MODUS Asia Edition | Q2 2017

MODUS ASIA Q2 2017 RICS.ORG/MODUS

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rics.org/modus

ASK THE BIG QUESTIONS

Q2 2017

MIND OVER MATTER The thinking behind successful cities / 36

IN THIS ISSUE RICS Awards, Hong Kong 14 / Data-driven cities 22 / The science of investor sentiment 26

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Contents MODUS ASIA Q2 2017 RICS.ORG/MODUS

D • MO

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ORMAL

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E IN

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S MAGAZ S MAGAZ business.

“You can’t go forward without engaging DU DU Businesses are the ones that have the solutions of tomorrow.

They have the technology, and they have the capital”

ORMAL

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MODUS M

06 DIFFERENCE OF OPINION The smart money in China is now on Tier 2 cities, rather than the established Tier 1 markets. We hear two points of view 07-13 NEWS IN BRIEF Industry news, advice and information for RICS members 08 THINKING: YUKIHIKO ITO Old-age problem has ramifications for Japan’s real estate industry 11 PRESIDENT’S COLUMN Amanda Clack FRICS considers our changing relationship with cities through different stages of their evolution

Features

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Foundations

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E IN

S MAGAZ

06

09

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22

26

14 TOP OF THE CLASS The RICS Awards, Hong Kong 2017 winners 22 DATA-DRIVEN CITIES Technology is already transforming how we interact with our urban landscape 26 ANIMAL INSTINCT The science of investor sentiment 30 BUILD UP OF TROUBLE Quantifying the risk that natural and man-made disasters pose to our cities

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A Z I NE • AG

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Intelligence

NICHOLAS YOU, GUANGZHOU INSTITUTE FOR URBAN INNOVATION COVER STORY, P36

44

45

48

44-45 CAREERS Learning from your mistakes; MBM director Nicola Woodward MRICS 46 BUSINESS Mastering the art of negotiation 47 LEGAL 101 New security of payments laws promise to smooth the flow of cash on projects 48 PROFESSIONAL DEVELOPMENT Embrace the new reality of the virtual world

32 AREN’T YOU A LITTLE YOUNG...?

Meet the entrepreneurs for whom age is no barrier to ambition

50 MIND MAP Faithful+Gould’s Leanne Owen MRICS on dementia-friendly building design

36 COVER STORY What kind of leadership do our cities require in this age of urbanisation?

PLUS 49 Surveyed + Events

42 STAY THE DISTANCE Japan’s hotels gear up for the 2020 Olympics 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.

Q2 2017_MODUS A SI A

03

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

FAIL SAFE Sir, Daniel Ho quite rightly says that the recruitment policies of many universities are now geared towards “chasing the rankings” (The complete graduate, p32, Q1 2017). This is not only unsafe for the industry, but is an awful experience for many students who are being criticised for not being able to learn the basics.

I firmly believe we can achieve both objectives of developing young surveyors with the core skills needed by industry, as well as help them to become independent, lifelong learners, but the current culture needs to change. Students need to fail sometimes, it is good for them in the end.

Rod McLennan MRICS HOT AIR Sir, Can you ask the writer of Deep water horizon (p36, Q1 2017) to tell me where she obtained the totally inaccurate information contained in the first paragraph? There has been no reported increase in the earth’s temperature and 2016 is most certainly not going to be hotter. The entire article is based upon questionable propaganda.

Sean Steer MRICS Thank you for your letter. At the time the article was written, Nasa had announced that August 2016 was the hottest month measured since records began in 1880, and was also the 11th straight month to break the previous monthly record. Also, the National Oceanic and Atmospheric Administration says that every month since May 2015 has been the hottest version of that month ever.

The UN’s World Meteorological Organisation has confirmed that 2016 was the hottest year ever, after releasing data last November showing that the five years from 2011-2015 were the warmest on record.

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。

LOCALISED FLOODING Sir, I welcome the article on flood risk (Deep water horizon, p36, Q1 2017), in particular the reference to the threat that coastal communities face and the realisation that we must “live with” water, rather than keep it out.

Investors and occupiers are increasingly coming to terms with the potential of flooding to affect their asset value and business performance.

It’s unfortunate the article repeats the myth that flood management funding is “channelled” to south-east England. Funds are allocated to maximise the number of homes protected and encourage businesses that benefit to contribute, and a significant amount of investment has occurred in the north and west.

That more developed areas in the southeast may be at risk underlines how flooding will always be a local issue, affected by specific physical conditions and the type of property at risk. An assessment of local characteristics will always be vital to inform an effective appraisal of any property, avoiding reliance on coarse data sets based on numerous assumptions.

Ian Joyner, CBRE, London

TRIP ADVISER Sir, Well done Secret Surveyor and well done Modus (Intelligence, p13, Q1 2017).

I am also engaged in the same sport [of getting in the way of people with their head in their phone], only I wait for these screen watchers to bounce off me and, hopefully, send the relevant device flying.

Recently, while out walking the dog in the local woods, a woman, more intent on thumb manipulation on a screen than interacting with her dog, went base over apex by not looking where she was going and tripping over a tree stump – how I laughed!

Interestingly, I spend some time in France and I have noticed that French people in restaurants speak to each other and enjoy the food and drink. Not a smartphone in sight.

Unfortunately, this is not the case in the UK, where people “talk” to each other across the table using messaging.

I would love to see a ban on the use of these devices in public spaces, or that at least they can only be used when the operator is stationary – and that includes cars. Let’s bring back the art of conversation.

Nigel Price FRICS

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 ricseastasia@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 / Junior Designer Katie Wilkinson / Creative Director Matt Beaven / Account Director Karen Jenner / Advertisement Sales Director Emma Kennedy / Asia Advertising ROF Media, Bryan Chan, +852 3150 8912, bryan@rofmedia.com / Production Manager Michael Wood / Managing Director Toby Smeeton / Repro F1 Colour / Printers ROF Media / Cover Image Alfred Pasieka/Science Photo Library / Published by Sunday, 207 Union Street, London SE1 0LN wearesunday.com / For RICS James Murphy and Kate Symons [UK] / Jeanie Chan [Asia]

Q2 2017_MODUS A SI A

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Intelligence

News / Reviews / Opinions / Reactions

DIFFERENCE OF OPINION

The rally in China’s Tier 1 cities is over, and Tier 2 cities are taking the lead.

Discuss.

properTy Values in China’s Top Tier 2 CiTies haVe risen Based on marKeT fundamentals and so are not overpriced. We also believe that prices in both Tier 1 and top Tier 2 cities will behave similarly, remaining more or less flat.

Last year’s raft of new homebuying curbs seems to have cooled an overheated residential market in China’s Tier 1 and Tier 2 cities. We anticipate that a wait-and-see attitude will prevail throughout 2017. Sales transactions will drop considerably, although prices will be relatively stagnant.

ROBERT CIEMNIAK FOUNDER, CEO AND CHIEF ANALYST, China’s government is determined to deter further price REAL ESTATE FORESIGHT, HONG KONG escalation in the near term. Average prices in Tier 1 cities raced ahead at a seemingly unsustainable 39% clip over on The Basis ThaT groWTh in sales Volumes Tends To Be the past two years, and as high as 23% in select red-hot Tier highly predictive of price-growth trends in China, then yes, 2 markets, prompting the government to intervene to rein our research suggests that Tier 2 cities are outperforming those in Tier 1. in runaway prices. There is no sign of relaxation, at least Monthly data from the China Real Estate Index System show that gross for a while. floor area sales volumes in Tier 1 cities declined by 3.4% in 2016, compared However, market forces continue to struggle against with the previous year. In contrast, sales volumes in the top 25 Tier 2 cities, government policy. In those cities with a shortage of new while decelerating, were still up more than 26%. supply, such as Nanjing and Hefei, the existing stock can be All Tier 1 cities are now subject to tighter policy restrictions, while some absorbed in less than five months. That creates pressure, Tier 2 cities have room for growth without restrictions (so far). driving prices upwards.

Among Tier 1 cities, Guangzhou is still holding strong. But sales volumes For Tier 1 and upper Tier 2 cities, economic fundamentals in Shenzhen, Beijing and Shanghai have fallen sharply in recent months. provide strong support for the market, and new supply is The story is the same for those Tier 2 cities with policy tightening tight. As a result, we believe prices will remain firm, although measures in place, such as Suzhou, Nanjing and Wuhan. But Tier 2 cities sales volumes will be subdued. At the same time, we expect with no or fewer restrictions, such as Qingdao, Xian, Ningbo and Wenzhou, to see market consolidation in lower Tier 2 and Tier 3 cities all reported a rise in volumes. that face oversupply, resulting in downward price pressure.

The key arguments made for Tier 1 cities maintaining their strong performance are that they have limited supply, a fast pace of clearing inventory and low land sales. These metrics can change very quickly, however. In Still number one or two steps ahead?

Shenzhen, for instance, the number of months required to clear existing Join the debate at rics.org/linkedin, stock jumped from seven to 16 within a short space of time in 2016. Inventory or email editor@ricsmodus.com and land sales also rose quickly. Prices declined in both November and December, preceded clearly by the sharp fall in volumes throughout 2016.

And finally, Tier 1 cities are also more likely to be stricter on implementing policy tightening measures, which will keep pressure on the market.

06

RICS.ORG/MODUS

INTERVIEW ALEX FREW MCMILLAN ILLUSTRATION JACK BEDFORD

ALAN CHIANG MRICS HEAD OF RESIDENTIAL AND HEAD OF SALES FOR GREATER CHINA, CUSHMAN & WAKEFIELD, SHENZHEN

Intelligence TOP TO BOTTOM

MEXICO CITY

Which cities’ office markets were the best and worst performers for annual rental growth last year?

-6.5% 19.7% SYDNEY

Source: JLL, 2016

NEWS IN BRIEF

9.7% HONG KONG

9.2%

LOS ANGELES

7.8%

SAN FRANCISCO

SÃO PAULO

-9.1%

MOSCOW

-10.7%

SINGAPORE

-11.4%

7.8%

MANILA

TIGHTENED ONE BELT, ONE ROAD ON COURSE TO EXPAND AGAIN

Professional statement on conflicts of interest launched

Red Book to be updated following standards review

-8.6%

INFRASTRUCTURE

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rics.org/modus

RICS has published a professional statement on conflicts of interest. The requirements cover professionals and regulated firms working in land, property and construction, and will become mandatory from 1 January 2018.

The statement has been developed through consultation with industry professionals and regulatory experts. The key findings were that respondents would like to see RICS address: definitions of confidentiality; full disclosure and transparency between parties; the practice of ‘‘dual agency” in the UK market; and tighter rules around multiple agency relationships.

The new requirements aim to address these concerns, providing both greater confidence for investors and increased clarity for RICS professionals.

JAKARTA

TRAIN TAKES THE STRAIN China’s One Belt, One Road project has enabled freight to travel from Yiwu to London by rail in 18 days – two weeks shorter than by sea

Governments are battling to revive growth along China’s One Belt, One Road (OBOR) system of trade links between Asia and Europe.

But those nations are forecast to benefit substantially this year.

Investments in infrastructure and telecoms projects totalling $494bn were announced last year, PwC noted in a review of Belt and Road infrastructure. Total growth in gross domestic product did slow slightly in OBOR nations in 2016 to 4.6%, compared with the five-year average of 6.1%.

However, the average value of projects in OBOR nations rose 47% in 2016. The utility and transportation industries reported the most rapid

escalation – a trend PwC suggests is likely to continue, with power consumption trailing GDP per capita in many middle-income countries.

The economic slowdown will lead directly to more project announcements this year, PwC says, although those ambitions will result in budget challenges and the need for an influx of private capital.

Infrastructure projects must also be “future-proofed.”

Countries such as Kazakhstan and Mongolia are likely to benefit from a dramatic increase in infrastructure projects, including rail. The first freight train arrived in London from China in mid-January after a 7,500mile, 18-day trip that shaved two weeks off the maritime route and cost half the price of air freight.

China’s aspirations for the region received a boost in late March, when 13 new members joined the Asian Infrastructure Investment Bank. The newcomers bring total membership to 70 states.

FOR UPDATES about China’s One Belt, One Road project, follow rics.org/obor

Following a recent review of the new international valuation standards (IVS), RICS Valuation – REVIEWING THE LATEST DISCUSSION Professional Standards (the Red POINTS AT RICS.ORG/LINKEDIN Book) is now being updated.

The updated global edition, Red Book 2017, will reflect this system but I can The important thing How do you record amendments in IVS 2017, and see the future for is to remain flexible, site survey notes? incorporate recent developments building surveyors is a making written notes in international standards paperless digital one. as appropriate. But it’s I use a digital on ethics and measurement, Sean Oragano MRICS easier to use dictation dictaphone which gets technical changes and new than make written transcribed by Dragon STARTED BY guidance on conflicts of interest.

Pencil, waterproof software, supplemented notes when you’re in Tim Richardson RATIFIED 5.8% 3.8%roof2.4% 1.7% MRICS,15.9% RICS professionals working 28% notepad and a bagPARIS of a cramped space 1.8% with site notes and 4.8% CLIMATE Birmingham in valuation were given the tapes, gauges, mirrors, or a damp, unlit cellar! photographs. Wind AGREEMENT? opportunity to share their torches, meters, etc.YES Ian Morris FRICS and other background insights and expertise to shape I tried electronic andNO noise can be a problem, what will become RICS Valuation can’t get on with it. I Using an iPad and the as can rain, so you – Global Standards 2017. worryCANADA about data GoReport app I prepare need S KOREA CHINA USA to be adaptable.

