Modus Asia Edition 03.12

MODUS 03.12 ricsASIA.org

03.12 // 10 of the best Underground building projects worldwide p28 tax trials Reining in the real estate market in China p36 village green The German exemplar of self-sufficiency p40

The underground issue

ricsasia.org

The underground issue

Inside: Modus previews the first annual RICS Hong Kong Property Awards

Contents// :03.12 //

The rise of expertise

The rapidly developing economies of Asia are providing endless opportunities for property and construction professionals. In the 22 years I have been a chartered surveyor practising in Asia, there has never been such a demand for skills offered by property and construction professionals. RICS is in a strong position as a professional institution to influence the property and construction industry in the region. Its members can provide expertise in many of the skills and disciplines required to build the property and infrastructure needed to support the development of Asian economies, and are already recognised as highly competent and skilled professionals by governments and corporations. For example, recently in Singapore the Council for Estate Agents (CEA) exempted RICS (general practice) members who have passed RICS examinations from entry examinations under the newly introduced Estate Agent Act. One of my goals over the coming years, as an Asianbased Vice President of RICS, is to pass the message to government authorities and the industry that RICS members are among the very best professionals in the industry. If we succeed in this, as I believe we will, real estate and construction professionals working in Asia will all want to be members of our institution.

Chris Fossick FRICS RICS Vice President

Regulars

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feedback Your views on RICS and Modus, and the latest global poll

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intelligence Global property and construction news, plus opinions, reviews and reactions

Features

35

law advice Exploring claims from a FIDIC perspective

44

business advice Tips for successfully managing your business cash flow

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property awards We preview the first annual RICS Hong Kong Property Awards

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10 minutes with‌ Wilson Kwong MRICS, CEO of Raffles Quay Asset Management

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10 of the best Underground projects worldwide

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Tapping reserves Water abstraction and replenishment

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property tax Attempts to cool the real estate market in Shanghai and Chongqing

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eco village Why Wildpoldsried in Germany is a model for energy efficiency

Information

45

rics news News and updates, plus the President

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events Exhibitions, training and conferences

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the measure Digging deep into the mining industry

03.12 // MODUS ASIA

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Feedback//

Join the debate :your views on Modus, RICS and the industry

mismeasurement?

The statement [in the Measure, Asia edition October] that Myanmar, Liberia and the US are the only countries not having the metric system of measurement first adopted by France in 1799 prompts me to ask (yet again) what happened to the Système International (SI), the system adopted by Britain if I remember correctly in February 1971, an amendment to the 5th Edition Standard Method of Measurement being issued accordingly (albeit entitled 5th Edition Metric).

The construction and engineering industries still reflect the SI system, a principal feature being measurement to the base one thousand (i.e. no centimetre, decimetre and dekametre; only millimetre, metre and kilometre). The centimetre is in almost universal use elsewhere, and is taught in schools. I sometimes feel that whenever I raise this issue I am not believed, most seemingly not having even heard of SI. Some years ago I wrote to RICS with this same query, which gave rise to a telephone call from someone who offered a far from convincing and waffling answer, lacking in any precision. I would have at least expected a profession that is significantly concerned with measurement to have the answer!

Michael Hawkyard FRICS According to our research, the Système International is the modern form of the metric system. The UK Metric Association (ukma.org.uk) says: ‘The development of the metric system was made truly international in 1875 by the

signing of the Convention du Mètre, a diplomatic treaty between 17 countries.

In 1960, the 11th General Conference on Weights and Measures adopted the name International System of Units (Système International d’Unités or SI) for the recommended practical system of units of measurement. SI consists of seven independent base units: the metre (m), the kilogram (kg), the second (s), the ampere (A), the kelvin (K), the mole (mol) and the candela (cd). There is also a standard set of prefixes: micro(µ-), meaning millionth; milli- (m-), meaning thousandth; kilo- (k-), meaning thousand; mega- (M-), meaning million.’

our profession has been the leader in environmental and sustainability matters for many years. It can even be argued that chartered surveyors are the original environmental professionals. Therefore I am very enthusiastic about RICS’ current work to help shape a sustainable future in all areas of professional practice – and this, in my opinion, will help attract the next generation to our profession.

David Inman MRICS, Blackburn

Get in touch // :Online ricsasia.org twitter.com/RICSnews

leading the way Can I applaud Modus for focusing on minerals and waste in your latest issue [November].

As a chartered environmental surveyor in private practice, and a graduate of the RICSaccredited Mineral Estate Management degree at Sheffield Hallam University in 1996, it is important to remember that

:email ricsasia@rics.org editor@ricsmodus.com

the modus poll :should drilling in the arctic go ahead?

Total votes: 385

Yes, to the highest bidder

4.9%

Yes, managed by neighbouring countries

6%

Yes, managed by independent third party

6.2%

Yes, following work to minimise damage/risk

28.6%

No, protect the land under a global commons

54.3%

Visit rics.org/modus now to vote in our latest global poll or to view past poll results.

Due to the volume of correspondence we receive, we regret that we are unable to print all letters or respond to every one individually.

The MODUS team// For Sunday

Modus Asia edition is the official publication of the Royal

For RICS

Editor Victoria Brookes // Art Director Christie Ferdinando

Institution of Chartered Surveyors in Asia: Room 2203v,

Editorial board Ian Fussey and Jaclyn Dunstan (UK)

// Contributing Editor Brendon Hooper // Art Editor

Hopewell Centre, 183 Queen’s Road East, Hong Kong

Roy Ying and Vivian Yuen (Asia)

Lauren Webb // Sub Editor Samantha Whitaker // Creative

Published by Sunday, 207 Union Street, London SE1 0LN

Asia advertising ROF Media

Director Matt Beaven // Account Director Stephanie Hill //

sundaypublishing.com

Bryan Chan +852 3150 8912 | bryan@rofmedia.com

Commercial Director Karen Jenner

Cover Corbis; Peter Crowther

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.

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Intelligence//

Image Corbis

:news :reviews :opinions :reactions

:grasberg mine, papua, indonesia

Producing around 600,000 tonnes of copper, 58m grams of gold and 174m grams of silver per year, the Grasberg mine has successfully become the largest gold mine and third largest copper mine in the world, but it has also had its fair share of political and environmental controversies in its near 40-year history. Discovered by Dutch geologists working for Shell in 1936, the mountainous area, which was initially known as the Ertsberg mine – and later the Grasberg mine located 3km away – started ore mining in 1972. Built at a height of 4,100m, it took considerable government funds and resources to support operations on the steep slopes, and in 1977 a main pipeline was subjected to an attack by an anti-government militant organisation. By the mid-1980s, owners Freeport-McMoRan identified US$40bn worth of reserves at Grasberg, and built a US$15m road for heavy equipment to access the site.

Though the owners argue the mine meets industry standards, there are on-going concerns about its environmental impact on surrounding river systems and groundwater, low wages for miners and the lack of benefits to the local community.

Intelligence//

Opinion

Building costs up as the East rises Tim Robinson MRICS EC Harris Asia

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s traditional economic superpowers struggle to emerge from the economic downturn, raising fears of a double-dip recession, the business community is increasingly focused on Asia and on capitalising on its future growth potential. As China and India begin to join more established economies, such as Hong Kong and Singapore, as key markets, what implications does this have for construction, which is so often a trusted barometer of economic growth?

According to research by EC Harris, the cost of construction in Asian countries has risen more than in most western countries over the past 12 months. Construction costs in nations such as the US, Germany, France and Italy have shown almost no change since 2010, and in Ireland, Spain and Greece, there has been a marked decrease, with prices falling by 14%, 8% and 5% respectively. In the same time period, construction costs in several Asian nations, including Hong Kong and Singapore, have shown a clear pattern of cost increase. Since this time last year in Hong Kong, for example, tender prices have risen by 8-12%.

A number of markets in the region,including Hong Kong and Singapore, have imposed measures to help slow property price inflation, but this is unlikely to prevent the near-term rise of construction costs for several reasons: Shortage of skilled labour. Many skilled construction workers are being incentivised to leave mature markets, such as Hong Kong, in favour of parts of the continent with high demand and larger growth programmes. Also, the construction industry has not attracted as many young people as in previous years resulting in an aging workforce.

In some places there is now a smaller pool of workers, who are trying to command higher wages. Some construction trades in Hong Kong have seen daily rates increase by 10% as they seek to capitalise on higher workloads.

Rising commodity prices. With commodities generally accounting for 10-20% of the cost of construction, this is an important factor. As the price of steel, copper and other commodities moves closer to all-time highs, and with increasing demand from the public and private markets, we expect contractors to pass on, rather than absorb, the increase, which would continue to erode their margins.

Increased demand. In 2010, the amount of work in the Hong Kong public sector increased by over 50%. With a similar appetite for growth across many other parts of Asia, this trend looks set to continue.

