia@rics.org with the subject line “Unsubscribe Modus Asia”.

FOR SUNDAY Editor Oliver Parsons / Art Director Christie Ferdinando / Deputy Editor Andy Plowman / Contributing Editor Alex Frew McMillan / Senior Designer Jess Campe / Creative Director Matt Beaven / Account Director Karen Jenner / Advertisement Sales Director Emma Kennedy / Head of Display Advertising Marlene Stewart / Asia Advertising ROF Media, Bryan Chan, +852 3150 8912, byan@rofmedia.com / Production Manager Michael Wood / Managing Director Toby Smeeton / Repro F1 Colour / Printers ROF Media / Cover Image Robert Frank Hunter / Published by Sunday, 207 Union Street, London SE1 0LN wearesunday.com / For RICS James Murphy and Kate Symons [UK] / Jeanie Chan [Asia]

Q1 2016_MODUS A SI A 05

Intelligence

News / Reviews / Opinions / Reactions

DIFFERENCE OF OPINION

Hong Kong’s housing market is overinflated and the bubble is about to burst. Discuss.

According to past experience, a bubble market includes high levels of gearing, multiple outstanding property mortgages, overheated speculative investment and a shortage of housing supply. Despite the recent rise in interest rates, the mortgage rate is still relatively low in Hong Kong, and is likely to only increase gradually. In addition, banks are running stress tests on the ability of mortgage applicants to pay, in which they assume an increase in rates of at least three percentage points. After the government imposed a set of cooling measures, the speculative market faded. What we see is strong and genuine demand for self-use and long-term investment, not signs of an overheating market. DANIEL SO STRATEGIST, CMB INTERNATIONAL SECURITIES No residential mortgage loans were in negative equity as of September 2015, according to the Hong Kong Monetary Much has been said about Hong Kong’s record-high Authority, and about 60% of properties in Hong Kong are price-to-income and price-to-rent ratios. Although these mortgage-free. The unemployment rate remains low at ratios undoubtedly indicate that the city’s housing is 3.4%. The affordability of prospective buyers is still stable. expensive, it is not entirely appropriate to compare current figures with The property market is always driven by demand. The historical averages, due to the widening wealth gap and unprecedented low annual supply of new flats was just 12,000 from 2011 to 2015, interest rates. below the average of 19,000 a year. The government is The real signs of this bubble are panic buying and irrational valuations. striving to achieve private housing supply of 86,000 new In the first half of 2015, as housing in Hong Kong was becoming increasingly flats for the next four to five years. unaffordable, demand for small flats surged to the extent that price Hong Kong property is attractive to both Chinese and differentials became irrational. The news that suburban, entry-level flats multinational companies as part of their global investment in City One Shatin were selling at higher prices per square foot than the portfolio and for business expansion. There have been several centrally located, middle-class housing at Taikoo Shing came as a shock. record-breaking transactions for commercial properties For 30 years, Taikoo Shing has traded at higher prices than City One recently, showing strong confidence in Hong Kong. Shatin. The change was a result of buyers focusing on the lump-sum down We anticipate that prices in will adjust healthily within a payment instead of the unit price. As long as they could afford the down reasonable range. But we are not in a bubble. payment, they were willing to pay a premium to“get on to the train”and own a flat. This was typical panic buying from weak buyers who cannot afford Bubble trouble or just hot air? What’s your view? flats that are larger or in better locations. Join the discussion on LinkedIn at rics.org/ In any bull market, be it financial or real estate, smart buyers get in early, linkedin, or email editor@ricsmodus.com while not-so-smart people are late to the party. They jump in at the riskiest moments. When these investors join the party, paying irrational entry prices, Hong Kong housing market hit, p13 you know it’s time to get out. So, how will this bubble end up? My bet is that it will deflate in an orderly fashion rather than burst, barring another global financial tsunami. 06 RICS.ORG/MODUS

INTERVIEW ALEX FREW MCMILLAN ILLUSTRATION ADAM AVERY

RICKY WONG FRICS MANAGING DIRECTOR, WHEELOCK PROPERTIES

Intelligence HOT TOPIC Percentage of a country’s population that thinks climate change is “not a serious problem”

32%

26%

22%

11%

10%

Source: YouGov US

NEWS IN BRIEF rics.org/modus

Sweden

226k

Germany

220k

324k

Australia

France

246k

524k

484k China

Malaysia

JAPAN £1Million Properties

TOKYO OLYMPICS FLIPS FROM 163p 146p 2011 2013 HADID’S HELMET2012 TO 155p HAMBURGER Rest of UK (median cost per ft )

London (median cost per ft2)

2010

2014

2015

104p New property measurement Prime minister Shinzo 69p Abe’s standard comes into effect 47p administration threw out Hadid’s 43p 76p 31p the cost doubled to RICS Property Measurement 17p 64p plan after 61p 45p 46p ¥252bn ($2.1bn) – which would Professional Statement, which 34p 29p 23p 12p have made it the world’s mostupdates the Code of Measuring expensive sporting venue. Hadid Practice 6th Edition, became Electricity Management Major Security Cleaning and Mechanical Lifts and Fabric repairs Site blamed soaring labour mandatory for RICS members feecosts in works 13.2% environmental and electrical management escalators and services maintenance resources the Japanese capital. Kuma’s from 1 January 2016. The 24.8% design will cost ¥149bn statement incorporates the 28.5% 29%($1.27bn), 29.5% 31.9% within the government’s ¥155bn new international property ($1.32bn) cap. measurement standard (IPMS: Hadid’s appointment, as an Office Buildings) and ensures that Beijing has a Bird’s Nest. Now Tokyo WITH LATTICE Kengo Kuma’s outsider, was attacked the clients benefit from consistency will be home to “the Hamburger”. Switzerland Spain Netherlands Germany France Sweden MaltafromRomania Slovakia UK replaceement outset within Japan and it was wherever in the world they The Japan Sports Council has €822 €622 €625 €600 €598 €500 €461 €333 €239 €902 design will be essentially a foregone conclusion commission office measurements. selected a new design for the main partially built $1.6bn 4 and the re-tender would go to a local Surveyors will be required to Budapest Metro stadium for the Tokyo 2020 Olympic fromLine wood proposal. She has complained of follow the Professional Statement Games, after controversially $1.8bn Great Belt Fixed Link,promises Denmarkto sit more discreetly “shocking treatment” by the whenever they undertake any new ditching the plans it initially $3.1bn Denver InternationalinAirport its setting Japanese measurements, unless instructed commissioned from British$13.4bnauthorities and claims 26%Boston’s Big Dig the new design has “remarkable otherwise in writing by the client, Iraqi “starchitect” Zaha Hadid. $16.1bn Three Gorges Dam,22% China similarities” with her original plan, or where local laws may stipulate The new design, which features 18% $21.1bn The Channel Tunnel which was derided in some quarters an alternative. a curving facade 13%with three 12% for looking like a bike helmet or “a To support implementation, graduated tiers, comes from Kengo turtle waiting for Japan to sink so RICS is developing a conversion Kuma, one of Japan’s best-known that it can swim away”. tool that will allow users to contemporary architects. Kuma compare IPMS with various local often uses natural materials in his -5% -7% -7% standards. As part of this work, WHAT’S YOUR VIEW on the new buildings, and the 80,000-seat -11% Director of Technical International Tokyo Olympic stadium design? stadium will have a roof that is 2010 2011 2012 2013 2014 Standards Alexander Aronsohn Email editor@ricsmodus.com partly made of wood. FRICS met with professional North 64.5 11.4 10.5 14.4 9 11.9 34.3 13.7 29.6 16.2 bodies in Australia, Indonesia, America Hong Kong and Japan to discuss CONSTRUCTION COSTS OF HIGH-RISE relevant conversion formulae. 2) PRIME OFFICE SPACE ($/M85.6 64.5 11.4 53.1 12.4 39.7 14.3 41.9 14 12 The IPMS conversion tool will Asia enable clients of RICS members to benefit from both the local Source: Turner & Townsend Middle approach and the international East 56.3 8.3 112.5 9 65 14.6 40.9 13.9 76.7 15.1 standard. Guidance, frequently asked questions and web training Continental classes are also available to Europe 33.3 10 35.1 11.7 25 6 27.5 6.5 38.3 18 support uptake of the new Professional Statement. 7.5 6.8 10.2 8.7 27 12.9 27.9 7.9 27 10 IPMS is being led by a coalition UK Average length of dispute (months) of 73 standard-setting bodies, Average dispute values ($m) including RICS. It seeks to address inconsistencies in measurement standards, which can lead to deviations of up to 24% depending on the method used. New London Sydney Hong Dublin Munich Doha SingaSao Dubai Bangalore For more information, go to York London Sydney Hong Kong Dublin Munich Doha Singapore pore Paulo New São Dubai Bangalore rics.org/ipms. York Kong Paulo

39.1%

34.8%

39%

34.7%

$780

$2,080

$2,110

$2,190

$2,950

$2,960

$3,350

$4,560

$3,900

$3,240

INFOGRAPHIC IAN DUTNALL

$4,840

THE DATA

Q1 2016_MODUS A SI A 07

One of the most sustainable construction ingredients is right under our feet. Rammed earth is local, can be as strong as concrete and is highly cost effective

s an architect who specialises in “healthy” buildings, one of my biggest challenges has been tracking down high-performance, non-toxic materials. It has been such a painstaking experience that, after 15 years, my firm now runs one of the world’s largest databases of building materials. One of the most sustainable construction ingredients is right under our feet: rammed earth. It can be generated locally, engineered to match concrete in strength, and is highly cost effective. What’s more, the walls are intended to be left bare both inside and out, eliminating the need for dozens of often toxic finishing materials. I first came across rammed earth with my co-founder at A00, Sacha Silva, more than 10 years ago. Our client had asked us to source the most ecologically responsible structural material for a resort in China. Modern rammed earth has come a long way from its origins. The old-fashioned process used surface soils that contain precious organic matter, which should be used for agriculture, not construction. It also contained high percentages of clay, which is unstable and undermines the strength of walls. Modern rammed earth uses only inorganic subsurface soils, which can be engineered for reliability and predictability. The process of ramming earth walls mimics that of sedimentary stone. You compress one layer on top of the other. The material buffers swings in interior humidity, largely eliminating the risk of mould. Finally, it is also incredibly beautiful. The problem? It originally had very poor insulation properties, and the closest experts were a continent away.

08 RICS.ORG/MODUS

Our research eventually led us to Canada and Meror Krayenhoff, one of the world’s leading experts in rammed earth. Canada’s cold climate had pushed him to pioneer an insulated form called Sirewall. He was also building the most beautiful walls we had seen. Fortunately, our client agreed to fund the training to localise the technique. The resort, Naked Stables, became the first modern rammed-earth structure in China, which also soon had the first insulated multistorey rammed-earth building in the world in the form of the three-floor River House, which sits in the middle of the Yangtze river. Another project in China, the Yellow River Tourist Center, is now the world’s largest rammed-earth structure. Several years ago, we brought rammed earth to Sri Lanka, while working on “House No. 5,” one of the classic manors in the middle of Galle Fort, a Unesco world heritage site. The original walls had been built of coral 400 years ago, mined from a nearby reef. Given the mild climate, we opted for non-insulated rammed-earth walls, a culturally appropriate and ecologically responsible replacement for the usual brick and concrete being used in Galle now. We are happy to see that the approach being adopted by others. To create the optimal rammed-earth mix, the first step is to visit local quarries and analyse the soil samples. We originally used cement as a binding agent to replace clay. In a well-engineered mix, you can achieve the strength of concrete using half the cement. But our aim is to eliminate cement entirely, using other binders. You compress each layer before adding in the next layer of soil. Steel rebar is also added during the ramming process – using 33%-50% less steel than concrete walls. Once stripped, the walls are left exposed and require no finishing. Rammed earth does come at a cost – in North America, the process is about 15% more expensive than normal construction. But in Asia, with cheap land and plentiful earth to mine, we believe we can match the cost base of “normal” construction methods. I like that rammed earth fits the “Reduce, Reuse, Recycle” ethos. When a building has served its purpose, it will be possible to crush it and return it to the earth – or “re-ram” it into a new building.