INDIA RUSSIA JAPAN GERMANY always Visit rics.org/ivsc for loss or failure during my own templates for If conditions are poor, more information. the survey! Simon survey reports. There I find shelter first.

Pinto AssocRICS are still glitches using Julian Record MRICS

INFOGRAPHIC IAN DUTNALL IMAGE REUTERS / ALAMY STOCK PHOTO

LINKING

Q2 2017_MODUS A SI A

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“Japan’s real estate industry has yet to catch up with its ageing population … and the need will become more and more acute as the years go by”

J

apan is due to post its 10th straight year of natural population decline in 2017, and births will fall below 1 million for the first time since records started in 1899. What does that mean for the country’s real estate market?

Of main concern is whether it can make the most of the situation. If we take Japan’s population as a whole, and break it down into prefectures, the significant growth of the biggest cities creates a very different situation for the real estate industry from the rest of the country.

Out of a total population of 127 million people, the Tokyo metropolitan area contains nearly 30% of the whole country, according to the Statistics Bureau of the Ministry of Internal Affairs and Communications. If you include the two other largest metropolitan areas, Osaka and Nagoya, that figure rises to 50% of the whole nation.

By 2050, these three areas combined are expected to account for 57% of the total population.

This suggests that the bulk of the populace, especially the younger generations, are moving from the regions to the greater Tokyo area and a few other principal, gateway cities. That being said, other regional cities will be more challenging for investors. Traditional real estate sectors that are correlated with population size, such as residential, office and retail, might face a significant lack of demand.

The number of deaths per year in Japan will soon reach more than 1.5 million, double the current birth rate. For the country’s increasingly elderly population, senior housing is not just a growing market, but a necessity.

Japan’s “2025 Problem” addresses the fact that, by this 08 RICS.ORG/MODUS

date, all 6.5 million Baby Boomers will be at least 75 years old, bringing the total number of people who are above that age to 21.8 million. By 2025, one in three will be 65 or older, and one in six will be over 75, according to the National Institute of Population and Social Security Research.

Japan’s real estate industry has yet to catch up with its ageing population, and a large number of seniors are on the waiting list for homes. The Ministry of Health, Labour and Welfare points out that there is heavy traffic to register for senior housing, and Tokyo tops the chart in those stakes. It seems that the ageing of Japan fuels steady demand in the senior-housing market, and the need will become more and more acute as the years go by.

At the same time, the population will become more concentrated in the metropolises. This means that the labour force, and the main source of service providers for senior housing and related industries, will also be concentrated in big cities. As a result, senior housing and the associated facilities will need to be located in Japan’s biggest cities, too.

The problem is that there is already a serious lack of a labour force in some of these cities, and the situation is picking up pace. To resolve this imbalance, Japan will have to re-evaluate its immigration policies, and consider admitting an increased labour supply from overseas. Although this subject has been discussed for some time, there is uncertainty over whether such a measure would be adopted, as the public consensus has not been favourable so far. That being said, as the situation gets more and more desperate, we expect much more pressure on the government to examine its anti-immigration stance.

In conclusion, it is clear that the country’s increasingly elderly population provides good long-term prospects for the senior housing sector, while the polarisation of the population between big cities and regional cities will accelerate. The demographic changes that Japan faces suggest there is opportunity to be had, although traditional real estate sectors in regional cities will face a significant lack of demand.

WHAT’S YOUR VIEW? Email your thoughts to editor@ricsmodus.com

ILLUSTRATION ANDREA MANZATI

YUKIHIKO ITO MANAGING DIRECTOR, ASTERISK REALTY & PLACEMENT AGENCY, TOKYO, JAPAN

Intelligence

NEWS IN BRIEF

WE LIKE

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rics.org/modus

Best of the best honoured at first ever RICS Awards China More than 300 guests gathered in Shanghai on 28 February to celebrate the excellence, achievements, and overall contribution of RICS professionals to the built environment at the first ever RICS Awards China.

Praising all the winners, finalists and jurors, RICS China Board Chairman Liang Shiyi said: “This year is going to be defined by pressing and fastchanging situations, rapid technological progress, and increased challenges from growing social demand and higher customer requirements.

In the response to these new opportunities and threats, we must move forward, or we will fall behind.

“It is the time for practitioners in China to tap into the expertise of RICS-qualified professionals worldwide… Let’s work together to take RICS China’s expertise up a notch in 2017.”

IMF uses RICS property data in its latest publication The International Monetary Fund has highlighted RICS Global Commercial Property Monitor data in its latest Global Housing Watch, a quarterly publication that the IMF uses to track risks relating to the housing market.

The RICS Global Commercial Property Monitor is one of the only indicators that can compare the sentiment surrounding commercial real estate markets internationally.

Interestingly, the IMF also uses the survey findings as a benchmark for risk in the residential housing market, noting that “the commercial property market is another important element of the real estate market. Sentiment indicators for commercial real estate developed by RICS show a positive relationship with residential prices.”

AIR WAVES Water stored at the base of the turbines flows into a hydro power station in lowwind conditions

Wind-hydro turbines What’s that? One of wind power’s biggest drawbacks is how to generate electricity when there is no wind. But a pilot project from GE Renewable Energy could help solve this problem. On a hill near Gaildorf in southern Germany, four of the world’s tallest wind turbines are being constructed.

So far, so normal. The added twist is that they will be the first to be integrated with a pumped-storage hydroelectric power system.

How does it work? In a word, gravity. The lower part of each 246m-high turbine contains a water reservoir and, when it is windy, the turbines generate electricity while the water is stored as a giant “battery” that will discharge when the wind stops. During times of high electricity demand, water flows downhill from the turbine reservoirs to power a 16MW hydro plant in a lower valley. When the energy supply is high, the hydro plant pumps the water back up the hill to the reservoirs, to be stored until it is needed again. The stored hydro capacity should balance the intermittent nature of wind power, optimising the use of energy in different conditions.

Can the system work anywhere? Although the plant needs a minimum height of 150 metres for the stored water to flow downhill efficiently, this does not necessarily mean the turbines can only work in hilly terrain. “Our system is able to work under saltwater conditions, too,” says Marie-Luise Stepping, communications director for the Gaildorf project. “For example, the turbines could be set up above cliffs using the sea as lower reservoir.”

The Gaildorf power plant is expected to be operational by the end of 2018.

ON RECORD

WHO’S SAID WHAT… AND WHY THEY’VE SAID IT

Indigenous communities are the world’s secret weapon against climate change

Augmented reality will soon permeate the design and use of commercial buildings

PETER VEIT director, Land and Resource Rights Initiative

JULIE WHELAN head of occupier research, CBRE Americas

Indigenous people manage 54,500m tonnes of carbon in the forests in which they live. Because they use sustainable methods, securing land rights for them should be a priority.

Real estate will soon benefit from consumers experiencing a product virtually before committing to it.

Data centres will need additional infrastructure as a result.

Q2 2017_MODUS A SI A

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ANOTHER BRICK IN THE WALL (FOR HUMANS) Up until now, bricklaying robots have not been thought of as anything other than a cost-saver, or a way of negotiating construction skills shortages. But this bulging facade, built by robots for an arts centre in Shanghai’s rapidly developing West Bund area, showcases the aesthetic potential of the technology, too. The complex form could only be achieved by the use of software that directs the movements of robots with minute precision – effectively reducing the entire human side of the construction process to strokes on a keyboard and movements of a mouse.

Perhaps one day that’s all we’ll be good for?

10 RICS.ORG/MODUS

Intelligence CLOUD COMPUTING

28%

15.9%

5.8%

4.8%

3.8%

2.4%

1.8%

1.7%

The top eight carbon emitters are responsible for 64% of the world’s greenhouse gas emissions

RATIFIED RA TIFIED PARIS CLIMATE CLIMATE AGREEMENT? YES NO

Source: Germanwatch/EIA, UN, 2015 CHINA

USA

INDIA

RUSSIA

JAPA JA PAN N

GERMANY GERMANY

S KO KOREA

CANADA

HOTELS + LEISURE

AIRBNB MAKES MOVES ON CHINA AND JAPAN Airbnb’s ambition to conquer China received a huge fillip in mid-March, after receiving a $100m investment from sovereign wealth fund China Investment Corporation (CIC).

CIC took around 10% of a $1bn round of funding that values Airbnb at $31bn.

In China, the company aims to increase staff levels from 30 to 300 people in the next two years, and build on its base of 75,000 mainland listings.

Airbnb is reportedly interested in acquiring Chinese competitor Xiaozhu, which has 100,000 listings and 10 million users in China. It is up against market-leader Tujia, which has 450,000 mainland listings.

Japan is also poised to hand Airbnb and its competitors a boost. Faced with a space crunch on hotel rooms as the 2020 Tokyo Olympics nears, the government is debating the introduction of a bill to allow landlords or investors to rent out their properties short-term for up to 180 nights a year.

Tokyo and Osaka have already approved Airbnb rentals, since they face the greatest pressure on travel accommodation. Airbnb reported a 2.7% rise in visitors in Japan in 2016, to 3.7 million guests, or 15% of the 24 million people that visited Japan.

The national bill is also likely to allow prefectures and local governments to set their own criteria and geographic zones for such short-term rentals. Illegal leases are also common. Formalising the rules would allow hotels to develop competing strategies.

ILLUSTRATION BERND SCHIFFERDECKER

Briefing: Japan’s hotel market, p42

HERE TO STAY Airbnb currently has 75,000 listings in mainland China and the CIC investment will allow it to target rivals

“Cities are gaining economic and political power” AMANDA CLACK FRICS RICS PRESIDENT TOWN PLANNING Regardless of the stage they are at in their evolution, our cities are getting larger and smarter.

How do we respond?

a ToTal of 4.9 Billion people Will liVe in asian and afriCan megaCiTies by 2035, with some of these cities becoming nation-sized. But scale is only one ingredient for success. Cities are for people. Hence the importance of innovation, liveability and adaptability to changing socio-economic landscapes. Cities and city regions are gaining economic and political power, asserting their role as incubators. We can look at them through four distinct lenses: experimental, new, evolving and developing. All have unique facets but also a common need for survival, resilience and growth.

Experimental cities are setting the pace with concepts such as underground storage facilities, high-level cycleways and dedicated public transport routes. Combined with strategic vision, good governance and economic stability, these cities – Hong Kong, or Dubai, for example – are attractive to investment. The risk is that growth outstrips infrastructure capacity, and higher costs push workers out.

New cities such as Tianjin and Brasilia are free from the constraints of legacy infrastructure. They can build-in resilience, high densities and smartness.

They can plan for affordability and liveability. But what looks like a winning formula to the master planners will only succeed if people want to live there.

The history of evolving cities like London and Tokyo is told through unique streetscapes and diverse neighbourhoods. Their challenge is to adapt around existing infrastructure and renew themselves without losing their character.

More than others, developing cities such as Mumbai and Lagos are grappling with inadequate infrastructure and are often characterised by congestion and pollution. They also have large areas of informal settlements: regarded by some as slums and by others as vital staging posts for city migrants.

Digital technology and data will supplant the internal combustion engine as the dominant force shaping cities. Big data will not only track movements, but anticipate them. Intelligent buildings that understand occupants’habits and preferences will be more efficient. Singapore is already exploring the possibility of improving public transport with on-demand driverless cars.

The rise of smarter, larger, more resilient cities will strengthen their interconnectivity. But might it also risk creating even greater islands of wealth?

Follow Amanda on Twitter @amanda_clack Q2 2017_MODUS A SI A

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12 RICS.ORG/MODUS

Intelligence

NUMBER CRUNCH RATIO OF WORKING-AGE POPULATION TO RETIREES, AND HOW LONGER LIFE EXPECTANCY IS RESHAPING THE LABOUR MARKET Source: Cushman & Wakefield, 2016

SECRET SURVEYOR

JAPAN

ITALY

GERMANY

2.3 to 1

2.9 to 1

3.1 to 1

“Is one of the reasons for the shortage of new talent that the job has become less enjoyable?”

ARE YOU INTERESTED in writing a future Secret Surveyor column? Send your musings on the profession to editor@ricsmodus.com

*ORGANISATION FOR ECONOMIC COOPERATION AND DEVELOPMENT

A

pproaching the end of my career in surveying, I have been looking at the demographics of the profession and wondering whether perhaps one of the reasons for the shortage of new talent is that the enjoyment of the job has been lost.

Today’s surveyors are weighed down by regulation and concerns over PII, and are invariably under huge time pressures.

Many of us who are now approaching retirement age had the luxury of being true general practice surveyors. We experienced a wide range of tasks that gave us the broad experience that stands every surveyor in good stead. Now, there is a pressure to specialise, which reduces the opportunities to explore the endless fascination of property. I never know what the next day will bring, but for the poor residential valuation surveyor, it is another round of property inspections, deadlines, and pressure to meet targets. What fun is there in being on a production line?

For older surveyors there was the opportunity to learn as one went along; mistakes were made and they were not repeated. The modern surveyor cannot afford a single mistake. Litigation is the first, not the last, resort.

It was interesting to see how many mature surveyors were present at a recent CPD day I attended. Many could be considered to be of retirement age, yet they still enjoy their work, helping clients to solve problems and advising them how to avoid mistakes. I wonder whether younger members, who have been brought up with the pressures of regulation and client expectation, will ever feel the same way.

Professions have to adapt and change, and older surveyors have dealt with those challenges. One cannot help but wonder, however, what has been lost along the way.