Higher interest rates and faster inflation. Largescale economic factors will continue to affect construction

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costs. In Hong Kong, for example, domestic inflation is currently running at 5.8% per annum, which inevitably impacts on labour costs.

All of these factors point towards a more fundamental change that has taken place in Asia over the past few years.

As Asian economies have started to develop more quickly, there has been an increase in local demand. Countries such as China and India, for example, are no longer just producers and suppliers, but are now also consumers of key goods, services and commodities. As a result, there is an additional burden on what is ultimately a finite amount of labour and resources, which is leading to price increases along the entire global construction supply chain.

With massive new-build programmes on the horizon in Asia, global suppliers are increasingly shifting their focus toward these emerging economies as they offer the greatest volume of work on a short- and long-term basis. And with the supply chain perhaps now prioritising the Eastern world it will, therefore, become increasingly important to start planning ahead to guarantee access to the raw materials needed for future projects.

Across Asia, and particularly in Singapore and Hong Kong, the outlook for workload in the private and public sectors is positive with significantly higher amounts of construction forecast than in the previous five years.

There is a commitment to major infrastructure projects and more development sites are being released in the private sector with consent to commence. As a result we can anticipate construction prices to continue rising at similar levels in the next 12 months, before levelling out in line with construction workload.

Tim Robinson is Head of Cost and Commercial Management at EC Harris Asia. echarris.com

market growth Construction costs in SIngapore have increased over the past year

China

Green leaders China and Japan are leading the way in the development of eco-cities, says a survey by the University of Westminster.

The comprehensive census highlighted 174 eco-based projects worldwide, with 23 in China, 17 in Japan and 16 in India. ‘Efforts to make cities sustainable, and innovations in urban development, have culminated in a new phenomenon [eco-cities], aimed at meeting the dual challenge of climate change and rapid urbanisation,’ said Professor Simon Joss, from the university.

18,140

The number of condominiums to be built in Jakarta over the course of 2012, up from 8,000 in 2011

Korea

High costs

Construction has begun on the Yongsan Landmark Tower in Seoul, predicted to become the world’s most expensive building. Although only 100 storeys tall, the cost of the land and the building is predicted to reach more than KRW4tn (£2.2bn). Designed by Studio Daniel Libeskind and built by Samsung Corporation, the tower will be fitted with the fastest lifts in the world, while GPS surveying technology will ensure its height is accurate to 25mm.

$81bn

The amount of preliminary projects (US$) Saudi Arabia has added to its pipeline since July, according to Citigroup

:One big question How is your local commercial property market performing?

Hong Kong The key issue is the sheer lack of available office space at any price.

Demand has changed from ‘firm’ to ‘tentative’. However, demand and supply were more balanced by the end of Q4 2011.

Jolyon Culbertson MRICS, Swire Properties, Hong Kong

China The tightening in residential property has led to demands for investment shifting into the commercial market. The rebound of rental for office particularly enhanced its attraction to investors.

Frank Jiang MRICS, Shanghai Urban Real Estate Appraisal Surveyors

Shanghai Investment demand remains strong in the office and retail sectors. Yields remained flat as expectations for future rental growth are positive. Stock remains limited in the retail investment market.

James Allan MRICS, Jones Lang LaSalle, Shanghai

Singapore There is continued demand for mass-market housing, although headwinds are getting stronger. Economic uncertainty could impact sentiments but long-term fundamentals remain strong.

Chris Fossick FRICS, Jones Lang LaSalle, Singapore

Tokyo Due to last year’s earthquake impact and the fact that available highyielding properties are decreasing in Tokyo, some investors are starting to look to Kansai and Western Japan.

Alexandre Giraud, Tokyu Livable, Tokyo Source: RICS Commercial Property Survey Q3 2011

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Opinion

news bites

Is the shiny allure of metals waning? i don’t think so

Firm step

Simon Rubinsohn RICS Chief Economist

M

etals of both the precious and base varieties have been generally strong performers in recent years, albeit for very different reasons. The former, most notably gold, are widely viewed as the investment bolt-hole of choice in a sea of uncertainty. The latter, meanwhile, have been underpinned by the healthy growth trend in emerging economies. However, the latest round of turmoil in the financial markets has cast a dark cloud over the commodity market, raising the possibility that the allure of gold may be waning just at the point when the worsening economic climate in the West spreads eastwards.

I suspect this is probably overstating the point. Safe havens will always be attractive and, in the current environment, with US and European policymakers scratching their heads about what to do next to alleviate the threat of a ‘double dip’, this will be even more the case.

Even if the immediate risk appears to be that of recession, the temptation to print more and more money in response is likely to provide a ready home among investors for gold.

Meanwhile, at this stage, contagion from the depressed West to the rather more upbeat East appears more possibility than probability. Remember, many of these economies have been hiking rather than cutting interest rates, and so have the scope to respond to any softening in demand. Significantly, China now accounts for around 40% of first-use demand for base metals; by contrast, the combined figure for the US, Europe and Japan is only around the 30% mark. The other supportive influence for many of these markets is the supply side. Disruption has been most visible in copper, but there have been obstacles in delivery in other areas as well.

Whether you see a resumption of the upward pattern in metal prices as a good thing rather depends on where you sit. In any event, after such strong gains, it may be that a period of more moderate growth will follow.

However, given the ongoing pattern of economic developments, it would be a brave call to suggest that gold or copper are going out of fashion any time soon. rics.org/economics

UK

Solar bridge On completion of its redevelopment in 2012, Blackfriars will become the world’s largest solar bridge, London’s largest solar array and the first railway station to span the River Thames.

More than 4,400 solar panels are being installed above the new station, currently under construction by Balfour Beatty, which should generate around half the station’s energy needs and reduce its annual carbon emissions by around 500 tonnes.

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Singapore

Foreigners’ tax To help curb excessive foreign real estate investment in Singapore, foreign investors will now have to pay an extra 10% stamp duty on residential property purchases.

‘Investment flows into our property market are now larger than before, and unlikely to recede as long as interest rates remain low,’ said Finance Minister Tharman Shanmugaratnam.

‘The additional buyer’s stamp duty should help cool investment demand, and avoid the prospect of a major, destabilising correction further down the road.’

Faithful+Gould has officially registered its Singapore and Shanghai offices with RICS. ‘Asia was the first area outside the UK for registered firms to be able to use the designation ‘Regulated by RICS’ and we look forward to communicating this to our clients,’ said Martin Riddett FRICS, regional director at F+G.

Strait ahead

Russia has given the green light for a 65-mile railway tunnel that will link Asia and North America across the Bering Strait. Although the project is not yet funded, the country is keen to pursue fossil fuel and mineral wealth in the Arctic, with predictions that the tunnel service could earn £7bn per year in freight revenues.

Quick stay

The 30-storey Ark Hotel, in the Chinese city of Changsha, designed to withstand a magnitude 9 earthquake, has been finished in just 15 days.

What’s more, not a single construction worker was injured during construction.

Watch a video of the project at youtube.com/ watch?v=Ps0DSihggio

Serviced stability The serviced apartment market in Vietnam could emerge strongly this year due to an increase in younger, short-term foreign professionals, says a report by CBRE. But the market also faces ‘falling rents and fewer tenants due to the worsening economic situation, as well as stiff competition from individuals buying apartments for sublease.’

China’s most established and credible real estate investment management forum 19 – 22 March 2012, Beijing, China Join us to gain industry intelligence, network with over 300 top real estate developers, funds, asset managers and investors and form new business repationships.

Over 70 speakers confirmed including:

Fan Wei Co-President & Executive Director Fosun Group, China

Freddy Lee Chief Executive Officer & Managing Director Shui On Land Limited, China

Stanley Ching Senior Managing Director, Head of Real Estate Group CITIC Capital, Hong Kong

REGISTER NOW! RICS members enjoy 15% discount off prevailing rates.

Register now and get the offer price on your phone Scan this QR pattern with the camera on your smartphone.

Don’t have a smartphone? You can also register and get the offer on our website.

www.terrapinn.com/reiwchina

Intelligence//

Insight

the valuation of green energy is a tricky business Charles Cowap MRICS Harper Adams University College

V

China

Enterprise zone Germany-based architecture firm gmp has been chosen to design a new financial centre for Nanjing. The masterplan, which will include a tower block complex of 10 buildings, will cover 80,000m sq with towers ranging in height from 120m to 200m. To provide office workers easy access to green spaces, a 28m-wide green belt will run through the scheme, while buildings will be cooled by outer façades that feature vertical shades to prevent solar heat gain.

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Physical, financial and other data Clear analysis of data: sensitivity analysis is likely to be important Clear, comprehensive reporting.

smart solution Solar power via photovoltaic panels is a viable source of green electricity

Valuations will have to be demonstrably soundly based in every step, fully and clearly explained with all assumptions clearly set out. This should serve the best interests of clients, practitioners and others in providing the valuation advice they need while ensuring the challenging conditions in which this advice is provided are fully appreciated.