ILLUSTRATIONS ANDREA MANZATI

RAEFER WALLIS CO-FOUNDER, A00 ARCHITECTURE, AND FOUNDER AND CEO, RESET AP, SHANGHAI

Intelligence BUDGET BUSTERS The most over-budget infrastructure construction projects in the world, adjusted for inflation

Budapest Metro Line 4 Great Belt Fixed Link, Denmark Denver International Airport

Source: Statista

$1.6bn $1.8bn $3.1bn

$13.4bn

Boston’s Big Dig

$16.1bn $21.1bn

Three Gorges Dam, China The Channel Tunnel

NEWS IN BRIEF

WE LIKE

rics.org/modus

2010

Members and staff show their charitable side

North America

64.5 11.4

2011

10.5

14.4

2012

9 11.9

2013

2014

34.3 13.7

29.6

16.2

Our professionals and staff members in Hong Kong and Japan have recently given Asia 64.5 11.4 53.1 12.4 39.7 14.3 41.9 14 85.6 12 something back by helping to KERB APPEAL Prefabricated raise funds for people in need Middle sections would in their local communities. East contain 56.3 voids8.3 to 112.5 9 65 14.6 40.9 13.9 76.7 15.1 On 28 November 2015, nine carry services members and staff in Japan such as cables joined a charity run organised by Continental and drainage Europe 33.3 10 35.1 11.7 25 6 27.5 6.5 38.3 18 the Run for the Cure Foundation PlasticRoad to help raise funds for education 7.5 6.8 10.2that? 8.7 An ambitious 27 12.9concept27.9 7.9 recycled27 10 and research into finding a cure UK What’s to use plastic for a new type for breast cancer. Dutchofconstruction firm VolkerWessels believes roads could Average dispute values ($m) of road surface. Average length dispute (months) Japan Council Chair Paul be cheaper and quicker to construct using lightweight plastic instead of Watkinson FRICS, who initiated asphalt – and require less maintenance – thanks to the material’s greater the idea, commented: “This resistance to corrosion, weather and extreme changes in temperature. And, charity run is proof that as asphalt is responsible for around 2% of all road transport emissions, chartered surveyors can and plastic roads could be a more environmentally friendly option, too. should act as role models in How would it work? Prefabricated off site, the sections of road would be society. We conduct ourselves in formed with space for cables and utility pipes below the surface. At this the public interest, applying our stage, the roads could also be integrated with anything from traffic sensors, professional knowledge of the to measuring equipment or connections for street lamps. The idea is to built environment and ethical fabricate the roads from plastic waste that is usually incinerated – and one approach to business. However big source could be the estimated 8bn kg floating around in our oceans. we can also show our passion Won’t they be too slippery? “The next stage is to build it and test it in a to personally step up and act laboratory to make sure it’s safe in wet conditions – for example, we could to support initiatives that help also apply sand or crushed stone to the surface,” says Rolf Mars, director drive change, investment and of VolkerWessels’ roads subdivision, KWS Infra. The company hopes to NZ$80m support for the communities build the first fully recycled thoroughfare within three years, and the city Residential consents in which we live, work and play.” of Rotterdam has signalled an interest in running a trial. NZ$60m Non-residential consents Meanwhile in Hong Kong, volkerwessels.com NZ$40m staff at RICS’ Hong Kong office NZ$20m dug into their pockets to help NZ$0 children by making a donation NZ$20m to the United Nations Children’s NZ$40m Fund. East Asia customer service NZ$60m manager Cecilia Tsang led this NZ$80m “The threat that campaign. “Education is the total retail sales, as however, in this ever09/12 09/13 the internet is key to 09/10 holistic and sustainable 09/11 evolving industry, we 09/14 opposed to like-for-07/15 killing off the development of both individuals like online and inneed to move on. The and society,” said Tsang. “We threat that the internet store separately, high street is a acknowledge Unicef’s mission showing the growing is killing off the high particularly in helping children to survive appreciation that both street is a particularly outdated myth” and thrive, from early childhood are intrinsically linked. outdated myth. through adolescence.” As the market We know that the Sean Gillies MRICS The fund will go to Unicef’s develops, there will be Head of UK retail, Savills biggest share of retail Education for All programme, further opportunities sales still takes place There were a number which provides quality basic for retailers to bed in physical stores and of myths in retail that education to children in China. down their multinumerous retailers took hold during the channel operations. height of the recession, are now reporting

INFOGRAPHIC IAN DUTNALL

ONE THING I KNOW

Q1 2016_MODUS A SI A 09

SECRET SURVEYOR

rics.org/modus

“Do employers look at someone in their late 40s and wonder if they’ll get a return on their investment?”

Land measurement standard coalition calls for new partners RICS has formally joined the International Land Measurement Standard (ILMS) coalition, an association of 14 professional bodies united and leading on efforts to create a standardised land reporting framework. Land issues are high on the agenda of the development community. Land and property transactions rank high on the global corruption index, and 70% of land and property in the developing world is classed as unregistered. For example, in Kenya, six in 10 land transfers are viewed as corrupt, while a study carried out in India estimated that $700m of bribes are paid annually by users of the country’s land administration services. This creates an extremely volatile land market, in which internal and external investors can never really be sure what exactly they are investing in, or if it even exists. By creating a standardised land reporting framework that can be used as a platform for land market investment, and to help nations build more complex land administrative systems as necessary, the ILMS coalition aims to increase market confidence and instil client trust in this area. The coalition is now reaching out to national and international bodies to help grow the coalition. Several key events in the global land professional calendar will have ILMS roundtable meetings. If your national or regional organisation has an interest in land, cadastre, land administration or mapping, then it is important that your voice is heard. Download the coalition declaration form from rics.org/ilms and join the ILMS coalition. Email internationalsupport@ rics.org for more information and with your complete declaration.

10 RICS.ORG/MODUS

ast year, at the age of 47, I breathed a secret sigh of relief. After two decades of struggling to manage full-time work as a chartered surveyor and being a mother, my youngest son headed off on a gap year and I was finally free. Free, I thought, to concentrate on my career, to finally take advantage of my 30 years’ experience in construction and property and look for new and exciting opportunities. What I actually found was that I was considered “past it”. For the first time in my life I’ve applied for job after job after job without success. Last week, a quantity surveyor exactly half my age was taken on for a job we’d both applied for. Now that’s either poor recruitment filtering or there’s something else going on. Since then I’ve been trying to work out whether I should just go and work in Tesco instead. I’m not sure what the problem is. I think I have a fairly young outlook on life, I keep myself up

to date with new technologies and developments, I’m open to new ideas, I don’t even look my age – so people tell me. Do employers look at someone in their late 40s and wonder if they’ll get a return on their investment? The generation before mine tended to retire early – my dad retired at 50 on a full civil service pension – but, for people my age, the reality is that we’ll need and, in most cases, want to work into our late 60s and perhaps longer. My conversations with other “ageing” surveyors suggest that this is not a gender issue but I do think there’s a connection with diversity. As an industry with huge skills shortages we have to let go of our stereotypical images of what an ideal quantity surveyor or valuer looks like and accept that good people come in all shapes, sizes, colours, genders and ages. ARE YOU INTERESTED in writing a future Secret Surveyor column? Email editor@ricsmodus.com

INDUSTRIAL

MANUFACTURING BASE SHIFTS FROM CHINA

LABOUR PAINS Rising costs in China are forcing outsourcers to look elsewhere

Asian countries have secured seven out of the top 10 places on Cushman & Wakefield’s latest manufacturing index. But rising labour costs in China are forcing a growing number of

manufacturers to reconsider where they locate their operations. The firm’s report, Where in the World? Manufacturing Index 2015, noted that as China, the world’s largest manufacturer by output, experiences rising labour costs, its cost competitiveness is being reduced. As a result, manufacturers are looking towards the lower-cost regions of Malaysia and Vietnam. “The markets of Asia-Pacific continue to remain attractive to manufacturers and this shows in our latest index rankings,”

commented Richard Middleton, Cushman’s head of occupier services in EMEA and Asia-Pacific. “Malaysia has retained top place in our main index for the second year running, while Vietnam tops our growth index and is maturing as a manufacturing destination.” Similar conditions are driving the market in Singapore. Growth in manufacturing output has pushed it into the world’s top 30 for the first time, and this is nearly all driven by science or techbased manufacturing.

IMAGES REUTERS; GETTY IMAGES

NEWS IN BRIEF

Intelligence

PAINTING THE TOWN RED, YELLOW, GREEN... Can a lick of paint really turn around the fortunes of a neighbourhood? The question was put to the test last July when artists Germen Crew applied this extraordinary paint job to the working class barrio of Las Palmitas in Mexico. The area has in the past been seen as dangerous after dark, but a new sense of pride in the neighbourhood has reportedly led to inhabitants taking a more active role in its security, and is leading to an upturn in the areaâ&#x20AC;&#x2122;s fortunes. MULTI-COLOURED WHITEWASH of urban poverty, or art for all? Email your thoughts to editor@ricsmodus.com

Q1 2016_MODUS A SI A 11

12 RICS.ORG/MODUS

26%

22%

18%

13%

12%

HOT OR NOT DESKS Five largest increases and decreases in prime office occupancy costs between Q1 2014 and Q1 2015

Dublin, Ireland

Downtown Panama City, Seattle, Panama US

Belfast, UK

Helsinki, Finland

Calgary, Canada

-5%

West Buenos Kowloon, Monterrey, Aires, Hong Mexico Argentina Kong

-7%

-11%

Intelligence

Moscow, Russia

-22%

Source: CBRE

$3,900

$4,840

BULLETPROOF HOUSING MARKET FINALLY HIT

$4,560

HONG KONG

$780

$2,080

$2,110

$2,190

$2,950

$2,960

$3,240

$3,350

Hong Kong’s property prices, which have shot up higher than the city’s signature skyscrapers, have finally fallen. The change in fortunes has led market participants such as Li Ka-shing to predict a downturn for the year, and often beyond. Official figures show that prices fell 3% in November compared with the previous New London Sydney Hong Dublin Munich Doha SingaSao Dubai Bangalore York Kong pore Paulo month – the biggest drop since the global financial crisis. The data, from the Rating and Valuation Department, show a pickup in pace for a decline that began in August. CentaLine’s private study shows a 7.5% drop from the peak in September. After the introduction of quantitative MARTIN J BRÜHL FRICS RICS PRESIDENT easing in the West, 100 Hong Kong and Public interest: two banal words that combine to form a complex BALANCING Singapore both enacted countermeasures Apartment rentals INTERESTS to deter an influx of80 “hot money.” Whereas construct – complex and yet imprecise. It is also frustratingly difficult to put Villa rentals The quest to Singapore’s prices have fallen almost 15% into words. RICS’ founders made a noble attempt, set out in our Charter. They Villa sales act to the 60 since mid-2011 – one of the longest public’s talked of usefulness and public advantage. These are wordssales of their time. To Apartment corrections in the city’s history – nothing advantage is the Victorians, usefulness was the application of utilitarianism, a prevailing 40 not just has dented Hong Kong’s impervious market. moral philosophy that society should maximise the utility of all individuals philosophical, That has left Hong Kong with the highest 20 it has real-life to achieve the greatest happiness for as many as possible. residential property prices in the world. The implications At a time unprecedented investment in public wishes of the 09/08 06/11of12/11 06/12 12/12 06/13 12/13 06/14 works, 12/14 the 06/15 2 12/08 06/09 12/09 06/10 12/10 average price in the12/07 city is06/08 $1,416/ft , majority may have seemed synonymous with the public advantage. But is this reports CBRE, 38% higher than second2 always true? In the 21st century, should professionals serve the dominant place London at $1,025/ft – and almost market forces to maximise profit and shareholder dividends? Or should they double the price of third-placed New York. The rapidly slowing economy in China, take a wider view of the public interest, which may lead them to act in line with coupled with the advent of higher interest the opinions of an enlightened minority? rates in the US, appear to have finally This is not an academic debate, as the accountancy profession has undermined confidence. Hong Kong’s discovered. An appeal tribunal relating to a high-profile case in the UK recently interest rates are directly linked to those affirmed that accountants should act in the public interest. The same tribunal in the US because the Hong Kong dollar commented that there was a lack of clarity in how accountants should has a fixed peg to its US counterpart. discharge these responsibilities. The case involved millions of pounds in fines Li Ka-shing, reaffirmed recently as Asia’s and years of legal wrangling. Much of this may have been avoided had clearer richest man by Forbes, said a 10% decline public interest guidance been available. in Hong Kong home prices is “nothing It is unlikely that codes of professional conduct alone will be adequate to special”, adding that “home prices will climb define the public interest. There also remains a question about how in practice as demand soars but fall when demand is squeezed in a depressed economy”. professionals can be expected to judge what is in the public’s best interests, not least as they rarely – if ever – have access to all the relevant information. And what if their client’s instruction conflicts with the broader public good? Furthermore, is the public interest a purely human concept or does it have ecological and environmental dimensions? Even assuming that public interest relates only to human considerations, is the interest of today’s public the same as that of future generations? If not, does today’s professional owe her duty to a future public, or to those who can hold her to account in her own lifetime? Such questions matter to every RICS member. It is in the public interest for us to look afresh at these two far from banal words. Follow Martin on Twitter @MartinJBruehl

INFOGRAPHIC IAN DUTNALL ILLUSTRATION BERND SCHIFFERDECKER

“Should we take a wider view of the public interest?”

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Hong Kong Annual Conference 2016 Unlocking the silver hair market – our future is now

Friday 20 May 2016 09:00-17:00

Grand Ballroom, Grand Hyatt Hong Kong, 1 Harbour Road, Wanchai

HOURS

Highlights of conference • High level dialogue forum speakers about the outlook for one of Asia’s most coveted ‘megatrend’ markets for its ageing populations • Industry insights on how to gain from investment opportunities now and in future • Key market trends and takeaways from successful international and local show cases • How to capitalize with scale on “silver dollars” for a new economy • Private sector models for investing, developing and operating the silver hair market

Joyous Living Project The Tanner Hill Senior Citizen Residences Scheme Project 14 RICS.ORG/MODUS

Joyous Living Project The Tanner Hill

ricshk-conference.org

Intelligence

NEWS IN BRIEF

INVESTMENT

HAS ASIAN PROPERTY REACHED THE TOP OF THE MARKET?

rics.org/modus

RICS plays a key role at COP21 climate talks At last December’s 21st Conference of the Parties (COP21) in Paris, RICS joined governments, building and construction organisations and funding agencies to launch the Global Alliance for Buildings and Construction. The alliance is a worldwide building sector network backed by the governments of France, Germany, Japan, United Arab Emirates, Cameroon and Senegal among others. RICS has joined the alliance an initiating partner in its capacity as a global professional body. In particular, RICS professionals can play a central role in mobilising capital for investment in energy efficient and sustainable buildings. Asia-Pacific government recognition update During Chinese President Xi Jinping’s October visit to the UK for meetings with prime minister David Cameron, RICS met with decision-makers from China’s Land Survey and Planning Institute – the government department connected to the Chinese National Land Resources Bureau. Land reform and resource management are key to the current Chinese five-year plan and representatives from both organisations discussed the links between RICS’ international standards initiatives, the valuation of development land, smart cities and sustainable development. In Australia, RICS has been approved by the Professional Standards Councils for a scheme that will enable RICS valuers to limit their liability. CEO Sean Tompkins, meanwhile, met with New Zealand’s housing minister, Nick Smith, to discuss developing the profession and housing supply in the country.