HONG KONG

PORTUGAL

EU

4.8 to 1

3.1 to 1

3.4 to 1

SINGAPORE

UK

OECD* MEMBERS

6.2 to 1

3.6 to 1

4 to 1

US

AUSTRALIA

WORLD

4.5 to 1

4.4 to 1

7.9 to 1

BABY BOOMERS

GENERATION X (1965-79)

GENERATION Y (1980-95)

GENERATION Z (1996-)

2015 2025 2035

Demographic forces are exerting pressure on the world’s future labour force. Population ageing will affect not only the future size of the workforce, but also its composition.

While growth in the working age population will continue, the rate is projected to slow. By 2035, Baby Boomers will be retired and no

longer part of the workforce, while Generation Z will exceed Generation Y in working age population size.

Age dependency will increase hugely in the next 20 years – in Hong Kong and Singapore in particular.

By 2035, the ratio of workers to retirees will have shrunk to 2:1 in the former, and 2.3:1 in the latter.

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13

TOP OF THE CLASS This year’s RICS Awards, Hong Kong was the ultimate showcase of the best of our profession.

We celebrate the nominees that made the grade

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RICS Awards, HK

T

he presentation ceremony for the sixth annual RICS Awards, Hong Kong, held at the Grand Hyatt on 17 March, brought together professionals from across the built environment to showcase outstanding achievements across 13 categories.

Each submission had been scrutinised by a jury representing a broad spectrum of markets.

The panel looked for teamwork, professionalism, innovation, outcomes and achievement.

“As jurors, we noticed an increasing level of competition and commitment among real estate professionals for this year’s awards. Not only did we receive a record number of submissions, but the quality was also exceptionally high,” said head juror Alan Child FRICS, chairman of Knight Frank Hong Kong. “Selecting the 2017 award winners was a great challenge, but one that we thoroughly enjoyed. We hope that this competition continues to influence companies to raise their performance standards in the years to come.”

CONSTRUCTION PROJECT TEAM OVE ARUP & PARTNERS HONG KONG FOR CHU HAI COLLEGE OF HIGHER EDUCATION The redevelopment of Chu Hai College of Higher Education, in Tuen Mun, could not have been completed on time and within budget were it not for the highly professional collaboration of client and project team, led by project manager Arup.

The construction itself was particularly difficult due to the heavy traffic flow, the limitation of the adjacent developments and complexity in unforeseeable underground conditions.

Arup set up a project execution plan that allowed each team member to work towards a mutual goal, influenced the reoptimisation of the superstructure design and deployed BIM technology – measures that together saved several months of programme time.

Value engineering was cost-effective and all post-contract changes with cost and time implications were signed off by all consultants and approved by the client before being implemented on site.

CORPORATE REAL ESTATE TEAM CBRE The winner of this newly introduced award category edged past the competition thanks to an innovative strategy.

On 26 September 2016, CBRE supported Citi in the formal opening of the East Tower of One Bay East (OBE). The launch highlighted Citi’s pioneering spirit, as it was one of the first global financial institutions to commit to the Kowloon Bay East area. The office building, which has a Hong Kong BEAM Plus Gold rating and US LEED Gold certification, has ushered in a new era in modern workspace, and underscores Citi’s commitment to Hong Kong.

CBRE acted for Citi in bringing together strategy, transaction advice, project management and change management. The result is an iconic, 23-storey, owner-occupied grade A office building for more than 3,000 staff. »

Q2 2017_MODUS A SI A 15

PROPERTY MANAGEMENT TEAM HARRIMAN PROPERTY MANAGEMENT FOR ONE BAY EAST

SUSTAINABILITY ACHIEVEMENT OF THE YEAR ARCHITECTURAL SERVICES DEPARTMENT, HONG KONG SAR GOVERNMENT AND DRAGAGES HONG KONG FOR THE TI TOWER The Trade and Industry (TI) Tower has achieved the highest standards required for a BEAM Plus Platinum rating and LEED Platinum rating. To combat the urban heat island effect, more than 40% of the site area is covered in greenery.

Meanwhile, the specification of higher-performance concrete reduced the overall quantity required, and thus led to a saving of more than 38% in embodied carbon.

Furthermore, a 35.5% reduction in carbon emissions against the Building Energy Code 2007 baseline has been achieved through: the use of a high-performance facade material with a shading co-efficient value of 0.26; full free cooling, which will offset the use of air-conditioning; connection to the Kai Tak District Cooling System, which is over 20% more efficient than a conventional air-conditioning system; and solar chimneys, which reduce the amount of air -conditioning and ventilation required.

Finally, building-integrated solar panels produce more than 42.8kW of power, and 18 lifts with regenerative power devices have been installed.

OFFICE TEAM JLL Last year, JLL assisted 391 tenants and 15 landlords across 5m ft2 of office transactions.

Key deals included a 220,000 ft2 prelet in Link REIT’s Kowloon office complex for JP Morgan Chase – the largest new letting in Hong Kong. The team also secured 93,000 ft2 at Tower 535 in Causeway Bay for WeWork – the largest new letting on Hong Kong Island in 2016 (pictured). Vistra hired JLL to consolidate seven businesses: the team found 40,000 ft2 at Lee Garden One. And when briefed to consolidate three of Berwin Leighton Paisner’s offices, the team secured a sixyear lease on 15,000 ft2 in Taikoo Place’s Dorset House.

Meanwhile, looking at online markets, the team relaunched its digital office-property platform in July, which helped to achieve a doubling of deal-on-deal conversion rates and revenue against 2015.

16 RICS.ORG/MODUS

One Bay East is a premium commercial development in Kowloon Bay East that demonstrates Harriman’s dedication to managing a sustainable building. It has its own in-house, registered energy assessor, registered inspector of the Mandatory Building Inspection Scheme, and a Hong Kong Quality Assurance Agency-recognised Sustainability Building Index Verifier. The property also has its own environmental protection and promotion committee to promote the green concept and culture throughout the company.

Harriman is committed to saving 32.5% of overall energy use, 40% of potable water and 50% of flushing water. A total coverage of 40% greenery was designed to reduce the urban heat effect. The company believes such measures, in addition to active and passive recreational areas, gym and cafe, can help to provide a healthy workplace and promote a better work-life balance for employees.

RICS Awards, HK

PROFESSIONAL CONSULTANCY SERVICES TEAM KNIGHT FRANK With 41 chartered surveyors, Knight Frank has one of the city’s largest valuation teams, making it well placed to lead in ensuring that projects are in line with global standards.

There were several highlights in 2016, but perhaps most eye-catching was the company’s work for Aecom to advise on the government’s new Underground Space Development programme. As a complex project with no precedent, the team had to advise on land use, financial returns, stakeholder interests, connectivity issues, pedestrian flow, construction challenges, interfacing with existing developments and fireengineering studies. It also collaborated with the building surveying, valuation, retail, property management and land advisory teams. Part of the team’s strategy on the project included the use of BIM to visually present the scheme’s physical and functional characteristics.

Knight Frank was also appointed as land consultant by Nan Fung for the heritage conservation and conversion of the Tsuen Wan-based 73,291 ft2 Nan Fung Textile Mills 4, 5 and 6 into a fashion and textile landmark, The Mills. This is the first private sector-initiated project to adaptively reuse old industrial space for sustainable development.

RESIDENTIAL TEAM JLL The residential team at JLL worked with more than 140 corporate clients and 60 families in 2016. Highlights included the sole appointment for the Argyle in Ho Man Tin, where the team drew upon specialist insights to promote the property’s excellent local schools to multi-national corporate relocators.

The Urban Renewal Authority also appointed JLL to sell 338 homes in Kai Tak. JLL provided back-office administration and handled sales day logistics and contracts. The project received 12,600 applications and sold more than 300 units in April and May 2016.

However, team’s greatest challenge arose from the UK’s referendum to leave the EU, which created significant investor caution. Prince of Wales Drive, part of the regeneration of the area around Battersea Power Station in London, was originally set to launch in May 2016, but JLL advised that it should be postponed until September. After the referendum, the team held briefings on investment opportunities afforded by the falling pound, exhibitions and viewings, which attracted more than 120 groups of prospective investors. »

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RETAIL TEAM CCH ASSET The retail team at CCH Asset uses innovative ideas and the latest technology to enhance the retail experience for its customers and business intelligence for retailers.

Understanding that intelligent shopping malls are the future, the company sponsors a research and development institute with China Telecom and Fudan University Business School. As a result, CCH Asset’s Jinqiao mall is the first shopping centre with ZTE’s latest precise location-tracking system – likely to be a game-changing technology in studying consumer behaviour.

The team has demonstrated professionalism with proven results in a reforming and challenging retail market. From the design concept, to development, to operations, the team proves that retail competence is much more than “filling up the space”. The team also leads the way in bringing innovative technologies that bridge the online and offline markets to the retail industry.

DEAL OF THE YEAR SAVILLS (HONG KONG) AND WHEELOCK PROPERTIES (HONG KONG) FOR ONE HARBOURGATE Comprising two office towers and a retail villa, One HarbourGate was sold to China Life Insurance and Cheung Kei Group for HK$10.35bn in a landmark deal by Savills.

Savills identified an en-bloc purchase as the top option, as it provided space for operational consolidation and longterm expansion. Doubly regulated as a state-owned enterprise and financial institution, China Life had exceedingly long lead times and a 15-month lag complicated negotiations.

Savills’ challenge was in establishing a basis of value for a place literally “beyond compare”, as there were no nearby grade A offices to price the new-build against. So the team returned to its initial city-wide survey of office blocks and modeled the valuation against variables such as building specification, age, sea view, amenities and traffic.

FACILITY MANAGEMENT TEAM HONG KONG JOCKEY CLUB Hong Kong Jockey Club’s facilities management team provides a safe and comfortable working environment for 60-plus departments and over 24,000 full- and part-time staff, while serving more than 2 million customers for the 2015/16 racing season.

The team is a pioneer in enterprise asset management, the standard to manage assets for the club’s asset owners, which are in the property, racing, tele-betting, IT, broadcasting and security infrastructure sectors. The team has developed a Public Administration and Health Management framework that follows the ISO 55000 standard and outlines the overall asset management plan for all property assets. A recent FM service survey shows that 95% of staff are satisfied with the organisation’s facilities management services.

CORPORATE SOCIAL RESPONSIBILITY PROJECT WHEELOCK PROPERTIES (HONG KONG) Wheelock’s comprehensive corporate social responsibility programme seeks to improve the quality of its developments and life for Hong Kong residents in four key areas: environment, art and design, youth support and community services.

All of the company’s developments have adopted BEAM Plus requirements while, on site, carbon emissions have been reduced by 10.6% and more than 74% of construction waste is recycled. And, at Wheelock’s 123 Hoi Bun Road project, 100% of waste has been recycled.

The fourth annual Wheelock Photo Competition received more than 1,000 submissions last year, and over the past eight years students with intellectual disabilities have produced more than 1,500 designs for its Christmas e-card competition. The company’s Swim for Millions also had more than 500 participants in 2016, raising over HK$3m.

Last year, Wheelock’s Project WeCan – a multi-billion dollar programme designed to assist schools with fewer resources – launched a tertiary education scholarship that has seen 74 scholars entered into university degree courses. Another 5,500 students have participated in industry-sharing projects.

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RICS Awards, HK

LIFETIME ACHIEVER TONY TSE WAI-CHUEN Tony Tse Wai-chuen has 40 years’ experience in the real estate business. After graduating from Hong Kong Polytechnic – now Hong Kong Polytechnic University – in 1976, he joined the Hong Kong Civil Services and worked at the Crown Lands & Survey Office – now Lands Department – for 12 years.

Since then, he has held senior positions in various companies and organisations in the private sector.

He has served as a member of the Hong Kong Town Planning Board, a member of the Land and Building Advisory Committee and as chairman of the Real Estate Services Training Board of the Hong Kong Vocational Training Council.

Tse Wai-chuen was elected member of the fifth Legislative Council representing Architectural, Surveying and Planning and received the Honour of Bronze Bauhinia Star in 2014. He is chairman of the Property Management Services Authority and chairman of the Hong Kong Trade Development Council Infrastructure Development committee. n

PANELLISTS

Meet the jury Head Juror: Alan Child FRICS Chairman, Knight Frank Hong Kong

YOUNG SURVEYOR HENRY BOTT MRICS, SWIRE PROPERTIES In 2014, Henry Bott MRICS planned to transform two vacant floors of Cornwall House, earmarked for demolition in 2017, into a co-working hub. He proposed a customised “accelerator” programme for a tech startup/co-working space project that would benefit the Taikoo Place community and the Hong Kong tech startup ecosystem as a whole.

From the tech accelerator programme Bott has identified win-win partnerships for both parties: start-ups get industry contacts through Swire’s ecosystem and receive financial and resource support from the developer. Meanwhile, Swire’s property management arm benefits from tech/disruption expertise. His ideas have turned Swire into the first developer to run a co-working space with its own tech start-up support.

Bott managed the project from design to launch, covering interior design, fit-out, budgeting, marketing and leasing, focusing on reusing and upcycling items sourced from within the Swire Group. The accelerator programme has now helped the growth of 41 companies.

Guy Bradley MRICS Chief executive, Swire Properties Margaret Brooke FRICS CEO, Professional Property Services Alan Dalgleish FRICS CEO, ANREV David Hand MRICS CEO, Asia Pacific, Colliers International Charles Lam Managing director, real estate, Baring Private Equity Asia KK Ling JP Former director of planning, Hong Kong SAR Government Philip Kai Wah Lo FRICS Chairman, Rider Levett Bucknall (China and Hong Kong)

Duncan Pescod GBS, JP CEO, West Kowloon Cultural District Authority David Tang MRICS Property director, MTR Corporation Chris Webster FRICS Dean, Faculty of Architecture and chair professor in urban planning and development economics, the University of Hong Kong Marco Wu Moon-hoi FRICS, GBS, SBS Chairman, Hong Kong Housing Society

RICS AWARDS 2018 Could your team or project be a winner at next year’s RICS Awards, Hong Kong?