Clients and valuers should then be able to proceed with the appropriate level of confidence. charles cowap MRICS is principal author of the RICS paper Valuation of renewable energy installations, which is due for publication in March. rics.org/rural

Singapore

Retrofit pilot Singapore’s Ministry of National Development has launched the Building Retrofit Energy Efficiency Financing Scheme to encourage the retrofitting of commercial buildings. Run

by Singapore’s Building and Construction Authority in association with United Overseas Bank and Standard Chartered, the scheme will enable building owners to obtain loans for retrofitting to the minimum Green Mark standard. It’s hoped the scheme will encourage mainly small or medium-sized businesses who are usually deterred by high upfront costs.

Images iStock; CUBE

aluers face the challenge of renewable energy generation: wind, solar, hydro and others. Energy and carbon continue to dominate the news, and recent reports suggest that the US$150 barrel of oil is not far away. Renewable energy installation has looked like a good investment, but it does carry risks. Despite the apparent novelty and certainty of this sector, much of that risk is traditional: covenant risk (how reliable are the suppliers and maintenance contracts?); government stability (should we place complete faith in current support regimes?); and technological/environmental risk (what if the wind doesn’t blow, the water doesn’t flow or the sun doesn’t shine? And to what extent might liability for obsolete equipment arise at the end of current leases or contracts?)

These are just some of the questions that will arise in the valuation of renewable energy installations. RICS has commissioned new guidance, which concludes that the valuation of energy installations is challenging. Each site is unique and there is a paucity of market evidence. Particular attention must be paid to: Detailed instructions Meticulous recording and evaluation of all information Careful selection, justification, application and adaptation of methods

Books :reviews

Kuwait

Japan

Slim living

(RICS Global Real Estate Weekly) (RICS Global Real Estate Weekly)

Euro The risks to construction output remain skewed to the downside until H2 2012 Canada Housing starts continue to surge, rising 8% last December

Rising

Falling

Order from ricsbooks.com

With living space at a premium, innovative house designs have become key to the residential construction market in Japan.

One recent example is STAY in Shinagawa, Tokyo. Designed by Studio Loop, the three-storey house has been built between a narrow 4.5m-wide strip of land between two existing houses, and squeezes in a parking space, a master bedroom, two study rooms, a living room, kitchen and roof terrace for a family with a young child.

Global

Land grabs Oxfam has warned that the rush to acquire land in developing countries is larger than previously thought, and may be fuelling conflict and human rights abuses. The charity has identified more than 2m km sq of land – the size of northwest Europe – as being sold, leased or licensed, mostly in Africa, to international investors in thousands of secretive deals over the past decade. This estimate is more than four times as much as that identified by the World Bank earlier this year. Though justified for growing food and biofuels, the land rush can be to the detriment of local people’s rights.

Gulf hub Kuwait’s international airport handles more than seven million passengers a year – and by 2020 this figure could triple, as the country becomes an increasingly important hub for the Gulf region. Architecture firm Foster + Partners has unveiled its design for a new terminal that will increase capacity to around 13m passengers a year upon completion in 2017, with plans for further expansion to accommodate up to 25m passengers a year. Spanning 1.2km, three symmetrical ‘wings’ will cover a 25m-high central atrium housing three levels. The project aims to become the world’s first LEED Gold rated terminal.

21.34%

Advice on how to build a home that will save money and energy and minimise greenhouse gas emissions.

18896 // £16.99

Drawing on a wide range of expertise, an insight on how companies can best position themselves for the growth in the clean-tech industry.

19024 // £29.99

The percentage overall land prices have risen in Thailand over the past four years

This third edition includes new chapters on topics such as the importance of sustainability in the built environment.

18890 // £29.99

Answers key questions, including how to begin thinking and designing ecologically and the difference between ‘green design’ and ‘sustainable design’.

18748 // £55

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Ahead of the first RICS Hong Hong Property Awards, we preview the firms and individuals nominated O

rganised by RICS Hong Kong, the annual RICS Hong Kong Property Awards aims to recognise the contributions and outstanding performances of agencies, teams and individuals across the industry, and to celebrate the talents and team spirit of surveyors, property developers, cost consultants, project managers and planners, to name just a few. RICS Hong Kong’s first annual dinner on 9 March will bring together the members and their guests for an evening of fun and entertainment, but the highlight of the event will be the presentation of the first RICS Hong Kong Property Awards. More than 50 entries have been received in 11 categories and, unlike many other awards that are made in the region, the RICS Hong Kong awards will recognise the people in the real estate and construction business at both an individual and team level, and will stand alongside the ‘must-have’ awards that RICS has established elsewhere in the world.

David Faulkner FRICS Chairman of the RICS Hong Kong Property Awards 2012 Organising Committee

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The nominations Sustainability Initiative of the Year

Hong Kong Science and Technology Parks Corporation (HKSTPC)

HKSTPC’s facilities management team focus on recycling, indoor air quality and energy-saving issues, working with partner companies to promote green initiatives and actively inspiring young people to engage in large-scale activities in collaboration with other organisations. The team also engage in environmental campaigns of EPD and public utility companies, often providing a venue and manpower for government, NGO and voluntary organisation environmental activities.

AECOM

In 2008, AECOM launched the Office of Corporate Sustainability (OCS) to promote sustainability within the organisation and deliver sustainable solutions to clients. In 2010, OCS grew to become a more strategic initiative to help put AECOM at the forefront of sustainability services in Asia. Subsequently, they have achieved LEED certification for AECOM’s office in Guangzhou and are currently supporting three other offices through the process.

Kwong Wah & Wong Tai Sin HospitalS

As well as installing photovoltaic panels and creating an integrative platform to promote the use of renewable energy and waste heat for clinical and non-clinical operations, the Kwong Wah Hospital and TWGHs Wong Tai Sin Hospital team are also looking to reduce hospital food waste. All hospital staff have adopted a Green Charter, and the team introduced an ‘Energy Saving Day’ to promote awareness, reducing electricity consumption by around 5,000kW.

03.12 // MODUS ASIA

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Awards preview//

Residential Agency Team of the Year

Knight frank

As one of the city’s most respected and successful residential teams, Knight Frank completed 160 sales and leases, 976 serviced apartment transactions and 47 lease renewals over 2011.

The team’s Relocation and Home Search portal catered for a major Deloitte relocation project, providing staff with online access to information

on orientation, leasing procedures and budgeted listings. The bespoke property management system has become the preferred choice for major corporates such as HSBC, on whose behalf they currently manage 200 tenancies. Staff are encouraged to participate in training and self-improvement courses to maintain high standards of service.

Project Management Team of the Year

Hong Kong Housing Authority (HKHA) The HKHA scheme to enhance pedestrian access to 29 hillside estates will be completed by the end of 2012, a year ahead of schedule. From assessing the feasibility of the initial designs to contract administration, the multidiscipline project team ensured statutory compliance while also taking the lead in developing new construction methods and specifications for innovative technologies such as prefabrication and external cladding.

This helped to reduce project costs and enhanced the overall energy efficiency. The client praised the team for completing the HK$650m (US$83.9m) programme, which includes 72 lifts and 18 footbridges, in a ‘proper and efficient way.’

CBRE

Over the past two years, the CBRE Project Management team have increased their revenue fivefold. They have also increased in size, from four to 25 staff, including architects, engineers, building services professionals and those with a legal background, bringing together extensive experience and expertise to offer a portfolio of services to clients covering all aspects of project management. In 2011, the team assisted a key client to achieve the first LEED CI Platinum rating in Hong Kong and, at the end of the year, they celebrated their 100th project appointment.

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HKHA

The new Responsive In-flat Maintenance Services (RIMS) team serves 700,000 households with an annual works expenditure of HK$200m (US$25.7m). The single team replaces a system where work requests were handled by different departments, providing a more effective, professional, innovative and customerorientated service to meet tenants’ needs and help to build a harmonious community. The team have effectively raised the level of maintenance service and communication with tenants with promotional activities and the addition of a hotline and call centre.

Property Management Team of the Year

Goodwill Management

Goodwill manage 33 properties in Hong Kong, including shopping arcades, offices and industrial buildings. The team strive to combine high-quality service with environmental responsibility, such as introducing recycling schemes at the Manulife Financial Centre in central Hong Kong (pictured). Regular courses and training days are organised to help maintain high-quality customer service, and the team support a variety of social organisations by donation and participation in voluntary activities, as well as providing work experience opportunities. In 2011, Goodwill received a total of 158 awards and recognitions for delivering best quality management services.

Harriman Property ManagemenT The Harriman property management team are the executive arm for Wheelock and Wharf Group, a publicly listed property developer and investor in Hong Kong.

Priding themselves on their unique HEART (Hearty, Enquiry, Assistant, Repair, Tools Backup) services, they demonstrated exceptional care to help new tenants and staff adapt to the One Island South office development in Wong Chuk Hang by publishing a handy neighbourhood guide – and achieved a 100% handover service satisfaction rating. In an annual customer survey, 94% of respondents rated the team ‘satisfactory’ or above.