END GAME Tokyo has maintained its position as Asia’s top city for investment, but the sun might be setting elsewhere in the region

Asia is an increasingly fraught place to invest in real estate, according to the 2016 Asian edition of the Urban Land Institute’s (ULI) Emerging Trends in Real Estate. That has left some property players wondering if Asia’s six-year bull run may be coming to an end. “It’s a difficult environment in which to deploy capital,” commented one of the interviewees – none of whom are identified by name. “There’s no low-hanging fruit. There are no particularly obvious trades. I struggle with it, and if you try to put normal

assumptions around acquisitions, it’s pretty hard to make them make sense in most markets.” Industrial and warehouse property has the best prospects for both investment and development, the report found, and was the only category universally agreed on as “good” for 2016. Hotels are essentially on a par with offices, but both are rated only as “fair.” Tokyo, like last year, is the mostattractive city for both real-estate development and investment. Sydney, Melbourne and Osaka occupy the next three slots. The report is based on interviews with around 350 executives from property developers and investment funds. It is compiled each year by PwC for the ULI. There is an increasing interest in emerging markets, and Ho Chi Minh City, Jakarta and Manila in particular have attracted attention. But the report notes that, in practice, very little foreign capital ultimately finds its way into any of those markets. Amid turbulence for currencies such as the Indonesian rupiah, which is at its lowest ebb since the Asian financial crisis, some investors are watching for signs of distress among developers with US dollar debt. “There is a time to invest and a time to wait,” one investor said. “We think some of these countries may be heading for a correction and we’re just getting ourselves ready.”

PAGETURNER GREEN BUILDING WITH CONCRETE: SUSTAINABLE DESIGN AND CONSTRUCTION GAJANAN M SABNIS Concrete is one of the most widely used construction materials, and the second edition of this book provides an overview of all the available information on its role in green building. Featuring viewpoints from global sustainability experts,

it details the economic benefits of using concrete in green building, as well as outlining ways in which concrete can be easily and affordably reused. Professionals can get a better understanding of how concrete can contribute to the

whole life-cycle of construction projects, such as the benefits of thermal mass, or using concrete to improve water quality, reduce the urban heat island effect, or reduce construction waste. Productivity Press, $137 WHAT ARE YOU READING? Email editor @ricsmodus.com Q1 2016_MODUS A SI A 15

GROWING PAINS 二 How can we ensure that Asia’s rapidly developing cities evolve to suit the needs of future generations? Words Alex Frew McMillan Illustrations Francesco Bongiorni

his is the Asian century. And it is taking a form that is both encouraging and disheartening. The continent is essentially under construction and able to shape its own landscape. But the one it has been most successful in forming involves blocks of city skyscrapers obscured by smog. It is an outcome that Asia’s population will refuse to accept. The idea that buildings should become more environmentally friendly is a given. But the idea that the built environment should be liveable, smart, sustainable, poses questions the region is finding hard to answer. To prosper, there is no dispute that Asia had to urbanise and expand. But as the continent moves from emerging to developed economies, those in the real estate and construction industries realise they need to make sense of what Asia has already got in terms of its urban environments, and decide where to go from here. “Sustainability in an urban context means a city that works well for its citizens in the present, without causing problems for them and the rest of the world in the future,”says William Taam MRICS, executive director of Asia operations at Arcadis. Taam outlines some of the prerequisites: transport systems that enable people to navigate the city quickly and affordably; a clean water supply; strong social structures; institutions that are predictable and effective; good public health; a well-educated workforce; and an environment that is conducive to strong economic performance. It is worth noting that economic performance comes at the end of this list. For Taam, terms like smart, liveable and sustainable are merging when looking at modern urban planning. It is an issue highlighted in Arcadis’first Sustainable Cities Index, which rates 50 of the world’s most prominent cities. Here, the headline ranking is divided into three subcategories: People, Planet and Profit, which correspond to social, environmental and economic sustainability. The quest is to find the perfect balance across these three perspectives of sustainability and, according to the report, although cities across the world are performing better for being sustainable for profit and planet, they are failing to sufficiently meet the needs of their people. »

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十一世纪是属于亚洲的世纪，但它却一方面鼓舞人心，另一方面又令人沮丧。亚洲正处于构建阶段，并将形成自己的特色。不过，其最成功之处却是建立了烟雾笼罩、高楼林立的城区。这是亚洲人所不愿见到的情况。建筑物变得更环保本应是理所当然的，但建筑环境应宜居、智能、可持续这个理念，却为这个地区提出了许多难以解答的问题。亚洲要繁荣，就必须推动城市化及进行城市扩张。但随着亚洲从发展中经济体转变成发达经济体，从事房地产和建造业的人士会发现，他们必须搞清楚就城市环境而言，亚洲现在已拥有什么，并决定从哪个方向去去发展。 A r c a d i s 亚洲执行董事、皇家特许测量师学会会员谭永康 MRICS 表示： “城市的可持续发展是指城市在现在要与居民共融，并在将来也不会对居民及世界其他地方带来问题。”谭先生罗列了一些必备条件：拥有快捷、可负担的交通系统；洁净的供水；良好的社会结构；可预测及高效的体制；良好的公共卫生；受过良好教育的劳动力；以及有利于维持强大经济绩效的环境。值得一提的是，经济表现列于清单的末尾。对于谭先生而言，在现代城市规划中，智能、宜居及可持续开始融为一体，并成为 Arcadis第一份“可持续城市指数”中的其中一项重点。 “可持续城市指数”对全球 50 座最主要城市作出评分。在这里， “可持续城市指数”排名细分为三个子类别：人、地球和收入，三者分别对应社会、环境及经济的可持续性。其目的是要在可持续发展的三个方面找到最佳平衡點。报告显示，虽然全球城市在收入及地球方面有较佳的可持续性，但在满足人的需要方面却差强人意。亚洲的分化情况最为明显。首尔、香港及新加坡凭出色表现而跻身 10 强，而持续性最差的城市则包含亚洲发展最快的一些城市，例如雅加达、马尼拉、孟买、武汉和新德里。这些城市由于受到旧有的重工业影响，导致城市无序扩张和污染等局面。那么，亚洲要发展真正宜居的城市，有什么要学习呢?事实上, 亚洲各地面对着截然不同的挑战。上海的人口预计到 2030 年将增加 54% 至 3000 万人，因此将面对巨大的压力。但在日本, 却可能要采取必須但有违常理的城市规划方案。日本是面对小型市镇人口大规模下跌的第一个国家。根据政府数据预测, 在 2050 年之前，日本将有超过 60% 居民区人口至少减半, 更有20% 变成无人居住。为此，日本国土交通省制定了“2050 鸿图计划”，鼓励改善紧凑型城市的网络。本质上而言，该规划旨在缩短区域城市之间對於共享服务和资源的需求。»

成长之痛如何确保快速发展的亚洲城市能满足下一代的需要? 撰文 Alex Frew McMillan 插图 Francesco Bongiorni

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Smart cities

The way to future-proof buildings – for the benefit of our investors – is to make sure they are in a sustainable, socially inclusive environment

Asia provides the starkest divergence. Seoul, Hong Kong and Singapore perform well enough to make the top 10. However, the least-sustainable cities include some of the fastest-growing metropolises on the Asian continent: Jakarta, Manila, Mumbai, Wuhan and New Delhi. These fall short on aspects such as sprawl and pollution, the result of old and heavy industries. So, what can Asia learn as it attempts to deploy truly liveable cities? The challenges are extremely diverse. Yes, the pressure on cities such as Shanghai will be immense as its population surges 54%, to 30 million by 2030. But Japan, for example, may be the harbinger of a necessary but counterintuitive approach to urban planning. It is the first nation to face a wholesale decline in the population of its smaller cities and towns. Government data predicts that, in the years through to 2050, more than 60% of Japan’s inhabited areas will lose at least half of their population, and 20% will become uninhabited.

CHRIS TAYLOR Hermes Investment Management

o that end, Japan’s lands and infrastructure ministry has developed its “Grand Design 2050”. This focuses on encouraging compact cities with improved networks. In essence, the plan aims to shrink the gap between regional cities that must start to share services and resources. “Regional cities are dying off,” says Jon-Paul Toppino, managing partner for real estate at PAG Real Estate Investment, about the 2050 scheme. “But I do feel the next 20 years for Japan will not be as bad as people think.” He points to the country’s world-leading spending in research and development per capita as signs that its cities will work more intelligently at the highest-end of the value chain. In the Arcadis ranking, Seoul scores highly in the people category, the area that has, to date, drawn the least attention from futurists and city governments. Good health and the second-best transportation network in the world make it highly liveable. In another report, devoted just to nations that border the Pacific, the Asia Pacific Economic Cooperation (APEC) commissioned PwC to put together Building Better Cities: Competitive, sustainable and liveable metropolises to look at what works, and what does not, in 28 cities across the region. Again, there is a clear pattern of the most-developed nations producing the most-sustainable cities. Toronto and Vancouver rule the roost, while Singapore and Tokyo – the best-planned cities in Asia – are placed next. Auckland and Melbourne also fare well – arguably, New Zealand and Australia lead the world in green planning and sustainable building and city development. Again, sprawling Seoul also scores high, with Osaka ranking above Hong Kong – a relatively lowly 11th place for a city frequently depicted as a model of the highly dense, vertical pocket city of the future. Hong Kong fared particularly badly in terms of its wealth gap, its “GINI rankings” showing that one million residents, or one in five, live in poverty – mainly as a result of high realestate costs. The APEC report claims that greater income equitability actually boosts economic growth. This would be a lesson well learned by economies such as Malaysia, Taiwan and Thailand, which are in the middle of the pack in terms of their urban development. They have an urgent need to adapt. Bangkok, Manila and Jakarta are already snarled with traffic and seemingly endless in their expansion.

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PAG 房地产投资公司的房地产管理合伙人 Jon-Paul Toppino 在谈到 2050 规划时表示： “区域城市正在相继消失，但我认为在未来 20 年，日本的情况不会如人们想象般糟糕。”他指出，日本的人均研发开支全球领先反映出日本城市将会在价值链的最高端上更高效地运转。在 Arcadis 排名中，首尔在“人”这个类别中取得高分,但該类并未引起未来学家和城市政府的太多关注。此外，良好的卫生及名列全球第二佳的交通网络都令其成为非常宜居的城市。在针对太平洋邻近国家的另一份报告中，亚太经济合作组织 (APEC) 委托普华永道 (PWC) 编撰“建设更美好城市：有竞争力、可持续发展及宜居的都市”报告中了解在区内28个城市中，什么是可行的，什么却行不通。拥有最多可持续发展城市的发达国家均有其一套清晰的模式。多伦多和温哥华领先全球，而新加坡和东京这两座规划最佳的亚洲城市则紧随其后。奥克兰和墨尔本同样表现出色，可以说，新西兰和澳大利亚在绿色规划及可持续建筑物和城市发展方面领导全球。不断扩张的首尔同样获得高分，大阪的排名也高于名列第 11 位，常常被视为高密度、高楼林立的未来城市的样板的香港。香港贫富差距问题严重，其“基尼排名”显示，香港有 100 万人（或1/5人口）贫穷人口，造成这种状况的主因在于房地产价格高昂。亚太经济合作组织的报告指出，收入公平性有助于推动经济增长。这对于比上不足、比下有余的马来西亚、台湾和泰国来说，无疑是一个很好的教训。它们亟需作出调整。交通问题及看似无止境的扩张已令曼谷、马尼拉和雅加达等城市焦头烂额。精明的投资者已开始留意到这些情况。爱马仕投资管理公司私人市场总监 Chris Taylor 表示： “为了我们投资者的利益，令建筑可适应未来需要，重点在于确保其建立在可持续发展并具社会包容性的环境。”他相信，这涉及到地方营造、审视位置的舒适度、其基建和周遭的公共空间。换句话说，建筑物并非那么重要。重要的是建筑物环境、社区, 连通性及空间感。因此可能是时候从地理和时间角度考虑更广义的发展。Taylor 表示，只有 37% 机构投资者认为养老基金应考虑受益人的物业投资会否提高或降低其退休时的整体生活质量。养老基金的投资期极长 ,因而最有筹码坚持要求所投资的

物业项目必须能提升其所位处的地区。开发商开始响应诉求。全球房地产集团 Grosvenor 将这些概念纳入东京、香港和上海等现有目标市场，并致力确保其参与的任何新发展能将项目与其周遭联系起来。这个概念正正是香港的西九龙所欠缺的。在这里，为富裕人士提供的摩天大楼公寓坐落于巨大的高档购物商场之上。从大街中进入九龙站上方的圆方商场绝不容易，Grosvenor 誓言自己的大厦要避免这种情况。Grosvenor亚太首席执行官 Ben Cha 表示： “城市结构的质量是下一代最大的课题之一。它涉及上宏观规模、连通性和基建，下至建筑物等各个层面。” 亚洲的建筑和发展是否持相似的看法？多数公司目前只会留意底线。他们将须接受可持续发展的各个方面，以推动经济增长和宜居性，同时保持城市的多元结构和传统。n