Visit rics.org/hkawards for more information about the 2018 awards.

The nominations will open in September 2017.

Q2 2017_MODUS A SI A 19

Smart cities

We are now able to measure more aspects of our urban environment than ever, producing vast quantities of data in the process. Modus investigates how cities are putting this information to practical use, from keeping traffic moving to improving disaster response times Words Stephen Cousins Illustration Malik Thomas

22 RICS.ORG/MODUS

DEMONSTRATE

SMART NETWORKS ARE ALREADY IMPROVING THE LIVES OF CITY DWELLERS

When we talk about “smart cities”, there is a temptation to refer to the concept in the abstract, as if they are part of some vision of a utopian future. In reality, some cities are already demonstrating how data can transform the way they operate.

Singapore has deployed an island-wide network of more than 1,000 sensors to collect data from busy areas such as traffic junctions, bus stops and taxi queues. The data is relayed over an ultrahigh-speed broadband network to the

relevant agencies to help them develop new services to reduce congestion.

In New York, Google-owned Sidewalk Labs has installed more than 200 out of a planned 7,500 LinkNYC kiosks across the city to replace old phone booths. »

ANTICIPATE

HOW CITIES ARE USING DATA TO PLAN FOR THE FUTURE AND IMPROVE RESILIENCE

Analysing vast amounts of data from sensors, databases or other forms of documentation helps cities forecast the needs of citizens and allocate resources appropriately. Predictive analytics can be used to smooth traffic flows, or minimise the risk of overloading important aspects of the city’s infrastructure by redirecting people and traffic to other areas.

The Bristol Is Open smart city test bed has installed a “Data Dome” in the city’s former planetarium, where

real-time data, gathered from IoT sensors located across the city, is collected, analysed using a high-performance server and visualised in 3D on a giant screen. In one demonstration, the system collected CO2 emissions data and used it to compose 3D models that showed pollution levels almost in real time.

Dimitra Simeonidou, chief technology officer for Bristol Is Open, told Modus: “The system was configured to show the likely impact of interventions, such as

changing pollution levels when traffic was rerouted. In future, it will enable many other functions, we will be able to visualise transport and citizen engagement, and make many smart interventions.”

Other cities are showing how existing data can be exploited without reliance on costly computer technology. At New York’s Mayor’s Office of Data Analytics (Moda), a small team interrogates spreadsheets and other documents, sourced from the city’s public bodies, »

TRANSLATE

GENERATING DATA IS ONE THING, TRUE INNOVATION LIES IN HOW YOU INTERPRET IT

When extremely large data sets are combined and analysed by computers, new patterns, trends, and associations are revealed, which could result in useful new insights or services.

A pioneer of this big data approach is the Milton Keynes smart city test bed MK:Smart. This “data analytics hub”, created by the Open University and telecoms group BT, collects and integrates information from energy, transport and water networks, weather and pollution

statistics and crowd-sourced data from social media and mobile apps.

The system “mashes up” various data points and runs “use cases” to identify potential applications. The Community Action Platform for Energy (CAPE) is one such example. The tool combines aerial thermal survey data gathered using drones, and maps it against other data sources, such as energy performance certificates (EPCs), to identify thermally inefficient properties.

The system also takes into account high-resolution aerial photography and historical data on hours of sunlight over the past 10 years to identify the rooftops that have the greatest potential for generating solar energy using photovoltaic panels. The idea is to identify the energy improvement services that are most relevant to individual communities.

The project will include an online platform through which communities can group-manage and purchase energy »

AGGREGATE

HARNESSING THE POWER OF THE MANY HELPS CITIES FOCUS THEIR RESOURCES

In a world where consumers generate around 500 million tweets and six billion Facebook “likes” every day, aggregating crowdsourced data can prove very useful in the drive to improve a city’s day-to-day functioning.

Civic authorities for various towns and cities in India have turned to smartphone apps to help improve air quality and reduce pollution. The Delhi state government has launched an app called Swachh Delhi, or Clean Delhi,

that enables people to upload photos of illegally dumped rubbish. The state government in Bihar is trying to clean up Patna – ranked among the dirtiest cities in India – with an app that allows local residents to report violations such as »

Q2 2017_MODUS A SI A 23

DEMONSTRATE

ANTICIPATE

TRANSLATE

AGGREGATE

« The terminals offer pedestrians free super-fast wifi and access to city services on a touchscreen, but in future they are likely to support a range of functions.

But the ability to roll out such innovations is not just limited to city authorities or big firms.

The Things Network is a global community of more than 2,000 people working to establish freeto-use, crowd-sourced internet of things (IoT) networks that are connected via cheap, long-range, low-bandwidth antennas.

In Amsterdam, members were able to provide city-wide IoT coverage by installing 10 such “gateways”, costing $1,200 each, in just six weeks. The network is based on low-frequency technology that has a reach of around 10km and requires no wifi password or mobile subscription to access. Energy consumption is low – devices can run up to three years on a single charge.

The service is being used to develop a range of open-source apps aimed at improving city life. One is designed to prevent Amsterdam’s many canal boats sinking when they fill up with water in rainy weather. An IoT device installed in the vessel detects the presence of water and sends a message to the boat owner. If they respond, a service called SaveMyBoat locates the vessel and clears the water out.

« to anticipate, predict and prevent problems and direct resources more effectively.

Working with the New York Fire Department, Moda created an algorithm to more accurately predict the likelihood of fires in certain buildings. And, in the wake of Hurricane Sandy in 2012, it integrated data from city agencies, National Guard surveys and utilities suppliers to streamline the allocation of disaster response resources.

Inspired by Moda, London hopes to set up its own office of data analytics, and initial trials are planned in five boroughs.

“Using data that’s already available is the most fruitful area for public agencies to look into,” says Stefan Webb, head of projects at the Future Cities Catapult. He points to work being done by London-based proptech firm Land Insight, which combines data sets from the UK Land Registry and local authorities to provide an online tool for developers seeking new development opportunities.

He adds: “There are different paradigms in terms of how local authorities make their data available. Whereas before it was sufficient to put it on a website, now, cities such as Manchester and Milton Keynes are curating their data and seeking solutions to different problems.”

« efficiency improvements, such as solar panels and loft insulation. The aim is to create a local marketplace for green energy products, bringing together suppliers and buyers.

Upendra Dharmadhikary, client partner at IT company Tech Mahindra, a stakeholder in MK:Smart, comments: “The benefit of solar is limited unless the price point is reduced. We are saying, if you buy it as a community, there is a better business case.”

Also harnessing the power of big data is Bristol Is Open.

SMEs that have partnered with the smart city test bed are writing intelligent algorithms based on high-definition footage recorded on networked cameras placed around the city. One firm is developing an algorithm that is able to extract data on transport movements from the imagery.

Another is using analytics to create a linguistic translation of the transport data that can be automatically transmitted to citizens in a series of tweets.

Bristol Is Open’s Dimitra Simeonidou says: “Imagine the situation of a critical event in a city, such as a fire, flood, or terrorist attack. The system makes it possible to send everyone a tweet explaining the situation, then automatically update them as events progress.”

« litter, flooding, dead animals, broken street lights and illegal construction. The progress of each complaint can be tracked through an online portal.

Crowdsource apps launched

by Singapore’s Smart Nation project include myResponder, developed with the Singapore Civil Defence Force, which aims to reduce the amount of fatalities in the city caused by heart attacks.

Singapore has an ageing population, and the number of people that collapse due to heart attacks has exponentially increased over recent years.

According to the city state’s Registry for Automated External Defibrillator Integration (R-AEDi), more than 1,800 people suffer an out-of-hospital cardiac arrest (OHCA) each year. Every minute after an OHCA has occurred, the chance of survival drops by 7%-10% without intervention.

MyResponder aims to increase those chances. Individuals who are trained in CPR and the use of defibrillator equipment sign up to the app, and if they are within 100 metres of a person who collapses and needs help, it sends an alert and directs them to the location. If defibrillation begins within four minutes of a collapse, R-AEDi says that survival rates increase to 30%. n

COUNTERPOINT

That smarts: data mismanagement is cities’ downfall The smart city movement has been alive for years. Millions of dollars have been invested in their development, and the technology has rapidly advanced. So why does the idea of a fully operational smart city not exist? Even purpose-built smart cities, such as Masdar near Abu Dhabi and Songdo in South Korea, have failed to deliver on their original promise.

Part of the problem is data, says Nigel Mehdi, author of a new RICS insight paper: Big Data, Smart Cities, Intelligent Buildings.

“Under current UK data protection legislation, organisations are required to record the 24 RICS.ORG/MODUS

minimum amount of data, use it for the minimum number of purposes and retain it for the minimum amount of time. This is the opposite of what many major corporations involved in smart cities are trying to do.”

Similarly, existing privacy laws restrict access to many important public data sets, limiting the insights possible. In addition, efforts to “smartify” existing cities have hit hurdles related to data standards and protocols. Many applications, such as smart street lights or parking sensors, have been developed in isolation and are unable to connect in a secure and open ecosystem.

Stefan Webb of the Future Cities Catapult comments: “Part of the failure of smart cities was that many companies offered a vision of an end-to-end smart city with mega efficiency, driven by a variety of technologies and data analysis techniques.

The problem is it doesn’t exist. Cities need to think about what applications they need for their specific challenges, then start building responses to that.”

RICS’ INSIGHT PAPER, Big Data, Smart Cities, Intelligent Buildings will be published later this year. Check rics.org/insight for updates

Smart cities

NETWORK OPPORTUNITIES Smart city applications range from teams of planners using data to aid disaster response, to algorithms that monitor traffic flows and tweet updates

Q2 2017_MODUS A SI A

25

Investment

ANIMAL

Words David Adams

When it comes to real estate, many investors are still creatures of habit. Whether commercial or residential, trophy assets or value-add, bear or …

(Tick if you’re a bear)

26 RICS.ORG/MODUS

Investment

INSTINCT

Illustration Iain Macarthur

… bull, sentiment still plays a major role in our investment decisions. But with so much data now at our fingertips, is it time to take a fresh approach?

(Tick if you’re a bull)

Q2 2017_MODUS A SI A 27

Investment

run by Aviva Investors, Canada Life, Columbia Threadneedle, M&G Investments and Standard Life suspended trading, effectively locking up another £35bn in investments. Several significant buildings in London were put up for sale, as funds sought to access the cash they would need to pay off investors who wanted to redeem those investments. By the end of November all had reopened, amid signs of a recovery in demand for UK property.

RICS senior vice-president Chris Brooke FRICS suggests there is a continuum for sentiment, with gut feeling at one end, and rational positions informed by detailed data at the other. “It varies from highly superficial sentiment, which is just about subjective views, to more sophisticated sentiment such as the house view of a fund manager, based on data,” he says.

Colin Lizieri FRICS, Grosvenor Professor of Real Estate Finance and head of the department of land economy at the University of Cambridge, thinks it is important to draw a distinction between “knowledge” and “sentiment”, adding that the latter can be both rational or irrational.

There are several reasons why irrational sentiment affects real estate markets more than other asset classes. One is the physical nature of the assets themselves. Another is that there is no real estate equivalent of derivatives, which would allow investors to “short” the equivalent of a stock when everyone else is buying, and which would help to mitigate the influence of sentiment.

Property also appears to be an asset class more prone than most to the influence of emotion. Popular culture is one contributory factor. Brooke points to the way real estate is a common topic of conversation in his home market of Hong Kong, and in Singapore.

S entiment, and the effect it has on investor behaviour in particular, is a slippery concept.

But we do know how fickle it can be and how powerful an influence it has on financial markets and, ultimately, upon the economy.

Real estate markets in particular can be very strongly affected by changes in mood.

At the end of 2015, the results of several leading market surveys suggested most investors felt very positive about real estate. Research from Colliers International, which canvassed the views of 600 investors with total real estate holdings of $1.5tn, highlighted a clear continuing trend to invest in global gateway cities such as London.

Meanwhile, investment manager Franklin Templeton’s Global Investor Sentiment Survey found that, out of 11,500 investors in 23 countries, more than half believed real estate would provide the best returns of all asset classes in 2016.

Then, last year, on 23 June, the UK voted to leave the EU. The immediate effects on some parts of the UK property market were spectacular: a week later, investors had withdrawn £1.4bn from open-ended real estate funds. Seven funds, including those

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“Everyone has a view on real estate and a lot of people like to talk about it.” As a result, he suggests, “the residential market is very sentiment driven, and not always based on facts and research.”

Academic studies also suggest the real estate market is affected by behavioural biases on the part of many investors, such as a predisposition to favour a geographical area of which they have a greater degree of personal knowledge, so-called “home bias”.

It is also important to keep in mind the differences in sentiment between different groups of investors with different aims, points out James Molloy FRICS, director and global head of real estate valuation at Deutsche Bank in New York. “You need to think about what would influence specific groups,” he explains. “So whereas an event such as Brexit might have a bearing on regional investors in the REIT sector, say, it may have less of an impact on long-term pension fund money.

“And opportunistic capital typically has a holding pattern of three to five years, so if Brexit is seen as an opportunity by them, they may feel good about what many others may perceive as a negative event.”