DTZ

Managing 118 Connaught Road West – more than 40,000m sq of office and retail space – the DTZ team are dedicated to promoting environmental protection measures, such as participating in ‘Earth Hours’ and recycling schemes, and collecting computer equipment and electrical appliances for reuse and donation. As well as routine repairs and maintenance, they have also tackled the problem of the deterioration of chiller plants with a plan to reduce energy by 46%. The daily issues of individual properties are discussed at regular managers’ meetings with top management and on-site operation staff to find the most effective solutions.

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Best Project Team of the Year

Rider Levett Bucknall

Quantity surveying consultants Rider Levett Bucknall have been instrumental as part of a team including Mace and Simon Kwan & Associates to design and construct phase three of the Hong Kong Science Park development in Pak Shek Kok – a 100,000m sq sustainable development of six buildings, housing research centres, specialist laboratories and conference facilities. Using innovative green building techniques such as passive design, high-performance façades that allow natural ventilation and solar-cooling water walls, the project team hope to achieve overall design and construction energy savings of 70%.

Knight Frank

Last year saw the culmination of a six-year working relationship between Knight Frank and the Hong Kong Jockey Club (HKJC) in producing a comprehensive commercial feasibility study for Hong Kong’s Central Police Station (CPS). The assignment also involved working with consultants including Herzog & de Meuron, Purcell Miller Tritton, Rocco Design Architects, Ove Arup & Partners, J Roger Preston Limited, Winkle Picker, David Elliott, and Evans & Peck. As a result, the HKJC is now working with the government to revitalise the police and prison buildings, as well as develop an art gallery.

Hong Kong Housing Authority

Serving 700,000 households with an annual works expenditure of HK$200m (US$26m), the HKHA’s Responsive In-flat Maintenance Services (RIMS) team have innovatively replaced a complicated workflow system. Work requests used to be handled by different parties according to the nature and cost of work, whereas now an RIMS In-flat Technical Team provides a responsive service for minor repairs and more complicated works to each HKHA estate.

The teams’ efficiency and high service quality has seen an average customer satisfaction level of 81% across 200 estates.

Shang shi Real Estate Holdings

Developed in association with Sumitomo Forestry, the Shanghai East Low Carbon Technology Industry Company and the Canada Wood Group, the 162,000m sq He Villa in the Lakeside Sanctuary commercial development in Zhujiajiao town aims to become ‘a low-density international eco-community.’ It is constructed with a high-end wood frame to be energy efficient, seismically stable and environmentally friendly.

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Awards preview// Young Achiever of the Year

Oliver Rigg

Raymond Ho

David Chang

Ross Criddle

At CBRE, Oliver has made a big impact in a short space of time.

One of his greatest attributes is his ability to build relationships – between clients, colleagues and other members of the real estate industry. In 2011 he completed transactions for VTB Capital and BT, to name just a few.

Raymond began his career at Savills in 2005 as senior marketing assistant and, in 2011, was promoted to director. He builds strong relationships with clients and has been involved in significant deals, including the sale of a HK$1.148bn (US$148m) property in 2010.

Before joining CBRE, David worked in corporate strategy for Andersen and Google in the US, and volunteered for NGOs in Bangladesh. His varied experience and skills can be utilised in multiple roles within strategy, business development, marketing and operations.

After eight years at Colliers International in the UK, Ross joined Knight Frank in 2010 as associate director. In his first major assignment for the Hong Kong Jockey Club, Ross helped to coordinate a multidiscipline team of consultants, surveyors and retail agents.

CBRE

Savills

CBRE

Knight Frank

Industrial Agency Team of the Year

Savills

Describing their work as synergising ‘revitalisation services’ with ‘collective sale services’ to meet the challenge of strata-ownership, the team achieved collective sales success in 2011 with the Cheung Fai Industrial Building (pictured) for HK$470m (US$61m) and the Nan Fung Industrial Building for HK$375m (US$48m). Made up of two chartered surveyors and three surveying graduates, the team’s market share reached 36% for investment deals over HK$100m (US$13m) last year. While fully adhering to Savills’ internal anti-bribery and business ethics codes, the team helps advise clients on permissible usage under town planning, land leases, waivers and occupation permits.

CBRE

The CBRE Industrial & Logistics Services team (ILS) raised the bar in 2011 in this often-neglected sector. Led by senior director Darren Benson, the ILS team cover the full spectrum of industrial requirements, including warehousing and distribution centres, factories for manufacturing, business parks, data centres and high-tech space for research and development. They are also highly regarded for their high-quality service, market expertise and consistent delivery. The team’s most notable success was their work on the Interlink development, achieving close to full occupancy before the building went into operation in Q1 2012.

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Awards preview// Retail Agency Team of the Year

Cushman & Wakefield

Comprising only five professionals with three support staff, the team have successfully delivered a number of challenging requirements for both established Hong Kong retailers and first-time entrants in the market. Their achievements in 2011 included securing the first flagship stores for Forever 21 (Causeway Bay), Burberry (Canton Road), G-Star (Causeway Bay) and Gap (Queen’s Road Central), all of which were in prime retail locations and often secured in the face of very strong competition. Of particular note was its specialist Food & Beverages team’s work in creating a wedding banquet floor at the ‘The One’ – a 29-storey retail complex developed

by Chinese Estates Holdings.

Best Deal of the Year

Knight Frank

The 146 owners of Arts Mansion on Conduit Road tried many times over the past decade to initiate a collective sale, but without success.

Knight Frank approached the owners in August 2010 and, after an intensive presentation and lobbying process, completed a collective sale in August 2011 for HK$1.85bn (US$238m) – Hong Kong’s largest private collective sale – with a participation rate of more than 90%.

Throughout the entire process, from initial contact to the completion, the team strived to maintain a fair and open approach, and their professional and ethical attitude was a key part of their success.

CBRE

As Hong Kong’s financial sector has grown, so too have the needs of the Securities and Futures Commission (SFC). SFC approached CBRE to consolidate their operations into a single building, and the team identified a six-storey, 11,600m sq opportunity at Cheung Kong Center – a location that perfectly met SFC’s requirement in terms of timing, and also had plenty of room to expand.

Colliers International

Headed by director Wayal Chiu (pictured left), Colliers’ industrial team have reacted to the difficulties in the global property market by introducing their own unique style of service differentiation. Through the unwavering efforts of Jeremy Barnett (pictured below left), the team achieved 2011’s largest industrial deal, which involved more than 23,000m sq of warehouse space being leased to a world-famous luxury brand. As well as devising a customised snapshot of specific market recommendations for the client, the team also presented a structured proposal mixing local knowledge and global expertise.

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Office Agency Team of the Year

Colliers International

organising responsive press conferences to share thoughts and information on market changes. Many large companies, such as Canon and Ove Arup, continue to use and refer business to the team – a reflection of their professionalism and level of customer service.

The Kowloon Office Services team have successfully established new analytical tools to help their clients make informed decisions.

They also contribute to the community by regularly

CBRE

For the CBRE Office Services (OS) team, 2011 has been a stellar performance year, with major deals including Central’s largest new set-up (Nissan), new letting (SFC), rent review (JP Morgan), and lease renewal and restructure (BNP Paribas). The CBRE OS team also participated in a range of charity events in the community.

property person of the year

to be revealed…

Who was Hong Kong’s most outstanding property person of 2011? Selected exclusively by the jury panel, this award category has no nominations, as the winner will be announced at the RICS Hong Kong Property Awards ceremony. The winning firms and individuals in all 11 categories will be presented with their awards at the inaugural RICS Hong Kong annual dinner on Friday 9 March at the JW Marriott Hotel, Admiralty, Hong Kong. Find out more at ricsasia.org/awards.

The Office Agency team gained significant successes in 2011, closing major transactions for IBM, Ralph Lauren, ING Life Insurance and Australia Consulate Generale. Of particular note were their services to FTI Consulting, providing strategic advice and assisting in negotiations to finalise a new lease in The Center, Hong Kong.