为了我们投资者的利益，令建筑可适应未来需要，重点在于确保其建立在可持续发展并具社会包容性的环境 CHRIS TAYLOR

爱马仕投资管理公司

The smart money is starting to take note. “The way to future-proof buildings – for the benefit of our investors – is to make sure they are in a sustainable, socially inclusive environment,” says Chris Taylor, head of private markets at Hermes Investment Management. He believes this involves placemaking, looking at the “amenity value” of the location, its infrastructure and the public realm that surrounds it. The building, in other words, is not that important. It is the built environment that matters, the community, the connectivity, the sense of space. It may be time to consider the broader reaches of development both in geographic and temporal terms. Taylor says that only 37% of institutional investors feel pension funds should consider whether their property investments will improve or detract from the overall quality of life experienced by beneficiaries when they retire. Pension funds, with their very long time horizons, are in prime position to insist that the property investments that they back must enhance the location in which they fit. Developers are beginning to heed that call. Global property group Grosvenor is putting those concepts to work in its current target markets of Tokyo, Hong Kong and Shanghai, aiming to ensure that any new development in which it engages links that project with its surrounds. That is a concept lacking, for instance, in Hong Kong’s West Kowloon, where skyscraper condos for the wealthy sit atop huge luxury shopping malls. Entering the Elements Mall above Kowloon Station from street level is almost impossible, a transgression that Grosvenor vows to avoid in its own buildings.“The quality of the urban fabric is one of the biggest subjects for the next generation,” says Ben Cha, CEO of Grosvenor Asia Pacific. “It goes from the grand scale, with connectivity and infrastructure, right down to the building.” Will Asia’s construction and development industries take a similar view? Most companies currently look only at the bottom line. They are going to need to embrace sustainability in all its forms to drive economic growth and liveability, while retaining a city’s diverse mix and heritage. n

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Risk management Xxxxxxxxx

Property is an inherently risky investment class, as the last global downturn proved. How that risk is managed is one of the most pressing challenges facing the profession Words Katie Puckett Illustration Robert Frank Hunter

I SHOW ME THE WAY

t was a $364bn meeting. That was the value of global real estate controlled by the investors around the table at RICS’ Parliament Square HQ, where representatives of leading global investment funds had convened for the first session of the RICS Global Investment Risk Management Forum. They had been invited by RICS President Martin J Brühl FRICS to exchange best practice and perhaps lay the foundations for an industry-endorsed approach to investment risk management. As head of international investment management at German fund manager Union Investment Real Estate, risk management is a primary preoccupation for Brühl. That is one reason why he has chosen to make it a key theme of his year as RICS President. The other is that he feels RICS is ideally placed to make a difference, as an internationally respected body and a source of professionalism, thought leadership and ethics for investors around the world. “Eight years after the crash, we are now talking about the potential overheating of the market,”Brühl explains.“I thought it was important to bring people together to show the world that we have learned, that we do have best practice in risk management. I think RICS is the right forum.” »

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Risk management

rühl’s initiative is particularly timely as investors flock into real estate markets around the world. Banks, insurers and pension funds must all meet tougher regulatory requirements imposed since the crash, but property is not as stringently regulated as other asset classes and its risk management procedures are less well developed. This is the gap that Brühl wants RICS to address. As the current cycle wears on, investors will inevitably be drawn into taking riskier positions to secure improved returns, which could leave them exposed in the absence of robust risk management processes. RICS members cannot dictate the highs and lows of market cycles, nor predict them with any certainty, but they can ensure their clients are in the best position to weather any storms. This is not just a matter for multi-billiondollar investors, points out Richard Stokes, RICS’ Head of Global Corporate Affairs: “Since 2007, equity market volatility and low yields have prompted greater investment interest in real estate as an asset class. In many markets it is now considered a safe haven for capital.” Much of this is the pension savings of millions of ordinary people: “Pension funds have been steadily increasing their investments in real estate over the last decade, so how investment risk is managed ultimately affects all of us.” Risk is not an inherently bad thing – it is, after all, the flipside of reward. Every investor or fund has a particular appetite or level of tolerance for risk, and it is often the role of an RICS professional to identify this and devise a real estate strategy that delivers the desired level of returns within acceptable parameters. There is no such thing as a riskfree investment – even cash will lose its value over time due to inflation – and there are many factors that can influence volatility. At a macro level, there are the ups and downs of global economics, political unrest and currency fluctuations that affect every investment and, at a micro level, the vagaries

of local markets, individual assets and tenants. There are risks associated with bricks and mortar, but also with the way a transaction is funded. If an investment is highly leveraged, the impact of even tiny fluctuations in value will be magnified – great if prices rise, but disastrous if they fall, as the global financial crisis demonstrated. “People focus on the real estate cycle and they forget the external factors,” says Philip Cropper FRICS, chairman of CBRE Capital Advisors in the UK. “If you go back to 2007, the market had increased the level of risk by leveraging higher and higher. They were doing extraordinarily well with very little equity if the market went up, but got wiped out pretty quickly when it went down.”

Compared with other investment options, real estate is highly illiquid, unique and often opaque ll

PHILIP BARRETT Pramerica Real Estate Investors

Generally speaking, property is regarded as less stable than bonds but less volatile than stocks. The crucial difference is that investors in the equity markets have access to extensive, highly transparent data on the performance of their assets, compiled from millions of transactions. Properties, on the other hand, change hands less frequently and may be valued only once a year. “Compared with other investment options, real estate is highly illiquid, unique and often opaque,” explains Philip Barrett, global chief investment risk officer at Pramerica Real Estate Investors and a founder member of the RICS forum.“Real estate is a cyclical business that does not have the standard risk metrics that exist in other investment classes.”

As every building is unique, risk management in real estate is much more labour intensive: “If you were to look at one of our investment committee books, it would include extensive details about the asset, location, rent roll, lots of pictures – everything you would expect if someone is considering investing in a piece of real estate,” says Barrett. “But there will be a separate section on what we consider to be the key risks and the mitigants against that risk. The fun bit about real estate is that you have to do that on an asset-by-asset basis.” Barrett has noticed a much greater focus on risk management from investors, owners and regulators, and he believes RICS has an important role to play.“If I go to an emerging market in Asia and I learn that someone is RICS accredited, that gives me some serious confidence. That’s the kind of power RICS can bring to it – there aren’t that many international organisations in our industry.”

apital is now flooding into property, particularly into core markets in Europe, as historically low interest rates across Europe, the US and the AsiaPacific region are driving investors to seek higher returns elsewhere. Sovereign wealth and pension funds are increasing their real estate allocations, while the relaxation of foreign investment rules in markets such as Taiwan has unleashed some significant new players. Meanwhile, wealthy individuals from around the world are flocking to real estate in core markets as a safe haven for their wealth. “The investment industry has completely changed during the last 36 months,” says Jan-Willem Bastijn MRICS, chief executive of the EMEA capital markets team at Cushman & Wakefield in Amsterdam. “Where it was probably international and cross-border before the global financial crisis, it is now completely global. Money flows are coming from all parts of the world, not just the ones that we know quite well.” »

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Risk management

In today’s market, assessing the source and associated risks of capital has become even more important: “You always had to do that, but now we like to understand not just the face that we see in the market, which might be the investment manager or the front line of the investor, but also the money behind that investor. That’s a huge game-changer.” The increasing diversity of capital has brought a more sophisticated approach, says Tony Martin MRICS, head of investment advisory at CBRE Capital Advisors, from investors who are now more likely to target a particular area of the market. He has noticed greater demand at both ends of the risk curve.“The desire for long-term, lowerrisk assets such as ground-rent funds has increased. At the same time, opportunistic, high-risk funds have also increased in scale as they seek to take advantage of the market coming back.”

ith so much capital flooding into core real estate markets, investors are also having to look further afield to less-established destinations to achieve the right level of returns. Investors have always sought to diversify their portfolios to insulate themselves against peaks and troughs in individual markets. The challenge is to identify genuinely non-correlated assets, notes Martin.“What 2007 showed is that most assets were correlated with each other in some way. If you’re going to have a 100-year or 200-year crash, you find that what were previously thought of as groups of assets with low correlation are in fact more closely correlated.” There is increasing interest in alternative sectors such as student housing, healthcare, self-storage and private-rented residential. Student accommodation is having a record year, for example. Investment in the UK rose from £2.4bn ($3.7bn) in 2014 to an estimated £5.7bn ($8.2bn) in 2015, says Joe Guilfoyle MRICS, head of corporate transactions at JLL Alternatives.“Institutions are, in part, being forced to look at new products because

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traditional sectors do not have enough assets for the weight of equity chasing it. Also, as we move through the cycle, investors are increasingly looking for properties that have more defensive qualities. Alternatives provide these because they’re underpinned by very strong supply-and-demand dynamics.” Historically, alternatives would constitute around 10% of institutions’ real estate allocation in the UK, says Guilfoyle, but this is forecast to reach 28% by 2019. The key is that these sectors have an operational element, where a good manager can outperform the market and increase the value of the asset. The caveat is that investors

Institutions are having to look at new products because traditional sectors do not have enough assets for the weight of equity chasing it ll

JOE GUILFOYLE MRICS JLL

cannot afford to take their eye off the ball: “Once investors have taken the decision to invest, proactive management to maintain those cashflows is absolutely essential,”says Guilfoyle. “The better managers maintain a continual investment in their asset.” Diversification makes risk management more complex, too, as maintaining the correct level of exposure requires constant monitoring. “One of the key aspects is managing that risk and making sure that changes in the risk profile don’t creep up on you,”warns Martin.“It’s an ongoing process. Where people sometimes go wrong is that they buy a portfolio and then sit on it. What they don’t realise is that their risk profile is not constant and will change. It is important that real estate strategies are monitored and then adapted to changing conditions.”

ll of this is activity driving demand for internationally recognised standards in areas such as valuation to improve transparency and confidence for investors. “Valuation is one of the key areas of risk management – investors want to make sure they are paying a fair price,” says Nicholas Talbot, RICS Director and interim chief executive of the International Valuation Standards Council (IVSC). “If a valuation has been done improperly, by someone who is not a professional or not to a consistent standard, the real value could turn out to be much lower than the price you paid. “Even if investors have their own risk management processes in place, and their own in-house valuers doing checks and balances, there could still be situations where people are trained to different standards and levels of professionalism,” Talbot adds. “In a seamless, ideal world, you would have a single approach so you know you’re comparing apples with apples.” The IVSC has succeeded in rallying some of the world’s largest valuation organisations behind its initiative to develop a common approach to valuation practices. In the longer term, this is what Brühl is hoping to achieve with the RICS Global Investment Risk Management Forum. There is plenty of best practice in the profession already – now he is seeking to bring industry leaders together to compare notes and learn from each other. “We won’t be able to prevent the next crash or the next crisis, but we can start to influence the market,” he says. “Hopefully it’s going to advance the industry and contribute to market confidence.” After all, $364bn may only be a fraction of the money swirling around the global real estate investment landscape, but you always have to start somewhere. n

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Knowledge is power in construction, and new technologies such as BIM challenge professionals to extend their skills further. It is into this context that RICS has launched a BIM Manager certification, to offer an industry standard that guarantees an individualâ&#x20AC;&#x2122;s ability to work with BIM on live projects. Andrew Brister talks to three of the first wave Illustrations Melvin Galapon

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THE VISIONARY MAC MUZVIMWE MRICS ASSOCIATE DIRECTOR AND HEAD OF BIM, FAITHFUL+GOULD, EXETER, UK

o say that Mac Muzvimwe is passionate about BIM is something of an understatement. Although still in his mid-30s, Muzvimwe is head of BIM at Faithful+Gould in the UK, where he is also an associate director.“My BIM journey really started back in 2009 when I was studying for my MBA in construction and real estate. I did my dissertation on BIM, and I questioned why it was not being adopted more widely in the UK given the many benefits. I suggested that the government needed to take a leading role – this was before the 2016 mandate was issued on public sector work.” The insightful Muzvimwe suggested that Faithful+ Gould set up the BIM working group that he now leads. “Our strategy is to make BIM business as usual. Today, BIM is still seen as a specialism, but my argument is that there are so many benefits, so many advantages, that it needs to become just the way we do business. We are doing that internally by making the tools more visible to the staff, making them aware of the advantages and rolling out training programmes.” Muzvimwe ably demonstrated the advantages to the business on a pilot project at City College in Plymouth. Faithful+Gould and parent company Atkins were appointed to provide both project management and quantity surveying services for the scheme. “The £7.5m [$10.8m] project was split into two main phases, and following the completion of phase one in 2011, we proposed to the client that BIM was used for phase two. Atkins started work on creating a model of the existing building, all design work was done using Revit and other BIM-compliant applications, and we used BIM for taking off the quantities and for auto-generation of schedules. The client was extremely satisfied with the results: 3D images and walkthroughs were provided to the college which, in turn, used these as part of its consultation process with various stakeholders, including students.” Muzvimwe thinks the best argument for BIM is the fact that you are building twice: once virtually and once on site. “Building virtually allows you to sort out any problems first, early on in the programme. If you have

to resolve those problems on site, it’s much more complicated, expensive and costly in terms of time.” Collaboration and sharing data is the key to success. As a member of both the Construction Industry Council’s BIM2050 Group and the RICS Technology & Focus Group, he is well placed to look at what the future holds for the profession. “We need to find our position in a digital world. The technology will do the quantity take-offs and remove human error, which gives us more time to add value and improve outcomes for clients. We can be part of the team, providing real-time cost advice on design options. The BIM2050 Group looks at what we can do to improve collaboration across the disciplines, and one area we are examining is digital qualifications that are recognised across institutions such as RICS, the Institution of Civil Engineers, Royal Institute of British Architects and so on. That way, when I meet with an architect or engineer, we have a common ground and a common knowledge. In a way, the RICS BIM Manager certification is a first step towards that.” Muzvimwe foresees a future in which Spon’s price books are replaced by a subscription-based app service, featuring real-time price data that the quantity surveyor can use to advise on implications of design options, such as the use of a steel frame over concrete. “This is not about technology – it’s all about improving outcomes for clients,” he says. »

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BIM Manager

THE STRATEGIST SARAH DAVIDSON FRICS HEAD OF CORPORATE RESEARCH & DEVELOPMENT, GLEEDS, NOTTINGHAM, UK

f BIM is all about management of data, then no one is better qualified than Sarah Davidson FRICS. Following 20 years as a practising quantity surveyor, Davidson now leads Gleeds’ corporate research and development department, managing a team that has developed the group’s internal data and benchmarking systems. “We now have a robust, structured database that allows us to better support projects and to better manage risk. We can integrate more with the design team because we understand where the allocation of cost ought to be for certain types of design.” With the arrival of BIM, Davidson could see the potential synergies with Gleeds’ data capabilities.“We can use data to address some of the problems around lack of predictability and certainty over cost and delivery, to better inform the briefing and project progress.” Since 2011, Davidson has been responsible for raising the awareness of BIM within Gleeds and developing its capabilities. “We’ve created a lot of guidance, there’s an internal, online BIM training course, we’ve introduced a Centre of Excellence and developed a mentoring scheme. We have highly motivated staff, who are very clever and many are of the generation that understand modelling.”