RICS OCCUPIER DEMAND AND UK EMPLOYMENT GROWTH Net balance %

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EARLY WARNING Research from RICS was able to predict the rise in unemployment brought by the global financial crisis by tracking the demand for UK office space

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Occupier demand (Adv. six months – left-hand scale) UK total employment growth (right-hand scale)

Investment

The occasions when people would have a subjective view not backed up by fact are becoming less frequent

ll

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CHRIS BROOKE FRICS RICS

A

mong certain groups of investors, sentiment will also be influenced by other factors at work in the market, adds Molloy. For example, those who are dependent upon leverage to buy real estate assets will be more seriously impeded by a reduction in the supply of capital.

Globalisation also has a bearing on the way investor sentiment influences markets. “As certain commercial sectors become more globalised, they will end up being driven by the feelings of global investors, rather than by those in the domestic market,” Lizieri suggests. “On the other hand, in markets that have already opened up, you might see a greater impact from sentiment-driven investment in general.”

But while the cause and effect of sentiment’s influence on real estate investment decisions might still be unclear, we can at least improve our understanding of these processes.

RICS is one of a number of organisations that gathers data to help understand sentiment and track its effects. Its senior economist, Jeff Matsu, believes the steps taken by RICS and others to ensure their research gathers genuinely useful data from a representative set of sources means it can offer very useful insights into changes in sentiment. In the case of RICS’ research, the results of market surveys often correlate closely with the course of future economic events (graph, opposite).

Matsu believes the data generated by these multiple strands of research can be knitted together to create an accurate picture of sentiment across a range of markets, which can then be used to help inform investment decisions. “[Such surveys] aim to capture different aspects of sentiment,”he says. “Together they paint a richer picture.

I think that approach is the right one. You’re not too reliant on any particular data: you’re being receptive to new data and metrics of sentiment and analysing it appropriately.”

In recent years, academics have sought to develop a more sophisticated analysis

of the role of sentiment in pricing, says Lizieri. “There’s now a greater acceptance that pricing can be irrational. There’s been more work looking at the idea that there are going to be periods when sentiment drives pricing away from fundamental asset values.”

Brooke makes the suggestion that, as investment decisions become more sophisticated thanks to the rising quantity – and quality – of readily available, useful data, sentimental behaviour is more likely to be supported by rational thought.

“I think the occasions when people would have a subjective view not backed up by fact are becoming less and less frequent,” he says.“There are so many different sources of sentiment now: media, commentary, analysts, what other investors are doing – the perception of a market can now come from such a wide range of sources. Sentiment will become more sophisticated as more data becomes available.”

Even so, William Ng, director of asset management for real estate at UBS Asset

Management in Hong Kong, believes that the human, more subjective side to decisionmaking will and should remain an important facet of real estate investment. “Research is one thing, but we also have to use local knowledge and intelligence; to look at the way the numbers are changing at the micro, as well as at the macro level.”

Clearly, investors need to find the right balance, and it is almost certainly always a good idea to question prevailing investor sentiment. After all, as Warren Buffet once said: “Two super-contagious diseases, fear and greed, will forever occur in the investment community. The timing of these epidemics will be unpredictable ... [investors must] attempt to be fearful when others are greedy and to be greedy only when others are fearful.” Sentiment is useful and important, but it should not be the dominant influence in any rational investment decision. n APPLY YOUR EXPERTISE by participating in an RICS sentiment survey. To find out more, or take part, visit rics.org/sentiment

ECONOMIC VIEW

Assessing the “Trump effect”

Financial markets were taken by surprise last November when real estate mogul Donald Trump won the US presidential election.

What impact has his victory had on investor sentiment in property?

In the days following the election, falls in global stock markets and a flight to safety – into real estate assets, among others – were followed by a significant positive rebound in market performance.

Some analysts, such as DeVere Group’s international investment strategist, Tom Elliott, cautioned that this confidence might be shortsighted. Although some Trump policies,

including loosening of regulation, investment into infrastructure, and tax cuts, could increase demand and boost growth and corporate earnings in the near term, they are also likely to increase inflation.

As Elliott noted in midNovember: “A typical boom-and-bust scenario may follow”.

At the time of writing, the overriding sentiment is caution, suggests Eva Steiner, assistant professor of real estate at Cornell University.

“Expectations of stronger economic growth ... may suggest a positive shock to real estate on the demand side,” she says, adding that higher inflation

might also drive positive sentiment in property, as it is often used as a hedge against it.

But this scenario would also increase the cost of debt, which would have a negative impact on some investors.

“We don’t know how rhetoric will translate into action, but it certainly creates additional uncertainty,” says the University of Cambridge’s Colin Lizieri.

But he also suggests that the way investors have reacted to Trump’s election is an example of rational sentiment influencing behaviour.

“It’s a real event that should legitimately be priced in different ways for different investors.”

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BUILD UP OF TROUBLE More people are living in cities than ever before, leaving them dangerously exposed to the impacts of natural and man-made disasters Data Helen Yates Illustration Laura Cattaneo

Population growth, urbanisation, migration and the growth of megacities (those with more than 10 million inhabitants) will present a significant infrastructure and engineering challenge in the future GDP 2015-2025

GDP AT RISK: TOP 10 CITIES … % of average annual GDP

NEW YORK

8

OSAKA

14

TAIPEI

45

LOS ANGELES

11

SHANGHAI

17

TOKYO

10

ISTANBUL

17

HONG KONG

12

SEOUL

16

MANILA

50

All cities $372.56tn Total GDP at risk All cities $4.56tn Share among emerging cities 71.5% Share among Top 20 cities 35.2%

Wind storm

$7 8.2 SHA NGH AI

Expected number of megacities situated in China and India by 2030 (seven in each country)

13.2

14.5 15.6

14

44.8

14.9

17.4 60 43.2 27.8

19

TAIPEI

30 RICS.ORG/MODUS

TOKYO

bn

5

12.3

2.

12.3

12.2

$8

11.5

9.1

UL

16.4

9.5

4.7 5.4 5.7

NB

15.8

7.4

Flood

Market crash

ISTA

4.3 5.9

Oil price shock

K

$79.3bn

Number of megacities in 2030, compared with 31 today

… AND THEIR BIGGEST THREATS (% share of total risk) Earthquake

bn

OSAKA

63 41 14

Number of cities projected to have between five and 10 million inhabitants by 2030, compared with 45 today

bn 5 .

4 7 NG $ HOONG

LO SA NG ELE S

Sources: Lloyd’s City Risk Index 2015-2025, UN World Urbanization Prospects report 2014

SEOUL

MANILA

NEW YORK

$90.

3bn

Risk management

TAIPE I

$18 1.2 bn

15 54.5 60 in

%

O KY TO

n .3b 53 $1

%

Proportion of the global population that will inhabit a megacity by 2025

Proportion of the global population currently living in urban environments

Proportion of the global population expected to be living in cities by 2030

LONDON

9

$53.4bn of GDP at risk

% of average annual GDP

SEOUL

$103.5bn

Human pandemic

Cyber attack

Sovereign default

7.2

13.4

10.3 11.1 11.6

14.7 13.1

12.6

9.5

13.8

10.7 11.5

10 19.3

18.6 20.9

17.4

20.2

8.8

IL A

$1 01 .1b n

12

Volcano

bn 4 . $90 NEW YORK

N MA

36.4

LOS ANGELES

34.3 23.3

21.3

ISTANBUL

OSAKA

SHANGHAI

25.4

HONG KONG

Q2 2017_MODUS A SI A 31

AREN’T YOU A LITTLE YOUNG TO BE What does it take to be a successful captain of industry?

A lifetime of experience? Years spent forging a reputation? These entrepreneurs would beg to differ Words Brendon Hooper Photography Joe McGorty, Alba Yruela

CHRIS WHITEHOUSE MRICS

29, managing director of development consultant NextPhase, Cannock, UK (right) I’m Staffordshire born and raised, but my life and career changed when I went to study in Newcastle. While at university, I did a year’s work placement at a very progressive general practice surveying firm, where my boss became a huge influence. He was already a director at 30, and he made it clear to me that if you know your product and your customer, there is nothing stopping you going it alone at a young age.

After becoming chartered at a practice in Shropshire, I thought it was time to take the jump, and the Midlands became a natural place for our first office. We initially started out in 2011 as a planning consultancy – I was 24, was soon to be married and had just bought a house. When you’re young you can take it all on at the same time! More than anything, the recession had shown me that the old approach to hourly billing, disbursements, and clients not really being 100% sure of what they were being charged, wasn’t the best way

to go about things. In my starting plan, I was adamant that we should provide mixed budgets for people – and if you get the cost programme on the table from the very first conversation, everyone knows where they stand.

Surprisingly, this wasn’t a commonplace method five years ago, although it is becoming so now. I thought if we could survive through the recession, we will grow out of it and reap the rewards further down the line.

Initially, it’s all about establishing the customer base. It’s a difficult and expensive process and you have to grow by word of mouth. There’s an element of luck, but because we did some good work for our first clients, who were well connected, this evolved into more work. We’ve grown rapidly over the past three years into a multifaceted chartered planning and development surveying consultancy, with offices now in London, Cannock, Swindon and Manchester. Our success comes from planning and reacting to the actions of the marketplace, while making sure there is no dilution of quality in the service we give. »

YOUR OWN BOSS?

Leadership

Q2 2017_MODUS A SI A 33

34 RICS.ORG/MODUS

Leadership

of us. We’re pretty relaxed in the way we operate and dress, and I think this helps us interact with a lot of our clients who are starting up their own businesses in tech, media and design. In fact, we pitched the business as more of a media consultancy, rather than a real estate firm, with the added benefit of the professional experience we gained as chartered surveyors, too.

Starting a business can be terrifying, but my professional experience taught me discipline, and that sometimes you have to make difficult decisions that are not commercially easy. It’s vital to do things the right way, rather than go for the quick buck.

Hopefully this means our clients see us as open, transparent and reliable. Ultimately, our success is down to having fun with our clients, because they’re in industries we also find interesting and exciting.

KAREN PRATS

29, co-founder and CEO of pop-up retail service popplaces.com, Barcelona (left) Popplaces started life in 2012, when we launched a previous iteration of the company, called Popcorner. We noticed a gap in the market for bringing together building owners with brands who are in need of retail space at short notice and for a short period of time. We call this on-demand retail – connecting spaces that could be in commercial buildings or shopping malls with brands who are interested in selling in a flexible way, online or offline.

We’ve now connected brands with owners of more than 4,000 spaces across Europe.

We’ve built a network with local partners in cities such as Milan, Paris and Berlin, but our main objective is to become one universal platform, instead of being different marketplaces in different countries.

At first, it was a challenge to match the right kind of spaces to the users – but we realised the key to success is not so much about acquiring a lot of spaces, but having the best ones suitable for users’ needs. As you build a business, you have got to be flexible and change your strategy when you need to.

Although I’m relatively young to be a manager, I think it shouldn’t matter as long as you develop yourself to be aware of how other people think and feel. Building a team is all about understanding, and appreciating people’s goals and insecurities. Money is not as important as seeing what we are creating.

SARAH WALLIS MRICS

35, founder and director of interior designer and project manager One:London For many years, I’ve had a passion for buying and refurbishing homes, and selling them on for a profit, which grew into an obsession for interior design. So it seemed logical to combine the two and start my own business.

We buy run-down properties that have redevelopment potential, overhaul them and bring them back to the market. We also manage design-and-build projects for private clients on their own homes.

I used to work as a retail agent for both owners and occupiers. The skills I gained, such as project management, client pitching and business development, helped to get the company started. Being chartered helps with approaching clients and gaining trust, too.

Funding is always the biggest issue.

Initially, I had pooled together a group of investors and begun the process of

CHILD’S PLAY Karen Prats (left) and James Townsend MRICS (above) are both proving age is no barrier to achievement

purchasing our first project, but at the 11th hour one of the principal contributors pulled out. Thankfully I managed to secure another and the project went ahead as planned.

I’d say the key to my success is meticulous cost planning. I often speak to developers who only have a vague idea of their projected costs and an even hazier idea of their likely profit. Before I even look at an opportunity I run an initial development analysis, followed by a detailed schedule of costs if I am confident that the property is worth progressing with. The whole process is a balancing act – creating a beautiful space without going over budget.

JAMES TOWNSEND MRICS

30, co-founder of boutique real estate consultant Kontor, London (above) I was at CBRE in London for five years, working with tenants such as Google and Fred Perry, when it dawned on me that there was a gap in the market to provide real estate acquisition advice to occupiers and start-ups in the creative and technology sectors.

In the nicest possible way, the real estate industry can sometimes still be a bit of an old boys’ network, and it needs to service modern clients in ways that are much more in line with their working lifestyles.

My business partner Luke and I selffunded the company, and there are now six

CHESTER HIN-CHING LEUNG MRICS 35, founder & CEO of residential

listings app OneHouse, Hong Kong

Hong Kong’s property market is still very traditional and ripe for disruption. A couple of years ago, I noticed one of the biggest complaints consumers had was about the lack of choice of agents with different backgrounds, experience and fee structures.

I set up OneHouse to bring a new element to the residential listings market – an agency fee bidding mechanism. We offer a platform for licensed agents to offer their services to consumers to find business. Once a landlord lists a property, we send agents an email alert. Agents can then submit their own bid to attract the landlord to appoint them.

There is no doubt that my professional surveying background has helped me get to grips with starting the company, and boost our cooperation with business partners.

People talk about “know-how” in the startup community, and I gained mine by working in both the public and private sectors, and becoming familiar with all kinds of property databases. One thing I learned was the importance of caring about interested parties, and being able to react to their concerns.