:the jury The panel evaluate all

applications in an impartial manner

Nicholas Brooke PPRICS, chairman, Professional Property Services

Piers Brunner Raymond Chow MRICS, Asia CEO, FRICS, executive Colliers International director, Hongkong Land

Edmond Ding President, Chartered Institute of Building (HK)

Colin Fitzgerald Managing director, Knight Frank

Professor Chau Kwong Wing Past president, HKIS

Ada Fung Deputy director of housing, Hong Kong Housing Authority

Simon Reid-Kaye Partner, Allen & Overy

Professor Teng Jin Guang Hong Kong Polytechnic University

Andrew Weir Head of real estate Asia Pacific, KPMG

Gareth Williams Gareth Williams & Associates

:The categories The entrants AECOM Asia Colliers International CBRE Cushman & Wakefield DTZ Goodwill Management Great Eagle Properties Management Harriman Property Management Henderson Sunlight Property Management

Cushman & Wakefield

Hong Kong Housing Authority Hong Kong Science and Technology Parks Hysan Jones Lang LaSalle Knight Frank Kowloon West Cluster, Hospital Authority Kwong Wah Hospital and TWGHs Mace Nan Fung Development Rider Levett Bucknall

William Taam MRICS, chairman, Asia Regional Council, CoreNet

Savills Shang Shi Real Estate Holdings Simon Kwan & Associates Agency awards Sustainability Initiative of the Year Residential Agency Team of the Year Project Management Team of the Year Property Management Team

of the Year Best Project Team of the Year Industrial Agency Team of the Year Retail Agency Team of the Year Best Deal of the Year Office Agency Team of the Year Individual awards Young Achiever of the Year (under 35 years old)

Property Person of the Year

Be part of next year’s awards Find out more about the winning firms from 9 March at ricsasia.org or in the next issue of Modus Asia. For information on how to enter the RICS Hong Kong Property Awards in 2013, visit ricsasia.org/awards

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Redevelopment

Preservation

Profile//

‘

My background is actually in aviation.

After studying in the UK in the 1990s, I returned to Hong Kong to join the Jardine Matheson Group as an executive trainee.

My first job was at Jardine Aviation Services, in 1998. In 2001, I was seconded to the Information Technology and Broadcasting Bureau of the HKSAR Government as assistant secretary, promoting e-government services. I later went back to Jardine Aviation Services, before moving to Jardine Matheson head office in 2005. I entered the property industry in 2006, and joined Hongkong Land, which is part of the Jardine Matheson Group, and became senior asset manager in its Commercial Property department. Two years later, I moved to Singapore with my family to head Raffles Quay Asset Management (RQAM), which is the asset manager of Marina Bay Financial Centre (MBFC) and One Raffles Quay.

I have a BSc from the London School of Economics and Political Science, an MBA from the Hong Kong University of Science and Technology, and an RICS-accredited MSc in real estate from Reading University in the UK. My qualifications have equipped me with good business management skills, while my real estate degree gave me valuable insights into working with property professionals at RQAM. RICS is very important to me. After completing my MSc, I talked to RICS members and the local office about RICS’ professional qualifications. I applied for membership through the Senior Professional route, and there’s no doubt that the qualification sharpened my ability to view things from the perspective of other similarly qualified industry professionals, with whom I interact on a daily basis. And as there is a rigorous process to obtain this qualification, and maintain its standards, it helps to further professionalise Singapore’s property market, and raise the overall standards of real estate professionals.

No two days are ever alike as the CEO of RQAM at the Marina Bay Financial Centre (MBFC), but most days I work closely with our tenants, speaking to our shareholders and liaising with my management team

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on the asset management and marketing of our developments. The first two office towers were built during the global economic crisis, which affected business sentiments. However, we managed to achieve 100% pre-commitment for both towers one year ahead of their completion in 2011. This was helped by the swift economic recovery, the determined efforts of our commercial marketing team and the support of tenants, who took a long-term approach to their leasing decisions.

The completion of Tower 3 this year marks a milestone for MBFC – as well as for Singapore – as it represents completion of Singapore’s largest Grade A office space.

I’m also looking forward to the opening of Phase 2 of the Marina Bay Link Mall, of which the final component is housed on the first three floors of Tower 3. It will offer more dining choices for our new downtown community of office workers and residents, and make MBFC an even more attractive lifestyle destination at Marina Bay. The Singapore government has forecast that the economy is expected to moderate its growth this year due to the uncertain global macroeconomic climate. This will likely affect sentiments and demand in the office and residential markets. While it’s too early to tell where these areas of growth will be, our experience has shown that key

‘RICS helps to further professionalise the property market and raise overall standards’ drivers are likely to be companies that have already factored business cycles into their long-term lease planning, and ultra-highnet-worth individuals who continue to view luxury homes as a sound investment.

Given that I spend a considerable amount of time in the office, I strive for a good work-life balance by spending time with my family. I have two young children and enjoy taking them out to eat dim sum on weekends, cycle along the beaches or go for a leisurely stroll near home.’

’

Recently gaining membership through the Senior Professional route, Wilson Kwong MRICS heads up Raffles Quay Asset Management, the asset manager of Marina Bay Financial Centre and One Raffles Quay

1o minutes with‌

Wilson Kwong CEO, Raffles Quay Asset Management, Singapore Interview by Brendon Hooper Photograph by Frank Pinckers

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going UNDERGROUND

Ten ambitious subterranean constructions around the world Compiled by Tim Abrahams

Joe and Rika Mansueto Library chicago, us Its reading room may sit above ground level, but the bulk of the University of Chicago’s new Joe and Rika Mansueto Library is beneath ground. A five-storey chamber houses the collection, along with an automated storage and retrieval system (ASRS). The books and journal volumes are densely packed

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into metal bins measuring around 45cm high, 60cm wide and 1.2m deep, which allows them to be compacted into seven times less space than conventional library shelf space. About 35,000 bins in all are stacked into racks around 15m high.

The ASRS consists of five robotic cranes that move along a track between the racks, retrieving the requested bin and

depositing it into a container at the library desk. A staff member can then open the bin, scan the barcode on the book and hand it to the student.

The system makes Mansueto’s collection of around 3.5m books immediately accessible, and the process should take the same amount of time as it does for a student to walk from his or her desk to the main library desk.

Gotthard Base Tunnel Switzerland The drilling of the world’s longest rail tunnel may have been completed in October 2010 after 14 years, but the high-speed trains it is designed for won’t be running through it until the end of 2016. Some 7km longer than the Channel Tunnel, the 57km Gotthard Base Tunnel will revolutionise transport across Europe.

Journey times between Zurich and Milan will be cut by at least an hour, with trains travelling through the tunnel at around 250km per hour.

The main purpose of the

new rail route – which is part of the AlpTransit project – is not for passengers, however, but for freight, which currently must travel along slow, dangerous alpine roads. Although there are already tunnels in this area of the Swiss Alps, they are not at base level, which prevents the laying of high-speed track. The new tunnel, which cost around £6.5bn to construct and necessitated the excavation of some 24m tonnes of rock, will take around 300 trains a day, providing a vital connection in the pan-European high-speed network.

Underground projects//

20th Century Castles Kansas, US The decommissioned nuclear missile launch facility where Edward Peden has lived for 16 years is the headquarters of a thriving real estate business. ‘We sold our first missile site in 1995.

As of January 2011, we have sold 55 of these properties,’ he says. 20th Century Castles currently has 11 sites for sale, such as a facility in Upstate New York’s Adirondack State Park with its own runway and 20 acres of land, on the market for US$4.6m (£3m). Cheaper is a site near Tuscon in Arizona, previously used for firing the Titan II ballistic missile.

It cost US$20m to build in the early 1960s, and can now be yours for US$540,000 (£350,000).

While Peden is having trouble finding any more sites, the existing ones are appreciating in value.

‘These properties are rare, collectable real estate that have continued to grow in value over the years, despite the current economic conditions.’

wiroa station wine cellar bay of islands, New Zealand Set in an extraordinary development in the far north of the country, the Wiroa Station Wine Cellar is part of an ambitious project to combine a working sheep farm with a luxury residential beach scheme. Although the development, which stretches over 500 hectares, has 25 plots for different owners, it also features several shared facilities, including the wine cellar. Part of the

developer’s plan is to ‘underbuild’, keeping this working in perpetuity by obliging owners to sign up to ongoing conservation covenants. The area is also protected by strict planning regulations – an issue that is inspiring an increasing amount of underground construction all around the world. Restricted to 25m sq, and set into the hillside to reduce the presence on the skyline, this simple building houses wine stock and provides a sceneryviewing platform.

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Shanghai Culture Plaza Theater Shanghai, China Although huge swaths of Shanghai have been demolished over the past decade, this project respects the city’s historic preservation by going underground. The Shanghai Culture Plaza is within the former French Concession on a site that previously housed a dog-racing track, then an auditorium for political and cultural events and, finally, a central flower market. Its main feature is a theatre that covers 570,000m sq of the total 650,000m sq of

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subterranean floor space, qualifying it as the largest underground theatre in the world. Although, generally, anything goes with development in Shanghai, digging down was the only way to get around height limitations in this sensitive area of the city. The surrounding buildings are six stories high, but this is still too low for the kind of stage needed to put on musical performances. Asia’s Broadway is therefore below ground, with the flowing entrance acting as a centrepiece for a park with paths and water flowing around it.

PATH Toronto, canada The first tunnel to connect commercial properties in downtown Toronto was built in 1900. Now, according to Guinness World Records, PATH is the largest underground shopping complex in the world, with 28km of arcades. So far, the subterranean labyrinth connects around 1,200 shops, as well as 50 offices, 20 parking

garages, five subway stations and a railway terminal. Each segment of the walkway is managed by the owner of the property through which it runs, with about 35 corporations coordinated together under one signage system. The complex is effectively a means to keep Canadians shopping during the Toronto winter, where temperatures average around -5˚C in January.