BIM allows us to manage risk better. It creates a link between designers, cost managers and contractors, so when things change, we can quickly address any issues

SARAH DAVIDSON FRICS Gleeds

She is excited by the opportunities BIM presents for surveyors. “We are used to being in the middle of things – accepting information, doing something with it and passing it on. We’ve often done that through reproduction and that creates risk. BIM allows us to manage those risks better. It creates a link between designers, cost managers and contractors, so when things change, we can quickly address any issues. It also takes away many mundane activities that don’t add value, allowing us to devote more time to things that do, like pricing and managing the risk. BIM also allows surveyors to move into asset management. If you understand how an asset is going to perform and how it can be optimised, you can make decisions based on long-term performance rather than short-term capital delivery.” Davidson believes the BIM Manager certification lends credibility to what is still a relatively new skill. “It’s allowed me to provide evidence to clients that I can do this job and enable them to have confidence in me. It also allows the applicant to evaluate themselves and gives them some direction over how they might want to progress.” The UK government’s construction strategy requires all centrally procured public projects to be built using Level 2 BIM by 2016. At this level, parties create models using their own software and data can be shared with project stakeholders. This puts a focus on intelligent modelling and project data generation, transition and application. “A lot of progress has been made, but there is still a way to go,” says Davidson. “There’s still a lack of awareness over what Level 2 BIM means – many think it is a software solution, rather than a data and information solution … It’s about the industry trying to work smarter, which has to be beneficial in the long term.”

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THE PIONEER CHUANG QIU MRICS DIRECTOR, JCM INTERNATIONAL ENGINEERING MANAGEMENT INSTITUTE, BEIJING, CHINA

recent survey, conducted by Dodge Data & Analytics in association with Autodesk and Glodon Software, predicted that BIM implementation in China will grow by 108% within the next two years. JCM International Engineering Management Institute is well placed to take advantage. It specialises in 3D, 4D and 5D construction project management and has several high-profile BIM schemes under its belt. “Our first BIM project was the Shenyang Taoxian International Airport terminal back in 2011,” says JCM’s director, Chuang Qiu MRICS.“We realised the whole project in 3D and BIM is excellent for project management – for example: cost management, quality management and clash detection. It’s a really good technology for communication and collaboration.” An architect by training, Qiu has more than 20 years’ experience in construction project management. He was the chief engineer of the China International Engineering Consulting Corporation’s project management arm, and set up JCM in 2011 to take advantage of the opportunities presented by BIM. “My company is still relatively small, but we are carrying out some very large projects because of our experience with BIM. A few years ago, only the most high-profile buildings were adopting BIM, but it’s now filtering down to more and more projects. Some regions in China have mandated its use by 2017, driven by the anti-corruption agenda, as BIM is a very transparent technology.”

The most important level of BIM is the management of the model. This is perfect for the quantity surveyor because the profession is good at management of data

CHUANG QIU MRICS JCM International Engineering Management Institute

Qiu sees the surveyor as central to a future involving BIM. “If the first level of BIM is the creation of the model, the second level is the modelling itself, and the third and most important level is the management of the model. This is perfect for the quantity surveyor because the profession is good at management of data. The key part is how data is transferred from the design to the operation of the asset over its lifetime. The advent of sharing of digital data will provide an advantage for surveyors. We are now providing 5D service for Shanghai Disney Resort. It proves surveyors’ important role in data management.” Qiu believes that China has taken huge steps with BIM adoption. “There was a big cultural issue in China around sharing data and intellectual property rights. Designers did not want to share their building models. Now the customer wants to implement BIM and it is up to us to advise on the best way to put it into practice. We have enough people with the skills to create the model but we lack people who can fully integrate 3D, 4D and 5D processes.”An opportunity for RICS-certified BIM Managers, perhaps? n TO FIND OUT MORE about the BIM Manager certification and how to apply, go to rics.org/bimmanager

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Valuation

WEALTH OF IDEAS How much is a concept, patent or trademark worth? Putting a price on intangible assets is becoming an important part of a valuer’s job Words George Bull Illustrations Joey Guidone

onsider this: roughly 80% of the value of companies on the NASDAQ 100 is, these days, attributed to intellectual property (IP). This means that, for some of the world’s most powerful companies, the main drivers of wealth creation are no longer the hard assets of old, but intellectual capital such as patents and trademarks, and even copyright. Yet until relatively recently, IP and intangible assets were the invisible class: poorly understood and unrepresented in company accounts. That is now starting to change, and it is opening up opportunities for business valuers with the right expertise. IP is typically protected by copyright, patents, trademarks and design rights. But it is also a subset of a wider group of intangibles that can be valuable but are not legally protected, such as know-how, customer relationships and supplier contracts. A brand, for example, is usually a bundle of lots 30 RICS.ORG/MODUS

of IP and intangibles. Although these assets may hold no obvious physical value, they can underpin a company’s market dominance and profitability, and are increasingly the target of mergers and acquisitions. “Industry has always had IP,” says Kelvin King FRICS, senior partner at London firm Valuation Consulting. “It just hasn’t been properly identified to allow valuation. Accounting is to blame for this. Until recently, we didn’t have any reporting for intangible assets, despite the fact that they are 80% of the asset class.” In 2008, a revised version of International Financial Reporting Standards 3 finally made it compulsory for all companies making acquisitions to produce a purchase-price allocation that identifies and assesses the fair value of all intangible assets. “You now see these assets in reporting and that helps everybody,” says King. “Before, if bankers didn’t see an asset in public accounts, they didn’t think it existed in a viable way.” Valuation can play an important role in the effective management of IP and intangible assets, from how they are developed, exploited and acquired, to how they can be used to create new revenue streams. It can also help companies decide what IP to protect and what to sell or abandon. One of the questions King is often asked by companies is:“Should I register this patent?” Registering a patent can be a complicated and expensive process, and legal protection does not always affect how valuable something is, he says. “You can have a very valuable brand without it being trademarked, for example. The more important question is: ‘In which jurisdictions should we concentrate our registrations?’ And that is driven by a valuation assessment. A valuer will put the real crown jewels in the portfolio so that management can focus on that area.” How that valuation is reached is a hot topic. Only a small number of business valuers are recognised experts in IP valuations. Decisive moves by organisations such as RICS aim to address this. The ninth edition of RICS Valuation Standards (the Red Book), »

Valuation

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Valuation

Encapsulating the methodologies in the Red Book is the first worldwide accreditation of business and IP valuation. It is a giant leap forward

KELVIN KING FRICS Valuation Consulting

published in 2014, introduced chapters written by King on the value of intangible assets and business valuation. This was followed in May by the RICS global guidance note, Valuation of Intellectual Property Rights, to help valuers unpick the legal, functional and economic characteristics of IP, all of which can have a profound impact on the value of an asset (box, below). “We always had visible, challengeable methodologies in the hands of good experts, but now it’s encapsulated in the Red Book,” says King. “This is the first worldwide accreditation of business and IP valuation. It really is a giant leap forward.” That still might not be enough, says Stuart Whitwell MRICS, joint-managing director of London-based Intangible Business. “When we first started, all the auditors pretended they were the only ones who could do it. Your typical business valuer is going to face that hurdle. Having people with some experience in accounting standards helps you get over the credibility hurdle.” Steve Choi, RICS’ International Director of Business Valuation in New York, says there is more momentum than ever behind industry-wide standards. “In recent years, the US Securities Exchange and Commission called into question whether individuals conducting fair-value measurement estimates had the requisite training, qualifications, experience and independence to perform this type of work. Basically, they said: fix it or we’re going to regulate you.”

Specifically, regulators criticised the lack of consistent qualifications and credentials. “If you interview valuation appraisers about how much work should be performed to value intangible assets, they will generally have different views,” says Choi. Since then, RICS, together with the American Institute of Certified Public Accountants, the American Society of Appraisers, The Appraisal Foundation and a group of leading accounting and valuation firms, have focused on creating a fair value measurement credential focused on business valuation and intangible asset valuation. Although the initiative is US-centric, it has international consequences, says Choi. “Anyone performing valuations of intangible assets for US publicly-traded companies should or will need to have this credential.”

he US is not the only country making a noise about IP. Hong Kong, given its position straddling Asia and the West, is being touted as a future IP trading hub. The opportunity has arisen, says Gary Man FRICS, managing director of Greater China Asset Services, because Chinese-listed companies engaged in overseas mergers and acquisitions have realised the importance of the IP they are buying. “Chinese companies won’t engage foreign companies to do the valuation for them and domestic firms can’t handle this kind of valuation, so the best choice is to find the expertise in Hong Kong. “I see more of this happening over the next five years. Hong Kong is in a good position to develop as a trading centre for all kinds of IP activities: valuation, management, buying and selling patents, marketing, and raising finance for research and development.” The opportunity is not just confined to Hong Kong. As Chairman of RICS’ Asia Business Valuation Committee, Man travels widely across Asia-Pacific. He says the latest guidance note has been well received by the Japan, South Korea and Taiwan governments.

GUIDANCE NOTE

What is intellectual property? Intellectual property (IP) is a creation of the intellect that has value to the owner and for which exclusive rights are recognised. They are negative rights, in that they allow the owner to prohibit others from using the IP without permission. 32 RICS.ORG/MODUS

The RICS guidance note, Valuation of Intellectual Property Rights, expands on International Valuation Standards 2013 and the Red Book. It provides important information on how the valuer identifies, defines

and describes specific rights attached to the IP being valued. The subject of an IP valuation can be a single right, or a portfolio of complementary IP rights and other intangible assets. Valuation is complex, particularly as a single asset

is rarely the sole driver of value. For example, a company may have a valuable patent, but that patent may be associated with a brand that drives sales. The IP valuer must be able to understand these interactions.

Valuation

Lending on IP and intangible assets is, however, a relatively new concept for the banking market. Traditional asset-based lenders have generally lacked confidence in valuation practices to lend on intangibles. But as methodologies become more accepted, and as new industry-wide standards bed down, things are changing. In 2013, the UK Intellectual Property Office commissioned King to write Banking on IP – a report to investigate whether those who created or owned IP assets could use them to secure the financing needed for company growth. Although no government recommendation followed, the report was well received and King has since joined the panels of several large banks, which he says

Companies want to know what their brands are worth, what credibility it gives them, and how they can leverage their assets

STUART WHITWELL MRICS Intangible Business

hitwell agrees: “China, southeast Asia and India are waking up to what brands are about. They’ve been more production-orientated, commodity-based industries, but now they see a need to develop other value-added components, which are mostly built around brands. So we see a lot more demand for that knowledge.” Most work, says Whitwell, is coming from Indian companies that want to know “what their brands are worth, what credibility it gives them, and how they can leverage their assets – including those that aren’t on their books, which are intangible assets”. In Malaysia, Intangible Assets has also worked on valuing IP for small and mediumsized enterprises (SMEs). A report published by the Association of Chartered Certified Accountants in July last year revealed that small businesses in the country may be missing out on finance, and even government funding, in failing to measure and report the value of their ideas and innovations. Whitwell says: “A lot of SMEs haven’t got many hard assets, most of it is code or software. So the government wanted to develop the skill set to value that, secure it, and lend against it, so those businesses can develop more quickly.”

shows the sector is starting to pay more attention to specialist IP operators. Where IP is of greater use to companies is as collateral, says King. With the number of companies running pension deficits on the rise and with no cash to put in, many RICS members may have been asked to value traditional assets, such as land and buildings, as security against future pension obligations. IP and its income streams is starting to be used in the same way.“Pension trustees are increasingly willing to take patents, trademarks and copyright as security against pension liabilities.” Business valuation is big business across the globe. It underpins stock market activity. With so much of this activity generated by technology, brands and artistic content, internationally recognised and consistent standards for their valuation is crucial. Not only could it provide regulators and traditional asset-based lenders with the reassurance they need to lend on IP and intangible assets, but it could finally put those assets at the top of company agendas. RICS business valuers could be at the forefront of a very interesting shift. n DOWNLOAD THE RICS GUIDANCE NOTE, Valuation of Intellectual Property Rights, at rics.org/valipr

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TIME TO MIX THINGS UP H

Versatile, cheap and strong, concrete is also responsible for huge levels of CO2 emissions. How is the industry cleaning up its act?