Developing a start-up isn’t easy – there’s a new challenge every day, usually involving juggling funding, operational amends, complaints, the competition, and the struggle to change people’s traditional behaviour.

Right now, I wouldn’t go as far as saying my business is very successful – I think it is more at the survival stage. But I guess this is how many businesses start, trying things out. A motto I like to keep in mind is: if you fail, fail fast, fail big, but fail forward. n

Q2 2017_MODUS A SI A 35

Cover story

SENSE AND THE CITY IN WHICH CITIES HAS EFFECTIVE LEADERSHIP MADE THEM A BETTER PLACE TO LIVE?

As the world’s urban centres struggle to keep up with the rapid pace of their growth, the need for leadership of great vision has never been stronger.

We spoke to three experts to find out what qualities are required in such a leader Words Christopher Swope Illustration Peter Judson

36 RICS.ORG/MODUS

Nicholas You: Medellín in Colombia was a basket case if there ever was one. And it’s a prime example of a place that has had four or five different mayors from different political parties over a 25-year period, and somehow each one found it in his best interest to build on what previous mayors did, because there was so much buy-in and joint ownership of what the projects were all about.

One of the earliest mayors built a metro line that connected richer neighbourhoods to the city centre. Another mayor came along and tied poor neighbourhoods together with a cable-car system. Another built escalators to make it easier to integrate poor neighbourhoods on the slopes of the city. Another mayor built schools and worldclass libraries in a slum, and that changed the centre of gravity of the city. So it’s a history of mayors building on each other’s initiatives.

Mark Watts: Copenhagen is the model we talk about for other cities to copy. It’s a place that has systematically applied good governmental leadership over a period of decades. There was no one great individual leader, it’s just been one administration after another that stuck to really good planning rules and followed through on the policy.

Diane Davis: In Stockholm in 2006, mayor Annika Billström introduced congestion charging at a time of intense political discord.

She had originally made campaign promises not to implement the charge, but then, after her election, had to backtrack due to political pressures. She saved face by introducing a trial rather than a full-blown policy, and by strategically timing a referendum so it would follow only after Stockholmers actually experienced the full-scale experiment. »

Who’s in the discussion: »Diane Davis Chair,

Department of Urban Planning and Design, Harvard University Graduate School of Design.

Davis is directing a research project called Transforming Urban Transport – the Role of Political Leadership, which is studying the effectiveness of political leadership in carrying out transport innovations in selected cities. »Mark Watts London-based executive director, C40 Cities Climate Leadership Group – a network of more than 80 of the world’s megacities.

C40 is committed to taking action against climate change, and has conducted extensive research on what powers mayors have to influence climate policy. »Nicholas You Director of global partners and programs, Guangzhou Institute for Urban Innovation, China.

You’s institute sponsors the leading international award programme for innovative local-government policies and projects.

Cover story

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Cover story

WHAT ARE THE HALLMARKS OF STRONG LEADERSHIP IN WELL-RUN CITIES?

As the trial unfolded smoothly, with a noticeable decrease in traffic and congestion, most Stockholmers began to change their views. When they subsequently voted in favour of the charge, it was clear that the political balance was shifting. The next administration, led by the Moderate Party, continued with the policy, even though it had originally opposed congestion charging.

WHY IS CONTINUITY SO IMPORTANT AND WHERE DOES IT COME FROM? DD: One thing that stands out about Stockholm is that the political party system is very strong in Sweden. So the fact that congestion charging stayed on the agenda for so long was a function of the political party apparatus, in which individual leaders were not only able to push ideas but the ideas didn’t die if they didn’t stay in power. That’s something we don’t have in the US. NY: A key ingredient of long-term success stories is always policy continuity – that we don’t have a flip-flop in policy every time you change mayor or political party, but things are able to continue across administrations. You can’t just change direction every four or five years.

One of the guarantees of continuity is citizens’ engagement. It would be very hard for a new mayor or political leader to just ignore a very strong engagement structure, whether that’s participatory budgeting, or participatory planning or contractual arrangements with organised community groups to run certain services.

38

RICS.ORG/MODUS

MW: One is an ability to think about the real long-term development of the city, while also understanding the immediate measures that need to be taken to solve existing problems and keep the city functioning.

That sounds completely obvious, but it’s not a given that political leaders at any level genuinely think about the long term.

Second, is an ability to look outwards.

Most of the really good leaders we see in C40 are incredibly willing to travel and to learn from other cities, and are not at all worried about copying those great ideas and adapting them to particular conditions in their cities.

NY: Leadership has to be understood as not just having a mayor who has brilliant ideas and a charismatic personality. Leadership is characterised by political leaders who are able to engage the inhabitants of their cities in planning and decision-making.

DD: It is about taking risks. Not just politicians – they work best when they have good relationships with technical experts and they both sign on to the risk.

Often the technical people don’t do that, they just say “this needs to be done”. And that’s part of what’s interesting about how Mexico City replaced minibus taxis with bus rapid transit lines. Mayor Lopez Obrador had amazing technical people working for him. There was a big political battle but he trusted the people around him and gave them a lot of authority to push things forward, to do the research and think about what would need to be done.

Once you put your foot in the water and take the risk, you have to follow it through to the end – not knowing what the outcome might be.

Cover story

ARE THERE ANY SPECIFIC STRUCTURAL LIMITATIONS ON HOW CITY LEADERSHIP CAN BE EXERCISED?

WHERE DOES GOOD CITY LEADERSHIP START? IS IT ALWAYS WITH A MAYOR? NY: Today, you can’t go forward without engaging business. Businesses are the ones that have the solutions of tomorrow. They have the technology, and they have the capital to come up with creative solutions.

And most businesses are local, unless we’re talking about those in the Londons and New Yorks of the world. We’ve seen how cities have been able to mobilise business, beginning with simple things like sponsoring a park, and then things start to happen.

MW: The strongest powers mayors hold are over land use: planning the spatial development of a city. Typically, mayors have pretty strong powers over the transportation system – in some cities, such as London, it’s almost absolute.

Where there’s the most variance is over buildings. About one-quarter of our cities’ mayors have really strong control over building codes – either having the ability to set local building codes themselves, or to greatly strengthen those that are handed down from higher levels of government. And then there’s the power to enforce them, which is actually the most important thing.

DD: Some cities don’t have the institutional capacity to do things they might like to do.

New York is a good example. Decisions that have to do with the mass-rapid transit system are made in the State of New York at the state assembly. So you have situations such as Michael Bloomberg, who was a strong leader as mayor, not being able to get congestion pricing approved.

NY: One of the common stumbling blocks we encounter with sustainable urban development is that, in a given metro region, you can have up to two dozen municipalities with different leaders and different political parties in power. And those adjacent jurisdictions are not necessarily working together. It is a major problem.

One way of overcoming it is to depoliticise some critical activities, such as strategic planning, long-term planning, and visioning around questions like: “What does the community want to be in 20 years?” Again, it’s about engaging people. If you involve communities and businesses in these longterm visions, you tend to depoliticise these processes and find common goals that everybody can work toward.

MW: One of the biggest barriers to mayors achieving ambitious plans around climate change is an inability to work with the next tier of government up – the regional tier – and vice versa. You quite often see incentives working at cross-purposes and a lack of coordination.

The India smart cities challenge that’s being led by prime minister Narendra Modi and the federal government is interesting, because mayoral power in India is relatively weak and political authority is vested in the states and the federal government. And yet there’s the reality of rapid urbanisation and the need to plan for urban development.

So they’re running an initiative that provides significant additional finance to city governments on the basis of projects that will improve sustainability. It’s a good way of working,

Leadership has to be understood as not just having a mayor who has brilliant ideas and a charismatic personality





NICHOLAS YOU Guangzhou Institute for Urban Innovation

WHAT IMPORTANT FACTORS ARE FAILING CITIES MISSING? NY: The old city management practice of having silos – where every department is on its own, fights for its own budget and doesn’t share information, data or technical resources with other departments – has gone forever. Everything we see about “smart” city approaches is about breaking down silos. It’s about making the city work as one. Can we talk about water without talking about energy? Can we talk about energy and not talk about waste? Can we talk waste and not water? These departments have to work together and share everything, and that requires a change in culture.

MW: Where we see failure, it’s often where administrations start from apathy or indifference, and think that they have nothing to learn from anywhere else.

Also, when there’s an unwillingness to plan.

Our data at C40 shows that the mayors who take the most action are those willing to take time to do a systematic plan for development of the whole city – or for a particular aspect like their climate change policy. They commit the resources to make it a data-driven exercise that analyses the problem, thinks it through in a systematic way and then sets robust targets against which progress can be measured.

Those cities get a lot more done than those where the mayor says: “I’m not going to waste my time with planning and academic study, we’ll just get on and do stuff.” Typically they don’t get on and do stuff, because there’s no organisational clarity about what they’re doing.»

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Cover story

HOW DEMOCRATIC CAN INFRASTRUCTURE PLANNING BE WITHOUT LOSING DIRECTION? NY: The more you engage communities, people and business in strategic, long-term planning, the more they will be informed and the less likely you’re going to encounter opposition. There’s less of a “not in my back yard” attitude if people are well informed.

I’ve been reliving this case in Italy, where they can’t complete a high-speed train network because a couple of communities on the route oppose it. We’ve seen cases like that over and over again. Who’s to blame?

Previous administrations never engaged communities on any decision, so people have almost an allergic reaction to new development. Look at London Heathrow Airport and the third runway – that’s been going on for 20 or 25 years.

This has been evolving very rapidly in China. Just a few years ago, all the central government had to do was say “move” and people moved – although that did require considerable monetary compensation.

Today, that’s almost impossible. In Shenzhen they want to tear down housing that was built 15 years ago, because it no longer responds to market trends – it’s ugly, it was built in a hurry, and that’s a problem when you have very rapid development. But today it would be impossible for the mayor or regional authority to say “we’re coming in with bulldozers and you’re evicted”.

MW: There’s means to engage citizens so they come along on the journey of long-term development of the city. Some of the Latin American cities have done that really well.

Look at what Jaime Lerner did as mayor in 40

RICS.ORG/MODUS

Curitiba, Brazil, when he brought in bus rapid transit. He put public transport on the agenda at schools so kids got enthused about wanting to use the bus, and that played a role in changing the minds of their parents, who otherwise saw the car as a status symbol.

There’s also a role for leadership in what mayor Anne Hidalgo is doing in Paris, in pedestrianising the Left Bank of the Seine, banning the oldest, most polluting vehicles, and proposing to ban diesel altogether from 2020. These are obviously policies that are not going to be popular with a section of the population who own those vehicles, but you can absolutely see that it’s in the interest of the vast majority of the population. And sometimes you do need leadership that is willing to take the tough decisions.

DD: Given the nature, scope and scale of infrastructure planning – at least in the case of urban transport – participatory and deliberative planning can be challenging and in some ways at odds with tight fiscal conditions, project deadlines and larger metropolitan aims.

The celebration of local democracy permeates everything in the field of planning. You often can’t get people to think about a city – it’s what’s best for their community. The institutions reflect that.

But when it comes to transportation, the local way may not be the most democratic.

If we define “democratic” in terms of equity and justice, we must also consider some of the troubling implications of what are often touted as“sustainable transport investments”.

Improvements to transit infrastructure can greatly benefit the urban poor and other underserved populations relative to privatesector-driven innovations such as Uber and company buses. But transit-oriented developments are also often associated with trends of gentrification and displacement.

WHAT ROLE CAN A CITY MAYOR OR GOVERNMENT PLAY IN HOUSING PROVISION? NY: Housing is a very sticky issue, because by themselves, cities have a very limited margin to manoeuvre. Through planning and zoning they can help mitigate gentrification and speculation. But if you’re in a totally open-market system and people want to come to your city, inevitably, you’re going to have a housing affordability issue.

Sooner or later, national government has a very important role to play. Instruments of housing finance such as mortgage rates, interest rates and subsidies are typically in

the hands of national government and can be manipulated – something local government rarely has the means to do.

DD: Housing is, generally speaking, different to transportation because in most countries and cities housing is provided by the private sector. Few countries still offer state-provided housing, although this may have been true in the past.

In the case of New York City, mayor Bill de Blasio has struggled to introduce subsidised housing into a market where land values are exorbitant and upscale market housing dominates. He has been able to make progress, not just by holding fast to affordability regulations and restrictions, but by making accommodations in terms of design styles. That also led to a big controversy about segregation in a new housing development in Manhattan, where market-rate units were provided with a different entrance to the subsidised units.

It has definitely been an uphill battle.

There’s limited room to manoeuvre, for both housing developers and state regulators, including elected mayors and politicians.

The housing market draws global investments in ways that transportation generally does not. In markets such as housing, the financial gain is clear and relatively guaranteed. It is harder to disrupt supply-and-demand dynamics. Many of the transportation innovations we have studied had positive impacts on land markets and their respective city’s global economic competitiveness.  CITIES WERE THE FOCUS of RICS’ World Built Environment Forum, held in Shanghai in March.

Visit rics.org/wbef for coverage of the event

2

1

STAY THE DISTANCE INN KEEPING Suiran Kyoto (1) sits in a UNESCO World Heritage Site and has been designed as a more luxurious ryokan – a traditional Japanese inn.