A new underground parking facility is being built for the 1,500 employees at Rambam hospital, which is home to one of the world’s best trauma centres, treating injured Israeli soldiers in wartime and masstrauma casualties following acts of terrorism. In the event that the hospital comes under sustained attack, the new structure can be rapidly transformed into a 2,000-bed hospital capable of withstanding conventional, biological or chemical weapons.

Construction began in October 2010 with an enormous 7,000 cubic metres of concrete poured over 36 hours.

As well as being underground, the emergency hospital will sit 8m below sea level and is designed to be able to generate its own power, and store enough oxygen, drinking water and medical supplies for up to three days.

Images Stu Phillips, Alamy

Rambam Health Care Campus Haifa, Israel

Underground projects//

Hebridean Earth House South Uist, Scotland

No 7 Subway Line Extension New york, US The New York City subway is the busiest underground transport system in the western hemisphere, providing more than five million rides a day. The extension of the No 7 line from Times Square towards the Jacob Javits Center will not only boost the capacity of the network, but is an integral part of a redevelopment plan drawn up by New York’s Department of City Planning for the west of Manhattan. The construction of the tunnel, plus a new

station at 34th Street, will provide public transport access to the Jacob Javits Convention Center, the lack of which has been a problem for the facility since it was completed in 1986. In addition, it provides huge opportunities for the redevelopment of the Hudson Yard area, which was rezoned in 2005 from industrial to commercial and residential. As a result, a plaza of 16 towers providing 1.1m m sq of office space is now proposed. The subway extension is 2km long and is expected to be operational by the end of 2013.

Situated in Askernish on the island of South Uist off the north-west coast of Scotland, the earth house is one of only eight registered underground residences in the UK. It was built by excavating a cavity from an existing hill and then constructing a cube inside the hollowedout space. Three sides were built from Polarwall, an insulating concrete formwork, with the fourth glazed. The house, like traditional Scottish stone cellars, has a barrelvaulted ceiling, but here it is lined with wood. Inside, it combines traditional features such as ledge and brace doors with the conveniences of a modern detached house.

Subsurface temperatures are stable, so it’s cool in summer and warm in the winter, and the issue of light is dealt with by the glass façade and prisms built into the roof. The result is energy costs that are 20% of the average for a conventional house.

Earthscraper Mexico City Bunker Arquitectura’s subterranean skyscraper addresses the need for new office, retail and living space in Mexico City without falling foul of laws that prohibit the demolition of historic buildings and building above eight stories. The earthscraper would sit

beneath the main plaza, which at 57,600m sq is one of the largest in the world. The inverted pyramid would have a central void to give all habitable spaces natural light and ventilation.

The first 10 stories are dedicated to a museum, followed by 10 stories of retail and housing, and a further 35 of office space.

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tapping reserves

Groundwater is the world’s most extracted raw material Illustration by Ian Dutnall

transpiration

evaporation

35,000,000bn m3

Other uses

The total volume of fresh water on Earth.

Worldwide groundwater usage

97%

of the planet’s accessible fresh water is stored as groundwater in underground aquifers.

30%

Groundwater is renewed globally at a rate about equal to 30% of the rate of renewal of surface water.

373,000 3 billion m

Covers 2.2m km sq, under Chad, Egypt Libya and Sudan, and is the world’s largest ‘fossil’ water aquifer system, meaning that the water is ancient and non-renewable.

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13% 48%

18%

19%

Managed Aquifer Recharge (MAR) is the process of adding a water source to aquifers for withdrawal at a later date. Since 1995, more than 400 sand dams have been constructed in the Kitui District of Kenya.

Each dam provides at least 2,000 m3 of storage so that there is less travel time to obtain water, and supplies are more readily available in the dry season.

Agriculture

of global water withdrawals are from groundwater (as opposed to surface water).

Percolation

Underground dams in Kenya, Africa

Nubian Sandstone Aquifer System, Africa

Drinking water

Energy and Industry

21%

100,000+

Groundwater renewal periods vary from 10 years to more than 100,000. Aquifers with a renewal rate of less than 0.2% are classed as ‘non-renewable’.

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The world’s 37 great aquifer systems cover just under a quarter of the entire land surface.

Stormwater harvesting in Salisbury, Australia

The Aquifer Storage Transfer Recovery project uses urban stormwater harvested from a residential and industrial catchment, which is treated in a reedbed wetland and injected into a limestone aquifer 160-180m below ground. The system secures continuity of supply in dry seasons and is a sustainable solution to stormwater processing.

Sources: UNESCO (Non-renewable Groundwater Resources; Groundwater Resources of the World and their Use); RICS Water Scarcity Report; groundwateruk.org; waterwise.org.uk; mstbrazil.org; futuredirections.org.au; rainwaterharvesting.org; nwc.gov.au; igcp-grownet.org; gwrsystem.com

Underground projects// Water breakdown

Rainwater harvesting in Chennai, India

Oceans 97.5%

Chennai gets an average of 1,300mm of rainfall every year, but nearly 65% is lost through evaporation and surface runoff to the sea. Most offices and residential buildings now have rooftop rainwater harvesting systems.

The collected rainwater can be stored for direct non-potable purposes or pumped into groundwater aquifers for later use.

Freshwater 2.5%

Freshwater Glaciers 68.7%

precipitation

Groundwater 30.1%

600-700 billion m3

Agriculture as a proportion of groundwater use

Global withdrawal of groundwater per year, making it the world’s most extracted raw material.

% 85 4% isia rica 8 n u f T A h t Sou 80% Spain

Groundwater as a source of drinking water

100%

90%

88%

70%

Austria and Denmark

Italy

Hungary

60%

Germany, Greece, Switzerland Belgium and and Poland Netherlands

Surface and atmosphere 0.4%

Sa In udi dia A 89 rabi % a9 0%

Permafrost 0.8%

Bangladesh 77%

Arge ntina 70% US 6 8% Aus tra lia Me 67 xic % o6 4%

56% France

Indirect potable reuse in Orange County, US

The Groundwater Replenishment System (GWRS) takes highly treated wastewater and purifies it using a threestep treatment process of microfiltration, reverse osmosis and ultraviolet light 3 with hydrogen peroxide. The GWRS replenishes the groundwater basin Covers 450,000km with 265,000m3 of drinking water sq, under the states per day, which also prevents of South Dakota, contamination by Nebraska, Wyoming, seawater.

Colorado, Kansas, Oklahoma, New Mexico and Texas.

The Great Artesian Basin, Australia

Ogallala Aquifer, US

billion m

billion m

64,900 3

Covers 1.7m km sq, (22% of the Australian continent). The water is up to 2m years old and is estimated to be enough to fill Sydney Harbour 130,000 times.

4,070

Guaraní Aquifer System, South America

The Chalk, South East England

billion m

billion m3

37,000 3 Covers 1.2m km sq – 70% of it below Brazil, 19% Argentina, 6% Paraguay and 5% Uruguay. Around 70m people have access to the aquifer.

6.65

Covers approx 13,000km sq and provides 55% of all UK groundwaterabstracted drinking water. The individual boreholes can yield more than 10m litres per day.

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Law advice//

Focusing on

contractual claims Illustration by Mitch Blunt

‘Claims’ is a word that can mean different things to different people. It can cause emotional flare-ups, strained relations, endless exchanges of correspondence and considerable resources. A claim has been defined as the assertion of a right to, a demand or a request for something.

That ‘something’ in the context of a building contract can be an extension of the time for completion and/or additional payment under the express or implied provisions of the contract.

Claims must be distinguished from disputes and variations. When the contractor makes a claim, he is simply putting forward a statement on his contractual entitlement. However, if the claim is not accepted or there is a failure to reach consensus, it may become a formal dispute.

Variations can manifest into claims when the contractor believes he has a contractual entitlement, for which he could not be sufficiently compensated under the contractual machinery for valuing variations.

if the claim is not accepted, or there is a failure to reach consensus, it may become a dispute

ORIGINS AND BASES Contractual claims must originate from particular clauses in the contract. A grant or refusal of an extension of time for completion does not necessarily entitle the contractor to a claim for additional payment.

Neither is it necessary for the time for completion to be extended before the contractor can make a claim for such additional payment. That regular progress or completion of the works has been disrupted, prolonged and/or materially affected is what forms the basis of the contractor’s entitlement. The expression ‘materially affected’ means that trivial delays and disruptions must be absorbed by the contractor and, therefore, only circumstances which substantially affect progress and/or completion of the works are recognised.

the employer to claim payment from the contractor or to extend the Defects Notification Period are found in several clauses in the contract form.