Words Roxane McMeeken Illustration Nicolas Dehghani

umankind has a serious concrete habit. In fact, after water, the material is the second-most consumed substance on earth. The Geneva-based World Business Council for Sustainable Development (WBCSD) estimates that we manufacture 25 billion tonnes a year of the stuff – more than half of it in China and India. And although the level of embodied carbon in concrete is not particularly high compared with other building materials – 0.107kg of embodied carbon per kilogram of material, compared with 1.460kg for steel, according to CO2 bible the Inventory of Embodied Carbon – it is the sheer quantity of it that makes it an oft-singled-out carbon criminal. For example, the WBCSD’s Cement Sustainability Initiative estimates that production of cement – the key ingredient in concrete, alongside aggregate and water – causes an immense 5% of manmade CO2 emissions worldwide. In response to this notoriety, the concrete and cement production industry has been working to reduce its emissions. Building materials giant Lafarge, for example, is on target to reduce its emissions by one-third by 2020 against a 1990 baseline. But although significant progress has been made, there is no doubt that more can be done. One area of focus is recycling, which extends concrete’s lifetime in use, lowering whole-life carbon emissions. The smartest approach is to reuse in situ, as demonstrated by architect MVRDV’s conversion of a pair of giant industrial seed silos in Copenhagen into apartment blocks. It is rare that such convenient circumstances coincide, however, and concrete has limited applications once broken up, so if not sent to landfill, old concrete is most likely to be

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used as aggregate in new concrete. The WBCSD’s Recycling Concrete report states that recycled materials account for 5% of aggregate in the US and 6%-8% in Europe – the greatest users being the UK, the Netherlands, Belgium, Switzerland and Germany. Meanwhile, Australian building rules allow up to 30% of old concrete to be used in aggregate. As encouraging as this may sound, Rob Russell MRICS, partner and head of sustainability at John Rowan & Partners in the UK, says:“Reusing concrete as aggregate doesn’t make much of an impact in the new product’s embodied carbon.” This is because sourcing the alternative, virgin aggregate is not very carbon intensive. “It tends to be found locally and does not require energy-intensive processing.” In addition, the structural limitations of recycled-aggregate concrete means that its use is mainly restricted to road sub-base. The biggest problem to address is the energy used to make cement. The WBCSD says that around half of cement’s carbon emissions are generated during the chemical reaction that produces clinker, the main constituent of Portland (standard) cement. Burning fuel to heat the cement in a kiln to around 1,400° celsius accounts for the other half. A global shift away from wet kilns to more energyefficient dry kilns began in the early 1990s. “It is now practically standard for new installations,” says Philippe Fonta, managing director of the WBCSD’s Cement

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Sustainability Initiative, “but existing kilns Arcadis UK, says:“A by-product depends on ll are likely to be operated until the end of their the primary industrial process happening – technical lifetime.” This has put emerging and happening locally, since cement is a economies, where more new kilns are being heavy material that tends not to be built, ahead of more developed regions. transported long distances.” ll Barry Piper FRICS, Faithful+Gould’s chief To find a solution that would be less operating officer, industry, in Asia-Pacific, reliant on external factors requires radical adds that in China – the world’s biggest technological innovation, in either the ROB RUSSELL MRICS John Rowan & Partners cement producer –“there has been a shift to concrete mix or plant. Could nanotechnology dry-process kiln production, but these hold the key to lowering concrete’s plants are still consuming up to 25% more energy than their emissions? Zongjin Li, a professor researching concrete at international counterparts”. Hong Kong’s University of Technology and Science, says that A shift to using greener fuels is also already under way. “a Chinese government research project has found a way to The European Cement Bureau (Cembureau), which use a nanochemical that increases the toughness of cement, represents the industry in Europe, says that its members allowing you to use much less of it”. have replaced one-third of fossil fuels with greener A plethora of other new cements are being developed. alternatives. But Koen Coppenholle, the Brussels-based Limestone calcinated clay cement (LC3) – a Swiss-funded organisation’s chief executive, admits:“We could go further. research project between educational institutions in We have set a target of replacing 60% by 2050.” Switzerland, Cuba and India – is claimed to produce 30% of the carbon emissions of standard cement; Californian company Calera has developed a process to capture CO2 hris Spicer, associate director and carbon expert at Sweett Group in London warns, however: “These emissions and convert them into a calcium carbonate-based alternative fuels normally need to be ground before cement; while Ferrock, developed by Arizona University, they are burnt and that requires electricity, which emits more uses waste dust from steel-making to create a type of cement. CO2 than gas. So alternatives must be combined with As interesting as these developments are, they are all at very early stages. Li says: “The process of replacing or efficient plant, which may require investing in upgrades. As changing cement will take a long time.” New materials will we are facing another potential global economic downturn, need to be tested in structures for decades before they can this may not appeal to manufacturers right now.” gain wide acceptance, and finding developers willing to use It will be difficult for the sector to be weaned off gas fully, their buildings as a testbed will not be easy. adds Sean Lockie FRICS, UK director of sustainability at Ian Hunter, co-founder of London-based construction Faithful+Gould. “What else can you burn that is that products consultancy the Materials Council, adds: “Several efficient?” A smarter solution could be the symbiotic use of attempts to develop cement replacements have foundered energy, he suggests. “There are various processes, such as because it wasn’t possible to scale up the production process burning municipal waste, where heat is not being used and commercialise it.” efficiently. You could connect a concrete plant to these processes and power it with the waste heat.” There is perhaps even more potential for lowering or many, the holy grail is carbon capture and storage concrete’s embodied emissions by replacing clinker with a (CCS). “CCS would allow the cement industry to cut readily available, less carbon-intensive material. Offering 80% of its CO2 emissions,” claims Coppenholle. the most immediate hope are two industrial waste products However, with the technology at an early stage, wide-scale that require much less energy to process when used to make adoption of CCS is likely to be decades away.“Our members concrete: ground granulated blast furnace slag (GGBS), a are investing in CCS research but commercialisation is by-product of the steel production process; and fly ash, from another step, which will require either public financing or coal-fired power stations. Spicer suggests that switching to intervention, since the current low carbon price these can reduce concrete’s embodied CO2 by half. disincentivises the private sector to invest in CCS,” he says. So although CCS would undoubtedly be a gamePaul Sargent, an engineer at Aecom who has written a PhD changer, and innovations in the composition of concrete on concrete, cautions that these new ingredients “affect the could be transformative, they are not going to offer a real structural properties of concrete, so they may not be suitable option for concrete producers any time soon. While recycling for all applications” but he believes that “up to 25% of holds less potential to make a serious dent in CO2 emissions, standard cement could be replaced with fly ash and up to 50% with GGBS”. More appealingly for developers, using the further inclusion of industrial by-products in cement these materials should make concrete cheaper to produce, and greener energy strategies are already making a palpable he adds, because they are waste products. difference. The concrete industry would, therefore, be well Already, worldwide, there has been“a general introduction served by continuing with these incremental changes. With of fly ash and slag of about 4% and 5% respectively”, says water being a key component of concrete, too, the sector has Fonta. Some manufacturers are achieving much higher levels, a duty to make every effort to become more efficient – too: “In India, the use of fly ash can reach 18%, while in especially since the world appears destined to remain Germany and Brazil the use of slag can be around 15%.” hooked on the stuff. n However, GGBS and fly ash are finite resources and their energy efficiency is dependent on there being a local supply. DOWNLOAD THE RICS GUIDANCE NOTE, Methodology to Simon Rawlinson MRICS, head of strategic research at Calculate Embodied Carbon, 1st edition, at rics.org/carbon

Reusing concrete as aggregate doesn’t have much impact on the new product’s embodied carbon

36 RICS.ORG/MODUS

Sustainability Xxxxxxxxx

RUBBISH IDEA To improve efficiency, the energy required to make concrete could come from burning municipal waste

TAKE THREE

Material fitness: alternatives to concrete GLULAM How does it work? Glued, laminated timber and cross-laminated timber (CLT) comprise layers stuck together to form, respectively, structural glulam beams and load-bearing CLT panels used in walls and floors. CO2 performance? Ian Hunter, co-founder of the Materials Council, says: “Glulam is lower CO2 than concrete and, in some cases, even carbon negative,” because by growing trees you lock up CO2. It’s an effective insulator, too. What can it do? “There is a push to do highrise buildings with timber and you can go up to 20 storeys,” says Hunter. “Rotting is a potential problem but there are products that can make it less likely. But you would not build a glulam sewer.”

HEMPCRETE How does it work? The woody core of the hemp plant is mixed with lime and water to form a concrete-like paste. CO2 performance? Hempcrete is carbon negative. Growing the plants removes more carbon from the atmosphere than is emitted when creating the lime binder. Hunter says: “Hemp is classed as ‘rapidly renewable’ because it regrows in less than a year.” It is also a good insulator. Aecom’s Paul Sargent adds, though, that the use of lime is not ideal: “We are trying to move away from products that need to be blasted out of quarries.” What can it do? “It’s great for low-rise buildings but it doesn’t have the strength for, say, a bridge or the core of the Shard,” adds Hunter.

BAMBOO How does it work? Strips of bamboo are compressed and glued to form lightweight – but tough – boards, panels and blocks. CO2 performance? Another material that captures carbon while regrowing rapidly, Hunter says: “It grows up to a metre a day.” It is ideal for use in Asia, where it is abundant. What can it do? It is being used increasingly in interiors, such as at Adolfo Suárez MadridBarajas Airport’s stunning Terminal 4. It is not as robust as concrete and not commonly used for structural applications, but Vietnam practice Vo Trong Nghia Architects has had some success with bamboo roof supports. Interestingly, Singapore’s Future Cities Laboratory is also trialling bamboo as reinforcement in concrete instead of steel.

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Investment

COME HELL OR HIGH WATER

TOP 20 MOST RESILIENT CITIES* Toronto Vancouver Calgary Chicago Pittsburgh Stockholm Boston Zurich Washington DC Atlanta Seattle Amsterdam Melbourne New York Detroit San Francisco Frankfurt London Sydney Brussels

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Investment strategies are usually based on market fundamentals such as yields and vacancy rates. But is resilience – how a city bounces back from disaster – a better indicator of risk? Words George Bull

SHOCK ABSORBER (clockwise from opposite) Resilience can be measured by how a city bounces back from events such as the Japanese tsunami of 2011, the London riots of the same year, and Hurricane Sandy, which left swathes of New York without power in 2012 *Source: Grosvenor

ver the next few decades, commercial real estate developers could be just as likely to base investment decisions on rising sea levels as on rising interest rates. As factors such as urbanisation, climate change and social unrest exert increasing pressures on cities, traditional metrics for measuring investment risk cannot hope to capture the whole story. Instead, forward-thinking investors are turning their attention to resilience – a city’s ability to function in the wake of a disaster – to guide capital allocation. In April 2014, UK-based global property group Grosvenor published a three-year study, Resilient Cities. The report ranked 50 of the world’s most important cities according to their long-term resilience, with surprising results. Scores were arrived at by weighing a city’s“vulnerability”against its “adaptive capacity”. While New York City may be prone to hurricanes, its ability to bounce back quickly – as it demonstrated in the wake of Hurricane Sandy in 2012 – puts it higher than cities you might expect to be less vulnerable. People sat up and took note. Here was an investor putting resilience ahead of projected vacancy rate and using the research to determine its own future capital allocation. “Historically, when we were evaluating cities, we were looking at the value drivers and making our long-term forecast on that basis,” says Kate Brown MRICS, group sustainability director at Grosvenor. “That tells you the upside, but it doesn’t let you evaluate the risk in a systematic way. It’s enabled us to have a much more informed discussion at the boardroom table.” For cities you know well, Grosvenor’s report might not tell you anything you did not know already. But it might get you to think differently about it. When London – which attracted £52bn ($75bn) of real estate investment in 2013 alone – came in 18th out of 50, Brown says the result did not feel comfortable until she started to dig into the reasons. “Poor air quality, lack of affordable housing – these are all things that we know instinctively about London but hadn’t pieced together in a systematic way to say, ‘this is the overall resilience’. That has been hugely helpful for us, both in terms of evaluating one city against another, and in terms of prioritising our influence within a city.” »