FLASH IN JAPAN Behind the ornate latticed facade of Hoshinoya Tokyo (2) are 84 five-star rooms and a luxury spa fed by a hot spring – the first in the city centre

42 RICS.ORG/MODUS

Japan’s hotel market is enjoying a pre-Olympics boost, but what happens once the Games are over, asks Alex Frew Mcmillan

There is a sense of optimism in Japan under the highly popular prime minister Shinzo Abe, as the world’s third-largest economy finally emerges from 20 years of slumber. And one of the leading flag-bearers of the country’s improving prospects was Tokyo’s winning bid to host the 2020 Olympics, which it secured in 2013.

The Japanese government predicts that Tokyo will draw 8.5 million tourists during the Games, which it forecasts should also generate ¥3tn ($27bn) and create 150,000 jobs. The hotel and hospitality industries will undoubtedly benefit. But do they gain long term? Or is their jolt of cash and influx of visitors restricted to August?

Tokyo is a mature hotel market, which means it will not see quite the same construction boom that occurred in developing markets such as Beijing or Rio de Janeiro. There are 140,000 internationally branded hotel rooms within 50km of the Tokyo Olympic sites, according to the International Olympic Committee, and 9,500 rooms in traditional ryokan inns. Instead of constructing new hotels, some landlords and developers are overhauling their existing stock. The venerable Hotel Okura Tokyo closed in August 2015 for renovation after 53 years of operation, while Daiwa House Group is investing ¥4bn ($353m) to revamp 27 of its resorts around the country.

Japanese hotels are now coming into their own as an asset class. “Before, hotels were one of the most risky real estate assets,” says Yuko Tomizuka MRICS, a valuer and real estate consultant based in Tokyo. “It was very hard to manage getting solid and stable revenue from hotel operations.” Financing was also very difficult to access.

This is not, of course, the first time Tokyo has hosted the Olympics. The 1964 Games ushered in a period of significant hotel development, during which the Okura opened, as well as one of Tokyo’s other grand hotels, the New Otani. This time around, developer

Briefing

GET IN SHAPE Tokyo’s winning bid has kicked off a wave of redevelopment activity that includes the city’s main Olympic stadium (top), Haneda airport (centre) and the iconic Hotel Okura (below), built for the 1964 Games

BY NUMBERS BOOKING THE TREND Investor interest in Japanese hotels is on the rise, fuelled by a development pipeline leading up to the 2020 Olympics. The market is now the third-most watched in Asia-Pacific, with only Australian office and retail more popular

IMAGES HOSHINO RESORTS, SUIRAN KYOTO INFOGRAPHIC IAN DUTNALL

Source: CBRE, 2016

ASIA-PACIFIC INVESTOR INTENTIONS

for instance. Increasingly, they speak Mandarin, too. China, with 5 million visitors per year, has already supplanted Korea (4 million) as the top source of tourists to Japan. Visa rules for visitors from China, as well as other Asian nations such as Indonesia and the Philippines, have been eased.

Longer term, the government would like to see the number of visitors from China grow to 3% of the Chinese population – 41.1 million visitors from one country alone. That is enormous growth for Japan’s total tourist industry as it now stands. Tomizuka believes it is possible, though, being roughly the same share of US citizens who visit Mexico each year.

The Olympics typically cause a drop in hotel occupancy in the year around the Games, as travellers put off nonessential business and pleasure trips. But the decline is more than offset by higher room rates – in London, per-night rates leapt 12.5% in 2012, hitting £134, while Beijing prices jumped 31% to $145 in 2008, according to STR Global. Only London reported a sustained, strong hotel market after the Olympics, with industry performance well below peak figures in Beijing and Rio post-Games.

In Japan, the casino industry will likely pick up some of that slack. The Japanese parliament passed a bill into law in

ROOM STOCK GROWTH BY 2020

+21% 2015

+26%

7th Japan hotels 4%

3rd Japan hotels 7%

2016

TOKYO 100,000 rooms

Pacifica Capital is bringing Marriott’s millennial-focused brand Moxy to Tokyo in November. Hoshino Resorts opened the Hoshinoya Tokyo hot-spring resort last year, in the Otemachi district that is also home to a luxury Aman hotel.

But the locations poised to benefit most from new hotel development will be those that act as spillover destinations for visitors who extend their Japan trip, suggests Yukihiko Ito, managing director of real estate broker and investment adviser Asterisk Realty & Placement Agency. That includes cities such as Kyoto and Osaka, as well as the islands of Hokkaido and Okinawa at opposite ends of the country.

Marriott and the Mori Trust Group’s JW Marriott Hotel Nara, near Osaka and the World Heritage Sites of Todaiji Temple and Heijo Palace, will open in 2020. Mori opened the luxury hotel Suiran, this time with Starwood Hotels, in Kyoto in early 2015. Malaysian conglomerate Berjaya and Four Seasons Hotels completed the Four Seasons Kyoto last year, while Takenaka and Hyatt’s Park Hyatt Kyoto will start welcoming guests in 2019.

The infrastructure that is built for the Games is the longest-lasting legacy, JLL notes. Tokyo’s government has encouraged the greater integration of the city’s confusing network of rail and subway lines, and the provision of signs in English. Haneda, historically Tokyo’s domestic airport, is also being upgraded to handle more international flights.

The government has also been working to promote “soft skills”, by encouraging hotel and taxi staff to learn English,

21,000 new supply

OSAKA 50,000

13,000

mid-December to legalise gambling, with “integrated resorts” – the euphemism first patented in Singapore – likely to be the model. Japan has the population and the percapita income to support such an industry domestically, unlike the world’s biggest gambling market, Macau, although tourists will surely also play their part.

Given their experience developing resorts elsewhere, international casino operators are likely to benefit.

Companies such as Caesars Entertainment, Genting Singapore, Las Vegas Sands, MGM Resorts International and Wynn Resorts have been jostling for four years to land bids to build the resorts, the first of which will likely take until 2023 to complete.

The casinos “will be a mega-booster to increase the economic impact on Japanese tourism and related industries”, says Ito. It will expand Japan’s tourism options, spur the real estate market and draw international investors to luxury hospitality – which will be their best bet, he adds. n

REFERENCE POINT REPORTS AND RESOURCES Economic Impact of the Tokyo 2020 Olympic Games report from the Bank of Japan bit.ly/Tokyo2020impact Viewpoint on the Japanese hotel market downloadable from CBRE’s Global Research Gateway bit.ly/CBREJapanhotels2016

Tokyo Olympics: A City Examines Itself in Preparation for the 2020 Games Article from the Urban Land Institute bit.ly/ULITokyo2020 The Olympic Games Effect JLL report on Tokyo 2020 bit.ly/Tokyo2020effect

Q2 2017_MODUS A SI A 43

Careers / Business / Legal / Training

Foundations CAREERS You made a huge mistake and there’s no changing it, so put it behind you and let your future deeds help repair your reputation

WHERE YOU STAND

You have just about clung on to your job – and, by the skin of your teeth, your professional accreditation, too – but the impact of the “bad thing” you did at work still hangs heavy in the air.

In many ways, the biggest task lies ahead – how to rescue your reputation and limit the damage.

“From here on in, your integrity, and the perception your peers have of you, really matter,” argues Sean Bricknell, communication coach to quantity surveyor Gleeds, and author of How to Avoid the Seven Communication Mistakes. “It sounds obvious, but first it’s vital to admit you’ve done something seriously wrong,” he says. “However, be careful of overly gushing everything out. That can weaken your position.”

It’s crucial, argues Bricknell, to apologise once, and then try to move on. Doing this, he says, requires fighting the urge to be continuously contrite. “No matter how serious the indiscretion is, repeating the apology ad-infinitum seldom does much long-term good,” he says. “All it does is remind people, and create a longer recovery period.

“Fortunately, organisations have a collective selective memory,” he adds. “The best way to rebuild your career is to put the mistake behind you, and let current and future actions count. Bringing it up all the time actually has the opposite effect. Get it out, over with, then move on.”

John Lees, career coach, author, and expert in career transition, says damage limitation must involve acceptance of having learned from the mistake. “Those who make errors of judgement, but refuse to learn from them, will continue

Check the rules RICS’ standards and professional guidance rules are available at rics.org/guidance.

Call for back-up RICS’ Member Support Service provides a confidential helpline (+44 (0)20 7334 3867) and access to advice.

Panel show Those alleged to have failed to meet RICS’ standards of competence or professional conduct may have to answer to a disciplinary panel.

Admittance advice Those who lose their accreditation can apply to be readmitted. All applications are dealt with through RICS’ established regulatory rules on readmission, which are on the RICS website.

44 RICS.ORG/MODUS

to be perceived badly,” he says. “Errors are best addressed full-on, and people should actually talk about what they’ve learned.”

This, he adds, helps wrong-doers avoid the repeated urge to beat themselves up about it, and addresses the effective moving-on phase. “If there’s something wrong-doers can fix quickly, or at least get patched up, my advice is get on with it. Focus on fixing important things that need solving right now, with the resources you have available.”

Those who commit serious professional negligence often blame factors such as a lack of time or resources to couch their actions as being unavoidable or inevitable.

Be careful, though, not to deflect too much, warns Richard Gelder, director at recruiter Hays Construction and Property. “Common, everyday mistakes are a reality of the workplace. But honesty is the first step on the road to recovering from really big errors. When you’re weighed down all the time because you haven’t held your hand up, you’ll always be looking behind you.”

The big unknown is the extent to which a truly monumental misjudgement might come back to bite someone career-wise several years down the line. The good news is that managers tend to refer to immediate successes, rather than past indiscretions, giving credence to Bricknell’s advice about avoiding the urge to be overly contrite.

“If you can be seen as adaptable, and able to learn from mistakes, even a severe reprimand some years ago can be turned into a positive,” advises Gelder.

Bricknell adds: “It may sound illogical, but it’s the stuff that you don’t try to hide that tends to die a death. To know you’ve done wrong, shown genuine humility, and then bounced back, is a creditable achievement.”

ON RICSRECRUIT.COM Need to get your boss back on side?

Follow RICS Recruit’s five steps to gain their confidence at rics.org/bosslove

WORDS PETER CRUSH ILLUSTRATION GIACOMO BAGNARA PORTRAIT AGI DAVIS

PICKING UP THE PIECES

Foundations

TIMELINE

1994 Joins the Valuation Office following a post-degree sponsorship training programme

MY WAY

Nicola Woodward MRICS DIRECTOR, MBM, BRISBANE, AUSTRALIA

THE BEGINNING I grew up in Leyland, an industrial town in the north of England famous for its trucks. At 14, I did two weeks’work experience in the architects’ office at the local council, and it instilled in me a love of all things building. I remember designing the toilets of a bomb shelter, inspecting the foundations of a new house, and receiving a parting gift – my first scale rule.

In 1990 I studied urban policy and society and government at Aston University. I was fascinated by how the urban environment impacted on the whole fabric of society. Three years later, I was sponsored by the Valuation Office (VO) to do a postgraduate degree in property valuation at Sheffield Hallam University, with the promise of a full-time job at the end. The next year, I moved to London to start at the Kensington and Chelsea office of the VO. Even better, the district valuer I worked for was an APC assessor, who would set up mock interviews to prepare me for my APC. It was a perfect starting point for RICS membership.

THE CAREER BREAK After four years at the VO, I joined Arthur Andersen, where I gained a tax qualification and learned a lot of quantity surveying skills. But after a few years, I needed a break. So I went backpacking in Australia,

1996 Becomes a chartered surveyor

and when I ran out of funds, a local capital allowances practice in Sydney gave me a job.

Two years later, I started my own firm with three colleagues. In retrospect, what was I thinking? I hadn’t been in Australia for long and didn’t have many contacts. However, in 2011 we sold our business to MBM.

THE PRESENT Day to day, I look after our national team of tax assessors, building surveyors and asset accountants. This includes planning growth and developing new services. I really love spending time with clients, helping come up with ways to meet their specific requirements.

THE FUTURE Many traditional surveying tasks are being replaced by advances in technology. This means we need to be more focused on providing high-level expertise to help our clients understand the results and data if we want to remain relevant. I’m trying to build a team of people who understand this and the changes our industry is going through. rics.org/nicolawoodward

1998 Joins Arthur Andersen as a corporate tax specialist 2000 Travels to Australia and takes job at Napier & Blakeley 2002 Starts Apex Property Consulting 2011 Sells Apex to MBM, becomes associate director 2014 Promoted to director, sits on MBM board

“In need of a break, I went backpacking in Australia. Two years later, I started my own firm … What was I thinking?”

Q2 2017_MODUS A SI A 45

MASTER AND COMMANDER

FIVE-POINT PRIMER

In many ways, business lessons are no different to some of the most fundamental lessons in life. To be successful in running a business is to essentially understand what others want – be they customers, suppliers or financial backers – and providing it in a way that you and they deem valuable.

At the heart of this is the ability to negotiate. The rules of engagement may be more formal in the business world, but the essentials are the same. Good negotiation is a mix of understanding the business situation and, more fundamentally, human dynamics.

Jonathan Fletcher MRICS, director of London-based developer Endurance Land, agrees wholeheartedly with this assertion: “There is a certain process involved with carrying out initial site assessments and negotiating with various parties. The challenge is working out where in that process you think there’s going to be an issue with, let’s say, one of the owners or stakeholders who are adjacent to the site.

“In this instance, you have to make an informed judgement about how you handle the negotiation to resolve that matter,” Fletcher explains. “And it does take quite a few years’ experience to be able to work that out.”

It is important, at all stages of the negotiation process, to be aware of three things. First, the business situation: ask yourself, what are the financial losses and gains to a

Initial thoughts What do you stand to lose or gain? What about the other party?

Basic instinct Do you actually need to negotiate at all?

Rules of engagement Know where the balance of power lies, who is more pushed for time, and when to call it quits.