CLAIMS BY CONTRACTOR The contractor has 28 days from being made aware of the event or circumstance giving rise to the claim to notify the engineer. Failure to give a notice within the 28-day limit disentitles the contractor from claiming an extension of time and additional payment, and discharges the employer from any liability for the claim. Any other notices called for under the contract, and the supporting details which are of relevance to the claim, are also required to be submitted.

The contractor has to keep such contemporary records as may be required to substantiate his claim and make them available for inspection by the engineer. A fully particularised claim must be submitted within 42 days of the contractor being made aware of the relevant event or circumstance. If the event has a continuing effect, interim claims have to be submitted at monthly intervals, culminating in a final claim within 28 days of the end of the effects.

In the final reckoning, any claim for time or additional payment must be responsibly assessed by the engineer without delay and within the contractual framework so that, importantly, the employer pays no more and the contractor recovers no less.

Eugenie Lip FRICS is head of KPK Contracts Support Group and a director with KPK Quantity Surveyors. kpkqs.com.

CLAIMS BY EMPLOYER Where the employer considers he is entitled to claim payment from the contractor including claims for delay damages, breach of contract by the contractor (or any other claims under the contract), or an extension to the Defects Notification Period, he (or the engineer) must give a notice to that effect as soon as practicable. The notice must be accompanied by particulars specifying the relevant subclause and/or basis of the claim with substantiation of the amount claimed and/or extension to the Defects Notification Period. References to Sub-Clause 2.5, which entitles

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Easing the

pressure In an effort to cool down the real estate market and curb speculation, China has launched property tax trials in Shanghai and Chongqing, two of the fastest-growing cities in China. Kam-hung Yu FRICS considers its implications

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Shanghai and Chongqing have experienced strong economic growth and rapid urbanisation over the past 20 years, which has led to skyrocketing house prices. The high house prices have adversely affected affordability, especially for young people, and could be well be a cause of economical instability and social unrest in the local community. It’s claimed that one of the major reasons for the high prices is that the local governments rely heavily on land sales to finance their expenses. The new property tax pilot programme, therefore, not only attempts to regulate the over-heated property market, but also to expand the tax base, which will enhance the stability of tax source for local governments.

There are two major problems with the existing property tax system in China: firstly, the tax base is narrowly defined, although there are many types of taxes; and secondly, the taxable value is not based on current market value but mainly on historical cost. There are several types of taxes that are payable by house purchasers or sellers including Stamp Duty, Land Appreciation Tax, Title Deed Tax and Business Tax. Many properties, however, are subject to exemption, for example, private residential properties, properties in rural areas, owner-occupied properties and properties for government or military uses.

Besides the narrowly defined tax base, most of the taxes focus on property

Property tax// transactions while only a few are based on holding properties. Among those related to property holding, the taxable value is mainly based on historical cost instead of market value. As a result, the tax revenue will not grow alongside the appreciation of property. The new property tax pilot schemes in Shanghai and Chongqing would be a major step for the central government towards a property tax reform.

The new property tax came into effect in October 2011. Table 1 (right) shows that in Shanghai the emphasis is on newly acquired residential units for investment purposes, whereas in Chongqing the focus is mainly on the luxury residential sector.

To understand the burden imposed by the new property tax on property owners, two scenarios are shown in Table 2 (page 39). To simplify the situations, it’s assumed that the subject property is luxury type and for investment purpose only. No exemption areas are considered in both studies.

In Table 2, the percentage of the new tax against the rental incomes is calculated.

For properties in Shanghai with a price lower than the twice the benchmark price, the tax rate will reduce the potential rental income by almost 10%. For properties that have a greater price, the tax rate will account for more than 15% of the potential rental. The impact in Chongqing is more severe: the benchmark price in 2011 is CNY4,970.5 per m sq. If a local investor

purchases a new luxury unit with a price greater than three times the benchmark price, assuming the exempted area is not applicable and the gross yield remains the same, the tax rate may account for over 20% of rental income. On the other hand, the tax rate will remain flat at 0.5% of the purchased price for non-residents of the city (around 10% of rental income), despite the fact that they are not entitled to any tax-exempted floor area.

The property tax rates in Shanghai and Chongqing are much greater than those

in other Asian countries, if the exempted floor areas and personal income tax are not taken into account. In Singapore, the tax rate has been revised to a progressive rate, up to a maximum of 6% on annual rental.

In Hong Kong, the property tax is 5% on government estimated annual rental, while in Macau the tax is 6% of estimated annual rental. Hong Kong and Macau introduced a special stamp duty to curb the resale of residential properties but have not imposed any additional tax against holding flats for long-term investment. >>

Table 1: Summary of the new property tax in Shanghai and Chongqing Shanghai

Chongqing

Property location

Whole administrative district

Nine major districts of the city

Types of residential units included in the new tax

Residents of the city: newly purchased second (or more) residential unit(s) Non-residents: newly purchased residential units

Residents of the city: detached houses; and luxury residential units with price higher than twice the benchmark price Non-residents: second (or more) residential units

Floor area exempted

60m sq per person

Residents of the city: Detached houses purchased before 28 January 2011: 180m sq per family.

Newly purchased luxury residential units and detached houses: 100m sq per family.

Non-residents: no exempted area

Benchmark price

Average price of new residential commodity housing over the past year

Average price of new residential commodity housing over the past two years

Annual tax rate (Percentage on the transacted unit price)

Progressive rate – 0.4% for property values lower than twice the benchmark price - 0.6% for properties higher than twice the benchmark price

Residents of the city: 0.5% for properties lower than three times the benchmark price 1.0% for properties between triple and four times the benchmark price 1.2% for properties higher than four times the benchmark price Non-residents: 0.5%

Calculation

Tax = Taxable area x Transacted unit price x Corresponding tax rates x 70%

Tax = Taxable area x Transacted unit price x Corresponding tax rates

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The new property tax in Shanghai and Chongqing would inhibit investment and curb the purchase of housing for speculative purposes, due to the high tax rate and differential treatment of non-residents in Shanghai. However, in Chongqing in 2011 it was reported that only around 3,400 of the existing detached houses should pay the new property tax, which indicates quite a narrow tax-base and means that the tax itself may not have a material effect on the housing market in Chongqing in the short term.

With the introduction of the new tax, the demand for residential units was expected to shift downwards, and the prices of the residential units fall. However, before the effect of the new property tax was seen, the global economy – as well as the monetary policy in mainland China – changed. Developers in Shanghai and other cities started to cut prices to stimulate sales, due to cash flow pressures caused by tight credit policies and the government’s continued tightening measures on the real estate market (for example, a property tax and restrictions on home purchases).

With this, the first- and second-hand housing transaction volume all over China has begun to slump. However, the data in the market has not been enough to comprehend the net effects of the new tax on the property prices and the rental levels.

Although house prices have started to decline, it is expected that the government is unlikely to relax the home purchase restrictions and other control policies on the property market in the near future, and house prices in China were expected to continue to decline in the last quarter of 2011. If house prices decrease to a reasonable level, it will help the government promote the property tax to cities other than Shanghai and Chongqing.

Sustainable market The property tax pilot programme is a constructive step for mainland China to build a sustainable and prosperous housing market. However, it’s not an easy task and considerable difficulties will be encountered in implementing and promoting the property tax to the whole country. The following issues should be considered by the central and local governments to build a successful system: To establish an efficient and transparent property registration and management system. The importance of a reliable and comprehensive land registration system to the process of property valuation is well recognised. A similar property registration and management system would imply

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that the investors would be more open with transactions and the government could monitor taxes better. However, the property rights are quite complex due to historical reasons. Other than in Shanghai, the general public has limited access to the title registration system, which negatively affects the reliability of the system and has led to insufficient public knowledge.

To develop a market-value-based taxation system. The property tax in Shanghai and Chongqing is now based on historical transaction prices. However, the local governments have also indicated that a value based on valuation will be used in the future. The market-value-based approach could generate more revenue for the local governments and would be more efficient in inhibiting residential units being held by the rich. In this regard, it is suggested a market-value-based valuation system should be enforced in future. To support this, the valuation methods should be fair, open and consistent. It is suggested that China should promote the development of an independent professional valuation institution and professional appraisers.

To establish a fair and open appeal mechanism. If a market-value-based approach is used in the long run, many arguments related to the valuation will appear. Therefore, a fair appealing system is important to build the creditability of the new property tax system among taxpayers.

Accommodation is a basic need and it has become the largest burden for citizens residing in the urban areas of China. The tax rates in the pilot scheme show the determination of the Central Government of China to discourage people from holding luxury units and second homes as a form of investment. This would help to minimise the poverty gap, but would inevitably affect the property development sector as well as the wealth of the house owners.

It could take a long time for the new property tax to be efficiently and effectively imposed nationally in China.

However, the current scheme in Shanghai and Chongqing is the first step in the process. To implement the property tax system successfully, the government should build an efficient and transparent property registration and management system, develop a sound market-valuebased valuation system and establish a fair system for appeals.