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Investment

rosvenor is not the only company interested in this on paper that might not seem as urgent as traffic pollution area. The Cities Research Center at JLL exists, in in Beijing, or the plans to rebalance Indonesia’s economy large part, because “we are being asked by clients away from its flood-prone capital, Jakarta, left unchecked it more and more about the dynamics of risk and resilience in can be a deal-breaker for companies with plans to expand. cities, rather than national economies”, says Jeremy Kelly, “We’ve seen the way Singapore has responded by JLL’s director of global research. To take transparency as an providing a framework that accommodates more example, Kelly says he knows of several international headquarters – it’s become more of a capital markets hub,” investors who use JLL’s Global Real Estate Transparency comments Brooke. “So that challenge facing Hong Kong Index as a way of filtering out cities to start considering. has opened up opportunities for other cities, which has an More enlightened investors are even thinking along the impact on its long-term resilience.” lines of stewardship, Kelly adds.“On the one hand it’s about Affordable housing is a hot topic from San Francisco to making sure it’s an innovative, entrepreneurial Sydney, because more people are choosing cities business environment, and on the other that it over jobs. “Employers are starting to question contributes to the wellbeing of citizens.” But it whether their graduates can afford to move FIVE LEAST would be wrong to think this approach is the into this or that city for their job. So cities norm. Although many investors may implicitly actually have a pretty big responsibility to get RESILIENT CITIES* recognise issues surrounding resilience, most this right,” says Dan Cook, Director of Strategy won’t recognise it explicitly in their decisionand Planning at RICS. Dhaka making until it has practical implications for Cook hopes that the growing attention on their portfolios.“At the end of the day, investors urban resilience will act as a wake-up call to Jakarta want a secure investment with attractive returns cities, but stresses that we are still in the infancy and that’s ultimately what drives them.” of defining what risk indicators they need to Cairo Chris Brooke FRICS, executive managing measure. Another issue is the availability of Manila director at CBRE Consulting in Hong Kong, consistent data. This becomes harder to find agrees that the industry has been slow to model once you venture outside OECD [Organisation Mumbai non-financial factors, but adds that Asia-Pacific for Economic Cooperation and Development] investors are realising they need to “model the countries, where international real estate factors over and above the pure real estate play”. investment markets are immature. “There’s a For now, the shift is being led primarily by long-term greater role in the future for professionals who can verify investors – sovereign wealth funds, large institutions and the data that underpins some of these things,” says Cook. pension funds – that see resilience as a way to preserve The real estate sector may find that cities themselves are capital over 10-20 years. “We will get to a point when those more than happy to play their part in building a standard institutions won’t put money into funds that don’t invest ranking system. Brown says that following release of responsibly through sustainable measures, contributions to Grosvenor’s research, Manchester City Council had told her the community, and energy and water management.” the report had enabled it to shift gear. “Until that point, Brooke believes resilience rankings will become resilience had been perceived as a risk dealt with through increasingly important, not least because they also create their civil contingencies department, but now it was being competitive impetus for cities themselves (box, below). perceived as an opportunity. Because if you could get it right, Hong Kong might be a mature market with great you could be on the forefront of attracting investment.” n infrastructure and a sound regulatory environment, but its housing affordability is one of the worst in the world. While DOWNLOAD the Grosvenor report at bit.ly/resilient_cities

Resilience strategies could change a city’s fortunes At Salford University’s Centre for Disaster Resilience, researchers are working to help communities plan for, and recover from, natural and man-made disasters. Often a city’s or community’s resilience is about managing more than a single hazard – it is also about managing the cascading impacts that result from it. Through exploratory work with the United Nations Office of Disaster Risk Reduction, the Rockefeller Foundation’s Global Resilience Partnership and industry leaders such as Arup, the centre, in north-west 40 RICS.ORG/MODUS

England, helps cities understand these chain reactions and how to coordinate a response. Bingunath Ingirige MRICS, director of the Centre for Disaster Resilience, says one way for cities to do this is to look at the role of the private sector in disaster risk reduction, not just the big emergency responders. Ingirige’s work in flood-prone towns in the UK, such as Cockermouth in Cumbria and Braunton in Devon, revealed that there are significant reputational benefits for small businesses that are better able to cope with successive floods than their competitors.

But there are challenges to adapting, says Ingirige. “We found that if a premises is affected by flooding, the insurer wants it rebuilt in the same way as before. There is no incentive for the owners to build-in adaptive capacity so it doesn’t happen again.” Ingirige and his team are now looking at ways in which local councils and the private sector can support communities in changing their behaviours. “If your resilience strategies aren’t good enough, then that will have an impact on new investment coming into an area,” he says.

IMAGES GETTY IMAGES; CORBIS; ALAMY *SOURCE: GROSVENOR

CASE STUDY

NO GREAT SHAKES Five years on from being devastated by a series of earthquakes, rebuilding activity in Christchurch is progressing slowly. Mark Smulian reports

FINGERS CROSSED The Crossing (1), a NZ$140m ($91.7m) development by the Carter Group, will provide 151,000 ft2 (14,000 m2) of retail and 54,000 ft2 (5,000 m2) of offices and is due for completion this October SLOW BUSINESS Demolition work continues in the central business district and, although the crane count is up, rebuilding activity has not occurred at the expected pace (2)

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For a city to host a Cricket World Cup opening ceremony four years after a devastating earthquake must be a tribute to an effective rebuilding programme. But sports venues alone are not enough to restore Christchurch and, despite progress with homes, commercial and retail space, years of work lie ahead. New Zealand’s Canterbury region, of which Christchurch is part, was hit by an earthquake registering 7.1 on the Richter scale in September 2010. Recovery had hardly begun when, in February 2011, a 6.3-magnitude earthquake struck. Although smaller, its epicentre was near the city centre and at a shallower depth, and caused far worse damage than its predecessor. In all, 185 people died, more than a quarter of the central business district was destroyed and some 10,000 homes had to be demolished, while more than 100,000 were damaged. The destruction was particularly acute in the eastern suburbs, which had been built on swamps and were engulfed by water and sludge. The city, though, is rising again. The New Zealand government’s building statistics for March 2015 show that residential consents in the year to December 2014 reached 6,668 – a 31.8% increase on the previous year. The total value of non-residential planning consents granted rose 38.6% over the year to NZ$121m ($94.6m). At the start of 2015, average Christchurch house values were NZ$471,550 ($368,766) – a 3.4% increase over the year. Rents over the same period rose by 3.1% to reach NZ$432 ($338) per week. The Ministry of Business, Innovation and Employment estimates that housing supply is likely to catch up with demand by 2017. In a January 2015 progress report, Canterbury Earthquake Recovery Authority chief executive John Ombler noted the coming Cricket World Cup ceremony and said: “The fact that we have enough working infrastructure, hotel rooms, and transport services is testament to the entire Canterbury community.”

$16.1bn $21.1bn

Three Gorges Dam, China The Channel Tunnel

Briefing 2010 North America

2011

64.5 11.4

MEANWHILE USES Asia Five years 64.5 have 11.4 passed since Middlethe first quake East and the56.3 city’s 8.3 residents are still having to Continental Europeuse temporary 33.3 10 facilities, such as the striking 7.5 6.8 UK “Cardboard Average dispute values ($m) Cathedral” and shippingcontainer mall

BY NUMBERS

NZ$80m

GAUGE OF CONSENTS Consents for new houses are still at healthy levels post earthquake, whereas commercial activity appears to have peaked Source: NZ government

NZ$80m

2014

are10.5then by who 14.4 bought 9 relatively 11.9 34.3cheaply 13.7 29.6fixer-uppers 16.2 repair, refurbish and rent out the properties, or sell them on. Another unusual approach is the planned creation of a 53.1 12.4 39.7 14.3 41.9 14 85.6 12 container village for construction workers who will vacate homes, releasing these for families. This idea draws on the container mall 65in14.6 the city40.9centre, built 112.5 9 13.9 76.7 as 15.1an emergency measure to provide shops after the earthquake. Known as the Re:Start Mall, it remains in use as no new retail space is 35.1 11.7 25 6 6.5 38.3 18 available, although Gary 27.5 Reynolds FRICS, South Island manager at building surveyor Alexander & Co, says: “Since 10.2 8.7 27 12.9 27.9 7.9 27 10 its inception it has changed size and been progressively Average length of dispute (months) moved to make way for ongoing construction work. “Currently no‘new’retail has been finished, so the Re:Start Mall remains. I would expect units in the new retail precinct [ownership and development of which is fragmented] will start being brought to market and occupied in the next few months, especially when anchor tenants have been secured.” Reynolds notes that “the crane count is on the up” in Christchurch, although demolition work still continues, particularly in the central business district.“It would appear that office rents are levelling off, but A-grade stock seems to be more than meeting demand.”

Non-residential consents

NZ$20m NZ$0 NZ$20m NZ$40m NZ$60m 09/10

IMAGE ALAMY INFOGRAPHIC IAN DUTNALL

2013

Residential consents

NZ$60m NZ$40m

2012

09/11

He conceded there had been criticism over the slow pace of rebuilding, but added: “We could not have rebuilt any faster – the components of planning, design and the construction required the ground to have stopped shaking.” Andy Tiplin FRICS, a chartered surveyor at local quantity surveying firm Rawlinsons, says residential rebuilding has been subject to“many wrangles between owners and insurers which has prolonged the painful process. Commercial rebuild has not proceeded at the originally expected pace but is now happening and will continue to happen relatively quickly over the next three to four years. “The benefit of the slow, deferred start,” Tiplin adds, “is that hyperinflation has not kicked in and resources are generally available.” Ombler’s progress report claimed that, during 2016, more than 2,000 public-sector staff would be back working in new offices in the city centre. As of October 2014, more than 237,000 ft2 (22,000 m2) of office space had been built since the earthquake and some 88% had been leased, on a par with New Zealand’s other main cities.“Our population has almost returned to pre-quake levels and employment is booming,” he concluded. One interesting characteristic of the post-earthquake market has been the rise of “as is, where is” sales. These are damaged but structurally sound homes on which an insurer has paid out to an owner on the condition they move out and sell the – now uninsurable house – at land value. The homes

09/12

09/13

09/14

07/15

David Soper MRICS, senior building surveyor at property services firm Hampton Jones, has worked in assessing residential and commercial earthquake building fabric repairs for insurers and policyholders. He says: “It appears that residential supply is stabilising with more homes coming on stream, particularly to the west of the city and outlying towns such as West Melton, Rolleston and Lincoln.” Despite efforts to recruit internationally, rebuilding has been a largely home-grown effort. Tiplin says: “There has been very little international involvement, except for some American experts being involved in the seismic design of base isolators and buckling resisting braces, though there have been some joint ventures with Australian contractors.” The devastation of 2010-11 was so great, however, that many years of reconstruction lie ahead. As Tiplin concludes: “It will probably be another 10 years or so before a first-time visitor to Christchurch isn’t immediately aware of the damage the earthquake sequence did to the city.” n

REFERENCE POINT REPORTS AND RESOURCES Canterbury Earthquake Recovery Authority Agency established to lead and coordinate the ongoing recovery effort cera.govt.nz New Zealand Government Building Information Helps housebuilders to comply with building regulations. building.govt.nz

Rebuild Christchurch Community-led site rebuildchristchurch.co.nz Christchurch City Council Dedicated postquake microsite. ccc.govt.nz/the-rebuild Harcourts gold real estate Explanation of “as is, where is” bit.ly/asis_whereis

Q1 2016_MODUS A SI A 43

Careers / Business / Legal / Training

Foundations CAREERS It’s the job of your dreams but does the pay package meet your expectations, or are you a bit wide of the target?

THE PERFECT PACKAGE

You are about to land your dream job – they want you, and you want them. But the details need to be finalised. There is no point taking a new role unless the package is right – salary, pension, flexible hours, a car parking space – the details that make all the difference. But how do you get everything you want? Employers suggest that the market is favourable for jobseekers right now, provided they have the right skills and experience. Jon White, UK managing director of construction manager Turner & Townsend, hires more than 100 people every year and says skills shortages are playing to the advantage of jobseekers. “There’s a fight for talent, we are all trying to attract the best and in the construction industry there are definitely skills shortages,” he says. “We’ve come through a recession and had fewer graduates coming through in those years, so there’s a shortage of talent.” However, White adds that his business is well informed of market rates for employees and operates within strict salary bands. “We are quite clear about the salary grades and work within bands. We understand what the market rates are. It wouldn’t be sensible to make an offer outside of our salary structure as that would create a lot of issues.” Both employers and candidates have red lines when it comes to job packages. For instance, some employers are very open to flexible working, others are not. Job candidates should not expect an employer to overhaul their entire company culture for them. Instead, they should seek out those who can offer the types of packages they

01 Understand your worth. Knowing the market rate is key to any negotiation. 02 Research your employer. All businesses have red lines – know what can and can’t be negotiated. 03 Define your goals. You cannot hit a target without taking aim, so focus on what you need. 04 Be confident. Sell yourself, describe your unique selling points and make your prospective employer want you. 05 Have other options. Sometimes you have to walk away, so it is a good idea to have other employers lined up to meet. 44 RICS.ORG/MODUS

require. Research on prospective employers is therefore imperative, either by talking to recruitment companies and contacts, reading industry media, searching online or, in some cases, making contact with a company and asking them directly. Lee Biggins, founder and managing director of UK recruitment site CV-Library, advises candidates on the best ways to secure a new job. He says it is important that candidates have a clear idea of what their ideal package looks like. “Be sure to know what salary you’re after and be clear about other package details, such as holiday allowance, working hours, pension plans and bonus schemes,” he suggests. “But also make sure that you are being realistic. While everyone would like six months’ holiday and a six-figure salary, it is not likely to happen.” Peter Willis MRICS has been on both sides of the table in job interviews and advises candidates to demonstrate ambition when discussing employment packages. “When you ask someone about their salary expectations and their answer is ‘make me an offer’, I just think it lacks ambition,” he says. “It’s worth asking for more than they first offer. If you don’t ask, you don’t get.” When Willis applied for his current role as project manager at building management company HCP, he understood it would involve higher commuting costs and the offer would need to be at the top of the advertised salary bracket. “After the first interview they did make an offer and it was at the bottom of the salary bracket. I fed back that the role wasn’t financially viable unless I was at the top and they took this on board. We did another interview and I was hired on the top salary,” he says.