Leave your ego at the door There’s nothing wrong with playing hard ball, but the best negotiators know that any deal is better than no deal.

Supply and demand Be careful not to jeopardise future relationships with suppliers by over-negotiating your position.

46 RICS.ORG/MODUS

PREPARE THE GROUND Once you are certain that negotiating is the correct option, preparation is crucial.

Walter Akers, a partner at auditor RSM who specialises in helping firms with contract negotiations, lists four points to keep in mind when preparing. The first is to identify the power balance in the relationship.“If you can help it, never negotiate from a position of weakness,” he advises, but always ensure you understand the negotiating context.

As Fletcher says, “Some of the trickiest people to negotiate with are the people who don’t see any need for it.”

Second, says Akers, is to be conscious of the timeline. If the other party needs something completed more quickly than you, use it to your advantage. Third, agree on roles in your own team ahead of time.

And fourth, “make sure you know when you’re going to walk away,” because “it’s so easy to end up with mission creep, where you keep on accepting less and less as the negotiations proceed.”

When initiating the negotiation process, it is worth remembering that the most effective tactics are often the most simple, says Fletcher:“Be polite. Don’t be aggressive.”

Beyond that, try to understand that “reality is relative,” suggests Akers. “It’s

WORDS TIM STAFFORD

BUSINESS Make your strategic moves count by versing yourself in the art of negotiation

particular negotiating position? Second, what it means for your team: are you happy with this proposal? Is it in line with what you wanted before negotiations started? Have you let ego obstruct a resolution? And third, what it means for the other party: will they be happy with the proposal? Are you making assumptions about their position that you should validate before proceeding?

Considering these three points will also help you make probably the most important decision about negotiation: whether you actually need to negotiate at all.

Fletcher recounts a time when one of his colleagues was working on a development in London and needed a crane oversailing licence. “We approached our neighbour and asked: ‘Could our crane swing over your property?’” In this scenario, says Fletcher, you might pay someone between £10,000 and £15,000, but in this instance, the site owner demanded £250,000.

“It was such a ridiculous figure that we thought, well, why don’t we just redesign the crane oversailing plan so that we don’t need them?” says Fletcher. “So that’s what we did. We would have probably paid the guy £15,000, but he got nothing because he over-negotiated.”

Foundations

LEGAL 101

what’s in your mind and it’s what’s in the other party’s mind that matters. It’s less about real value and cost, and more dependent on what the other party thinks it is, and what you think it is,” he says.

Both Fletcher and Akers urge would-be negotiators to be wary of making any rash assumptions about the other party’s position. If you do, “make it clear that it is an assumption, and keep on validating that assumption,” says Akers.

“Successful negotiators will play hard ball, but when it’s time to strike a deal, they take the ego out of the room and get it done” WALTER AKERS RSM And when the crucial time comes to close out a deal, it is vital that you remain as rational and calm as possible, Akers advises.

In his experience, the successful negotiators play “a significant amount of hard ball, but when it’s time to strike a deal, they take the ego out of the room and get it done”.

Finally, remember that much of your negotiating will be done with suppliers, adds Akers. If you spend all of your time making them“submit”to your will, it could harm any long-term working relationship you might have with them in the future.

Good negotiation is based on having a clear idea of what you want and putting great interpersonal skills to use, but also realising that the right deal is more important than beating the other side.

ON RICS’ UK SMALL BUSINESS HUB Persuasion is often used in negotiation, which involves the ability to discuss and reach a mutually satisfactory agreement. It is having the aptitude to use persuasive negotiation that makes one a good influencer.

In “Persuasion: a vital skill for professional success”, Simon Jones, a CEO, chair and board adviser who works with SMEs on their business development and strategy execution, provides some tips and advice on how you can develop your skills of persuasion and build a strategy for successful business negotiations.

To read the article, go to rics.org/smallbusiness and click on “Business advice”.

Making some sense out of claims STEVEN BEAUMONT MRICS Executive director, Quantum Global Solutions

The potential change in Security of Payments legislation, which is set to become law in Hong Kong later this year, will govern payments for construction work done in the public and private sectors, and will set out rules for when and how payment must be made. This is very similar to the UK legislation known as the Housing, Grants, Construction and Regeneration Act 1996, later updated and revised in the Local Democracy, Economic Development and Construction Act 2009.

Was the UK legislation successful? The straight answer is yes. It promoted the flow of cash, which as we all know is the lifeblood of our industry, and it promoted that through statutory legislation in the 1996 and 2009 Acts.

How will this operate in Hong Kong and whom does it affect? The objective of the Hong Kong legislation is to make money move freely and to stop unfair payment clauses. This means that “Paid when Paid” contracts in which, for example, the subcontractor only gets paid when the contractor gets paid, will be unenforceable in court, arbitration or adjudication.

Unreasonable payment periods – such as 90 days for interim payments – will no longer be allowed. All this can only be a good thing.

In the public sector, the legislation will cover all construction contracts, regardless of value. In the

private sector, however, the legislation will apply where the contract for a new building has an original contract value greater than HK$5m ($644,000).

When this applies to the main contract, it will automatically apply to subcontractors, too.

This is a minor drawback, which begs the question of why the authors of this legislation considered public contracts and private contracts separately. Why not have one set of rules that covers public and private contracts the same?

Once an application for payment is received by the client or a contractor, this is referred as a “payment claim.” The payer, whether the client or the contractor, then has 30 days to serve a “payment response.” That must state what is to be paid, what is disputed and what is being set off.

What happens if a client does not abide by the legislation? Put simply, the contractor can refer the matter to adjudication.

If the adjudicator finds that the client has acted in breach of the law, then the adjudicator can publish a decision that is enforceable in the courts.

This is simply the application of common sense made official. In the short term, rather than reducing disputes, it will more than likely serve to increase them. But on the positive side, these disputes will be managed swiftly, and not allowed to fester or get out of hand.

That will ensure that cashflow continues along the supply chain, all for the good of projects.

Q2 2017_MODUS A SI A 47

CPD booster Related content from RICS

THE FUTURE OF CONSTRUCTION Sam Stacey (above) covers some of the technologies that will become commonplace in the construction world. cpdfoundation. com/webcasts/257 ››CPD hours: 1

THE VIRTUES OF VIRTUAL PROFESSIONAL DEVELOPMENT New technologies such as virtual reality will play an important part in the future of construction. Get in on the game

Working games There are many real-world problems in the construction industry that gamification can be used to address. For instance, Skanska is using it to help workers reduce service strikes – the problem of pipes or cables being accidentally severed while digging underground.

The “gaming” is a process that builds on CPD: ON DEMAND the foundation of BIM. The CPD Foundation offers Given digital models of members a convenient and buildings that include comprehensive way to meet not just geometry, but their CPD goals for one annual many other object payment. For more information attributes, games can be go to cpdfoundation.com created to show 48 RICS.ORG/MODUS

real-time feedback on the effects of design changes. For example, the design process for a school can be made into a “game”, where professionals investigate and play with build options, such as different doors, windows, furniture and lighting types. It also helps clients and end users – schoolchildren in this instance – understand the trade-offs that need to be made in design. All this helps to sharpen people’s decision-making skills on cost and sustainability.

Constructive techniques As the cost of virtual reality equipment gets cheaper, we can go ever further in providing true-to-life experiences. Equipped with laser sensors and VR headsets, users can watch avatars interact with virtual environments. For example, “virtual rehearsals” can simulate the construction of a building before the work commences, and can help people act more confidently and quickly when they do it for real. They can also save a lot of money if aspects of the build that are not quite right are discovered beforehand. A particularly useful application is training in temporary works inspections, where mistakes can have disastrous consequences.

SAM STACEY is a chartered engineer and director of innovation and business improvement at Skanska UK skanska.co.uk

BIM METHODOLOGY AND IMPLEMENTATION Anna Thompson MRICS, an RICS Certified BIM Manager (above), looks at the activities and processes surrounding BIM application. rics.org/implementbim ››CPD hours: 1.5; £40

MODERN DEMOLITION METHODS Paul Brown of Redbridge Demolition (above) talks about the evolving technologies involved in demolition and the recycling of building materials. cpdfoundation.com/ webcasts/268 ››CPD hours: 1

ILLUSTRATION MARINA MUUN

Tech at play Surveyors should be aware of how some aspects of the construction industry are being significantly altered by new technologies. For example, engaging all stakeholders with the construction process is becoming increasingly important, and “gamification” is helping us do this.

Computer games are popular, and the right ones have a strong potential in business applications. Because games can immerse people in different worlds, they are being used to help train professionals to perform better in representations of real-world scenarios, such as in safety and the optimisation of design and financial outputs.

Foundations

SURVEYED Is there a book, website or app you couldn’t be without? Email editor@ricsmodus.com

HARDWARE

GO FULL CIRCLE Real estate professionals are increasingly using 360° photographs and videos to provide an all-round visual document of the built environment. For example, they are a great way of giving a prospective homebuyer a virtual tour of every

EVENTS

Book RICS events online rics.org/events For inquiries, call +852 2537 7117

HONG KONG

››RICS Hong Kong Annual Conference 2017 19 May, Grand Hyatt Hong Kong The financial and real estate markets are the two pillars supporting the economy of Hong Kong over recent decades. With advancement in technologies, the increasing connectivity of Hong Kong to adjacent regions and the changing investment atmosphere, now it is time to redefine the driving forces for sustainable growth and prosperity. The RICS Hong Kong Annual Conference 2017 will explore various growth potentials and deterrents with views and case studies shared by experts across a broad range of industries. rics.org/hkconference

corner of a house via a computer screen or 3D-headset – before they even set foot into the property.

The cube-shaped iStar 360° camera captures high-definition immersive images, which can also be used in laser scanning and photogrammetry. It is solidly built but lightweight, and you do not have to be an expert to operate it, as only one button is required to capture an image or timelapse video. Up to 60 high-definition panoramas can be captured on one battery charge, but this can be increased to more than 600 when using an external battery.

Back in the office, the camera’s wifi automatically connects it to the supplied desktop application, to quickly and easily batch-stitch images.

ISTAR 360° CAMERA For local stockists, check nctechimaging.com

AUSTRALIA

››RICS Australia Awards and Annual Dinner 2017 1 June, Royal Automobile Club Victoria, Melbourne Celebrate the best of the Australian built environment industry with professionals from the land, construction, real estate and infrastructure sectors, their employers and clients. The annual awards are the industry’s peak social event and present a great opportunity for you to make new contacts, network with the best in the business, and generate new leads and contacts. rics.org/ausawards

MALAYSIA

››RICS BIM Conference 2017 27 July, Kuala Lumpur BIM is an increasingly important component of the design, construction and management of assets in the global built environment, but adoption of BIM in Asia still lags behind Europe and America. This conference will look at the challenges

ALSO THIS ISSUE

››The Teamup app can help you and your team keep track of all contracts, photos, work orders and documents for each job in one easy-to-view online calendar.

Try it out at teamup.com ››Are we ready for driverless cars?

Lauren Isaac, sustainable transportation manager at WSP Parsons Brinckerhoff, considers how we need to refresh our infrastructure funding mechanisms in 2017 and beyond. bit.ly/wsp_driverless ››Test out your skyscraper design and management skills with Project Highrise, a 2D tower-building simulation game. React to your tenants’ needs, manage costs and keep the “virtual” profits flowing.

Available at bit.ly/projecthighrise.

facing early adopters in Asia’s emerging economies and provide best-practice guidance on embedding BIM-enabled work processes in your day-to-day business.

The event is a must attend for anyone keen to drive modernisation in our profession. rics.org/BIM2017

SINGAPORE

ULI Asia Pacific Summit 6-8 June, The Fullerton Hotel This summit brings together a diverse network of more than 500 decisionmakers and experts from all sectors of the real estate industry, including investors, funders, developers, advisers, planners, architects and city leaders. The event provides a unique platform that connects the real estate industry across the region and globally, where thought-leaders and professionals share new ideas and best practices, identify solutions and opportunities, and make new connections and strengthen existing relationships. apacsummit.uli.org Q2 2017_MODUS A SI A 49

Mind map

WHAT IS DEMENTIAFRIENDLY DESIGN?

Awareness of dementia-friendly design is increasing. The needs of people living with dementia need to be considered on a wider scale, and all buildings should consider dementiafriendly design.

Leanne Owen MRICS, managing quantity surveyor, Faithful+Gould, Leeds, UK

An estimated 47 million people worldwide live with dementia, and this figure will almost double every 20 years.

Lighting, colour schemes and tactile information also need to be considered.

Design features to assist way-finding can greatly assist too, such as maximising natural lighting and creating landmark features.

The location of facilities is key.

Knowing where to find a bathroom in a new space can be very important. In homes, simple changes such as glass-fronted cupboard doors can help avoid confusion.

ILLUSTRATION STEPHANE MANEL

Measures do not have to be expensive. Simple changes have a minimal impact on cost, but can have a huge impact on a building’s ease of use for a person living with dementia.

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RICS.ORG/MODUS

BIM Conference Journey towards adoption in ASEAN 27 July 2017 InterContinental Kuala Lumpur 165, Jalan Ampang 50450 Kuala Lumpur Building Information Modelling (BIM) is an increasingly important component of the design, construction and management of assets in the global built environment, but adoption of BIM in ASEAN still lags behind Europe and America. Our BIM Conference will look at the challenges facing early adopters in ASEAN’s emerging economies and provide best practice guidance on embedding BIM enabled work processes in your day-to-day business.

In association with:

Supported by:

For more information visit rics.org/bimmalaysia or call +65 6812 8190