NEXT ISSUE: BEAT THE EMAIL BEAST For further careers advice, go to rics.org/careers, and for the latest jobs, see ricsrecruit.com

WORDS JON CARD ILLUSTRATIONS ANDREA MANZATI : ADAM AVERY PORTRAIT CELIA PETERSON

BECAUSE YOU’RE WORTH IT

Foundations

HOW TO

MANAGE ENERGY USE Choose the right contract There is no one-size-fits-all energy contract. Suppliers offer a range of packages tailored to suit the needs of different businesses. It’s important that your tariff is tailored to your usage. Carry out a simple energy audit Make an inventory of all the electrical equipment you are using and how much energy each consumes to identify any unnecessary usage. The time of day at which you consume energy is also important. For businesses that use heavy machinery, rescheduling operations to take advantage of low, off-peak rates can deliver significant savings. Invest in new equipment Look carefully at the age and condition of your equipment and investigate whether buying newer or more advanced options could deliver greater efficiency. Technologies such as motion-sensing lighting and timers for other appliances can also help. Use smart meters They allow a supplier to bill customers based on actual, rather than forecast, energy use. Find a supplier that offers this service and have one installed – it will give you much greater control over your energy spend. TIM JARVIS is manager of Mid Market at Gazprom Energy gazprom-energy.com

MY WAY

Phil Moss FRICS

HEAD OF CONTRACT SOLUTIONS, ARCADIS, DUBAI

Like many quantity surveyors, I actually wanted to be something else. I was always keen on being a structural engineer, but I didn’t pass my school physics exam. So I took a part-time surveying degree at Liverpool Polytechnic while working for a local practice in north Wales. It was a great formative time, which usually involved building new roofs for castles and churches. After graduating in 1986, I took a job with the British Airports Authority at Stansted. The experience couldn’t have been better for a young QS – we were tasked with building much of the airport’s infrastructure, such as access roads and drainage channels. I was also able to pass my test of professional competence within a year, as I had already completed much of the practical criteria. By the early 1990s, I had moved to London to join Capita’s cost plan team on the Jubilee

Tube line extension. I remember only four of us were allowed to know the true cost figure – it was, and still is, a spectacular project, but it suffered many delays. I joined EC Harris’Birmingham office as a partner in 1999, travelling back and forth to London while leading teams on the West Coast Main Line and again on Underground projects. And in the lead-up to London 2012, I was seconded for a year to the Olympic Delivery Authority, negotiating budgets with delivery partners on the project. After the Olympics, I took an opportunity to direct the restructuring of the Hong Kong Jockey Club’s property portfolio. I’d advise any young surveyor to gain experience working in that city. Lately, I’ve been working in Riyadh, Saudi Arabia, heading up EC Harris’– now Arcadis’ – Middle East team. With global oil prices so low, focus in the region is now much more on value for money. It’s been a culture shock, but the people are great and you’ve got to fit in with local ways to get on. It’s also a bonus to get up in the morning and not have to check whether you need an umbrella or not! rics.org/philmoss

“With global oil prices so low, focus in the Middle East is now much more on value for money. It’s been a culture shock, but the people are great and you’ve got to fit in with local ways to get on”

Q1 2016_MODUS A SI A 45

BREAKING AND DATA ENTERING Barely a week goes by without another story of a company being hit by hackers. Attacks that make the headlines tend to involve well-known businesses, but small companies can be targets, too. Criminal gangs are the main culprits – often to steal data, occasionally to demand ransoms. Some cyber attacks are conducted by young thrill seekers, whereas others have malicious intent. Cyber attacks take many guises, but are quite often begun by a person, unwitting or otherwise, installing a virus on a network. Experts say using an insider is often more likely to yield results than attempting to hack through a firewall. Andy Crocker is the CEO of cyber security firm Protect 2020 and previously was a senior investigator in the now defunct UK National Hi-Tech Crime Unit. He cautions that small and medium-sized enterprises (SMEs) might be seen as an “easy entry point” to a larger organisation. “Criminal gangs are the main threat to businesses, and their intentions are primarily profit,” he says. “SMEs are often regarded as a softer target than their bigger partners.” Crocker says many cyber attacks are inside jobs, with staff members the culprits. “A great deal of serious hacks are done by disgruntled ex-employees. Businesses need to have exit policies in place to ensure that, when a person leaves, they don’t take the crown jewels with them.” More businesses are now embracing cloud-based services but that means companies are then reliant on their NEXT ISSUE: SERVING YOUR CLIENTS suppliers’ security. Nick Blenkarn MRICS, managing director at UK-based 3D HOW DO YOU evolve your business to visualisation company Seeable, moved become more client focused? To take his business’s systems into the cloud to part in future business advice columns, take advantage of a wide range of Google email editor@ricsmodus.com 46 RICS.ORG/MODUS

RECOVERY POSITION Business owners using the cloud need to be sure they are taking advantage of the security measures that come with them. They also need to have a plan in place to recover data and resume operations if their business is disrupted. Mervyn Green MRICS, owner of quantity surveying business the Merv Green Consultancy in Newport, south Wales, has built in a range of methods and rules to mitigate against attacks. Like many business owners, he opted to use cloudbased services such as Dropbox. However, he also uses encrypted pen drives to transfer documents to clients and, rather than store data in the cloud, he archives via hard disks and has set reminders to ensure this is done regularly. Security updates and virus checks are scheduled and automatic. Finally, access to his computer systems is restricted. “I’ve seen other companies suffer cyber attacks and they can be very costly,” he says. “I’m the only one who uses my laptop and I don’t ever go on any suspicious-looking sites.” Such incidents are becoming more frequent and insurers are reporting an increase in claims as a result of IT security breaches. Emma Vigus, head of professional indemnity at Howden Insurance Brokers, cautions that some professional indemnity insurance policies only cover the policyholder directly and would not include data loss from a third-party supplier.

WORDS JON CARD ILLUSTRATION JAMES BENN

BUSINESS Companies of all sizes must take their IT security seriously

apps and to improve security. He has more confidence in Google’s servers than his own. “If you store all your data on your office server, what are you going to do if the building burns down or someone breaks in? It’s about ensuring your data is backed-up and ours is across multiple locations on Google’s servers, which is more secure than being on your premises.” But this means that access and password controls are of the utmost importance. Therefore, the company uses a two-step verification to access Google apps. It also runs password management software such as Lastpass, as well as YubiKeys – essentially a USB stick combined with a password, which ensures a two-step verification before allowing users to access business-critical data. “It’s about having a sufficient level of paranoia to get to the right level of security. Geomatic surveyors need to be a little bit paranoid to make sure they are doing a good job,” Blenkarn adds.

Foundations

LEGAL 101

Recovering from a cyber attack can be expensive, so standalone cyber security insurance should be considered. “If you experience an infiltration, are infected by malware or experience a system outage, you need to be confident in your ability to rectify the situation quickly. The costs charged by IT forensic firms may be very high unless negotiated in advance,” she says. Businesses often neglect to consider the impact of mobile devices on their security,

“If you store all your data on your office server, what are you going to do if the building burns down? It’s about ensuring your data is backedup and ours is across multiple locations” NEIL BLENKARN MRICS Seeable yet smartphones connected to your network can potentially wreak havoc. Some companies have a “bring your own device” (BYOD) policy, but security experts warn this increases the likelihood of malware entering the network and removing data. “BYOD is one of the biggest things that has played into the hands of criminals,” says Professor John Walker, a lecturer in cyber security at Nottingham Trent University. “Companies just lose control of their data.” Walker says cyber crime is both underreported and underestimated and is costing companies vast sums of money. His advice is to get proactive, better understand the risk, and make changes.

HOW SECURE IS YOUR IT POLICY? Every business should have a secure IT policy. Here are six measures you should take. n Enable automatic updates. This is a must for all businesses, as updates on software and browsers include security patches and remove bugs. n Use anti-virus and firewall software. Regular scans prevent the accumulation of

malware, which can act as a Trojan for future attacks. n Enable two-step verification. Most cloud services have this, preventing outsiders from gaining access by guessing your password. n Audit and check all mobiles, which are often the weak spot for companies. Install antivirus software on your mobile. n Only download from trusted and verifiable sources. This is easier said than done and accidents happen. Encourage staff to own up if they make this mistake. n Control access. Ensure former staff cannot access your systems after they leave.

Rising tide of water services JULIEN CHAISSE Associate professor, Chinese University of Hong Kong

The explosion in the global population over the last two decades has sparked a revolution in the water-services industry. Opportunities for investment in water services and sanitation infrastructure have been attracting tremendous attention from international financial institutions. They see potential profit in addressing problems such as freshwater scarcity, inadequate sanitation infrastructure and the inability of many public authorities to meet supply demands. Today, and especially in Asia, businesses are vying to engage with the waterservices industry. The Water Partnership Program estimates that, by 2025, the combined annual spend on water infrastructure will exceed $1tn in Organisation for Economic Cooperation and Development (OECD) countries and the BRIC nations of Brazil, Russia, India and China alone. The need for additional infrastructure investment will certainly increase demand in the market, potentially spawning billiondollar valuations. The scale of the opportunity largely explains why water has earned the moniker of Earth’s “blue gold.” As demand grows, the sophistication of water services must also improve. The industry requires advanced technologies

and novel infrastructural concepts to meet demand for greater volumes of drinkable water. The resulting investment market is complex yet lucrative. It is also a sector in which investors fiercely protect their investment and technical know-how. The last decade has brought with it a dramatic surge in investment disputes between foreign investors and host governments. Arbitral panels have been charged with applying the rules of international trade-law agreements in specific cases – not a straightforward task given the broad and ambiguous terms of these agreements. This new phenomenon of investment litigation has resulted in a series of decisions from arbitration tribunals in the waterservices sector. Most of these disputes had to deal with the uncertainties generated by state regulation over concession contracts. In technical terms, there was often no issue of “expropriation” by a local government, but rather claims of breaches of “fair and equitable” treatment. Such decisions have contributed to the formation of an embryonic water-service jurisprudence sector and the elucidation of key provisions, concepts, and definitions embedded in bilateral trade agreements and water-service-related concession contracts. All of this has created a nascent framework for global economic regulation of the sanitation and waterservices industry.

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to be of any practical value. Developing solutions usually encourages innovative thinking, with the objective of avoiding risks or reducing their impact.

BRAIN GAIN

WHY TAKE THE RISK? Risk management is increasingly at the forefront of modern construction contracts, as clients strive for time and cost certainty. Effective risk management involves the entire project team. There are several strategies to consider. Risks may be avoided entirely – usually by eliminating their cause – transferred to another party through contracts or insurance, or exposure to the risk can be reduced through mitigation plans. Acceptance of the risk should be considered only as a last resort. Clients should manage risks during the procurement stage, but once a contractor has been appointed, mitigation plans should be developed between the client, the contractor and its supply chain. Plans must be appropriate, cost-effective and achievable

EVENTS

BOOK RICS EVENTS ONLINE AT rics.org/events For inquiries, call +852 2537 7117

HONG KONG

››RICS Annual Dinner/ Awards Hong Kong, Presentation Ceremony 11 March, Grand Hyatt Hong Kong The RICS Annual Dinner in Hong Kong is a platform for professionals in the local property, real estate and construction industries 48 RICS.ORG/MODUS

to unite, catch up and celebrate success. Celebrating excellence, professionalism, achievement and overall contributions of projects, teams and development to our built environment, the presentation ceremony of RICS Awards, Hong Kong 2016, will take place at the

There is no standard way of managing risk. The process is typically driven by a single individual, the risk manager, in concert with the rest of the project team. Individual accountability for managing each risk can be assigned to its own custodian. Updates from the risk manager are collated on a periodic basis by the risk manager and added to the project risk register. Collaborative software such as Sharepoint allows a risk register to be held centrally and shared via computers, tablets and smartphones. A project risk register should include the probability, impact assessment and cost contingencies for each risk. It can be developed into a complete collaborative risk analysis and management tool with mitigation plans and contingencies for not only individual risks, but also for the whole life-cycle of the project. Risks can be operational, such as weather, flooding or accidents, but they can also include more abstract, strategic problems such as insolvencies, skills shortages or policy changes. Risk management is therefore a proactive method of reducing susceptibility to cost and time overruns, and improves value for money while leaving an auditable trail of decisions and actions. NIGEL BARR FRICS is managing director of Stradia stradia.com

same occasion where winners of 13 accolades will be announced. rics.org/awardsdinner ››RICS Hong Kong Annual Conference 2016 20 May According to population projections from the Government of the Hong Kong Special Administrative Region, by 2041 around one in three Hong Kong residents will be an elderly person, up from one in seven in 2013, leading to reduced GDP and a

shrinking workforce. Drawing references from Asia-Pacific countries, the RICS Hong Kong Annual Conference will explore the challenges and opportunities presented by this increasingly ageing population, with a focus on master planning in the city to cope with the changes in needs; sustainable business models for an emerging silver-hair market; and the creation of a workforce to support it. ricshk-conference.org

MIPIM HALF-AD 180x116-OL-A.pdf 1 2015/12/15 14:32:48

Mind map

HOW IS INDIA BUILDING ITS SMART CITIES? Anshuman Magazine FRICS Chairman and managing director, CBRE India, and Chairman, RICS South Asia

India plans to develop 98 smart cities, which will account for nearly 35% (130 million) of its total urban population.

Cities such as New Delhi, Mumbai, Chennai, Hyderabad and Raipur have already started to use smart technology such as energy meters, geographic information systems to manage property tax, and online planning approvals.

TheÂ government has allocated Rs70.6bn ($1.056bn) for smart cities. A special-purpose vehicle could be created for each city and funding options being considered include infrastructure bonds, publicprivate partnerships and municipal bonds.

The objective is to enhance quality of life by addressing deficiencies in urban infrastructure, so green building norms, smart parking and intelligent traffic management systems would all be part of the plan.

ILLUSTRATION GIANMARCO MAGNANI

One big challenge will be how various levels of government collaborate for fund allocation. Indiaâ&#x20AC;&#x2122;s stringent land acquisition norms may also hinder development.

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