Kam-hung Yu FRICS is senior managing director in Valuation and Advisory Services at CBRE for Greater China. cbre.com.hk

This page: Chongqing Previous page: Shanghai

Property tax// Table 2: Impact of the property tax on rental income (scenario analysis) Shanghai: Benchmark price: 22,260 per m sq Multiple of benching price

Average unit rate/m sq

New tax rate on capital value

Average market yield

Month rental/ m sq

Percentage of new tax on rental

x 1.0 x 1.5 x 2.5 x 3.5 x 4.5

22,300 33,400 55,700 77,900 100,200

0.40% x 70% 0.40% x 70% 0.60% x 70% 0.60% x 70% 0.60% x 70%

3.6% 3.0% 2.8% 2.5% 2.5%

66.9 83.5 130.0 162.3 208.8

7.8% 9.3% 15.0% 16.8% 16.8%

3.8% 3.5% 4.5%

39.4 50.8 83.9

13.2% 28.6% 26.7%

Chongqing: Benchmark price: 4,971 per m sq Less than 2.0

Not applicable for apartment tax

x 2.5 x 3.5 x 4.5

12,430 17,400 22,370

0.5% 1.0% 1.2%

*Normally detached houses, for at this current point in time there are few apartments equal to or greater than this price in Chongqing. Exchange rate US$1 = CNY6.35

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Eco village //

is this The greenest place on earth?

a small german village has become a shining example of community-led sustainability, finds Brendon hooper Photographs by Benjamin Gerull

Rotten potatoes, piled almost two metres high, have been dumped in a farmyard on a cold autumn day. Heaped beside them is a pile of old hay and a mound of compacted maize. They look like three small mountains of animal feed, but this organic matter is not to be eaten. It’s all about to be pulped and fed into two giant domes of biogas digesters, where the mixture will anaerobically ferment to release methane for fuel.

‘These days, the farmer here would rather describe himself as an “energy farmer”,’ says Günter Mögele, a local teacher and member of Wildpoldsried village council. Mögele is referring to farm owner Ignaz Einsiedler, who will use some of the methane to heat and power his farm, while the rest will be pumped downhill to heat the village of Wildpoldsried – which could be described as the greenest place on earth.

Deep in the rolling hillsides of southern Bavaria, close to Germany’s border with Austria, the citizens of Wildpoldsried have enacted a plan over the past 12 years to transform how they use, save and produce energy. The village generates around 320% more electricity than it needs from the production of renewable energy from wind, solar and biogas, reaching annual revenues of around €3.8m (£3.3m). This incredible surplus has been achieved through a

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combination of grass-roots community investment and local entrepreneurship, incentives for renewable energy use, and a willing leadership ready to act upon the community’s desire for a more sustainable future.‘Fourteen years ago we brainstormed a few ideas to make the village greener and more energy self-sufficient,’ explains Arno Zengerle, mayor of Wildpoldsried. ‘Soon after, a somewhat chaotic but successful renewable energy plan just grew from the conviction of local pioneers.’ localism in action With the consensus of its small community – Wildpoldsried has a population of just 2,600 – the council realised that action could be swiftly taken to change its energy use for a more sustainable future. So in 1999, it produced a blueprint for how it should aid and encourage the community’s requests for renewable energy schemes. Called WIR-2020, the Wildpoldsried Innovativ Richtungsweisend (Wildpoldsried Innovative Leadership) had three main aims: to increase renewable energy sources and decrease the community’s energy use; to use as much locally sourced wood in the construction of buildings as possible; and to protect groundwater stores by the ecological disposal of waste water.‘We wanted to >>

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excess heat from the community biofuel burner is enough to heat the whole building alone – There are no radiators

see how we could go about saving energy by using our own resources,’ says Zengerle.

‘One way was to use local wood as much as possible – there are many sustainable wood industries in the region that supply construction materials, with waste wood used as fuel for biomass burners. After securing a grant in 2000, we started to develop our wetlands into a natural waste water system.

And while this was happening, the community began building the village’s first wind turbines.’

In fact, it was biogas farmer Einsiedler’s brother, Wendelin, who helped to found the first community group that would lead the way in realising renewable energy projects. In the same year the WIR-2020 plan was created, Wendelin Einsiedler – known locally as the ‘Wind Pope’ – and several of his neighbours established a wind energy company to build two 3.5MW turbines on the hilltop above the village, funded by a mixture of equity stakes, local bank loans and a small grant from the Bavarian state.

Two years after the success of the first scheme, 94 investors from the village contributed a minimum of €5,000 (£4,300) each into a second wind energy company to build two more turbines, while a fifth was installed in 2008 using a similar fundraising method. Current total capacity is up to 12MWh per year, and the projected revenue for 2012, after a third company is started and another two turbines built, is expected to be close to €2m (£1.7m).

It is this varied approach to renewable energy that has made the plan so successful. While the community wind energy groups were being formed, Ignaz Einsiedler applied for a second biogas digester on his farm. Today, three community-funded biogas companies operate four digesters that supply the community’s heating system and produce around 320,000kWh per year.

village green

Down at the new village community centre, which doubles as the local bank and is in the process of being developed into an eco-hotel, warm air flows out of ventilators leading to the basement. ‘This warm air is excess heat from the community biofuel burner, and it’s enough to heat the whole building alone,’ says Mögele, who is also the deputy mayor. ‘There are no radiators in the building.’

The council installed its combined head and power (CHP) heating system in 2005 after securing an EU grant, with an intention to heat not just the community centre, but a whole network of buildings. Running on biogas and biomass wood pellets, which are made from sawdust from local mills, the burner will only be supplemented with oil at peak demand during extremely cold winters. ‘For six months of the year, the village only requires 25% of the heat generated by the burner,’ explains Mögele.

Two more biogas heat generators in the town, supplied by pipelines from the biogas farms, also boost the heating network. Over six years, the community heating system has grown to pipe heat to 42 local buildings, including the town hall, households, restaurants, commercial companies and a new school. And with better insulated, more heat-efficient pipes, the council hopes to double this in the coming years. power on Wildpoldsried’s renewable energy growth strategy means that when an opportunity arises to bolster its energy self-sufficiency, the council will provide encouragement and, if necessary, financial assistance. This has been the case with the village’s wide-scale adoption of solar photovoltaic systems – around a third of households have installed panels on their roofs, providing 3.6MWh per year in total. After Germany introduced

µ Wildpoldsried produces 320% more energy than it needs, yielding €3.8m (£3.3m) in annual revenues // 5 wind turbines produce 12.5MWh per year // 190 households have solar PV, generating 3.6MWh per year // The village has achieved a 65% reduction in total carbon emissions

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Eco village //

A third of Wildpoldsried’s homes (previous page) have solar PV arrays. The village has five wind turbines (above) and four biogas digesters (above and bottom left) fed with organic matter (left) – but mayor Arno Zengerle (top right) says they are only halfway to achieving their energy goals

its Erneuerbare Energien Gesetz (Renewable Energy Act) feed-in tariff in 2000, it became much more economically viable for householders and small businesses to install solar panels and be paid for producing electricity by the energy company.

So, helped with credit from the local bank and a local company established specifically to deal and supply solar panels, around 200 households are now producing their own electricity and feeding the surplus back into the grid. The mayor believes that, on the whole, the village has paid off its investment over the years, and for the next 10 years will be mostly earning a profit. These profits are then circulated back into the community, for example to buy new equipment for the school or fire department.

Householders’ energy needs are further reduced by a village-wide application of Passivhaus building principles. Earlier this year, the village council enacted a regulation for all new builds to incorporate energy efficiency measures – so developers must now ensure new homes are ultra-low energy, super-insulated and free from oil heaters. The council also offsets construction costs for all new zero-energy homes with a rebate of €15 (£13) per square metre, while paying half the costs of a thermal survey for retrofitting measures on existing properties. ‘We provide free energy advice, and pay half the €250 [£220] for thermal surveys,’ says Mayor Zengerle. ‘If the householder goes ahead with the energyefficiency measures, the local bank will pay the other half.’

Since Germany announced a commitment to phase out its reliance on state nuclear energy in the aftermath of the Fukushima nuclear disaster, Mayor Zengerle’s office has been inundated with requests from groups wishing to tour the village and see its energy strategy working up close. Looking to replicate Wildpoldsried’s success, around 100 official groups a year have been coming from as far away as China, Russia, Japan and Brazil, which is why the community centre is being extended to cater for an influx of eco-tourists.

But while they are keen to attract more ecotourists and renewable energy businesses to the village, they also feel they have only achieved half of their sustainable energy goals.

Zengerle hopes that by 2020 the village will be totally free from using oil for heating, and will have a system in place that stores and automatically manages energy via a ‘smart grid’, for times when the regional grid becomes overloaded with renewable power.

The people of Wildpoldsried are a shining example of how small societies can achieve near complete energy sustainability by carrying out, as Zengerle says, ‘not a strict plan as such, just great ideas’.

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Managing your

business cash flow Illustration by Mitch Blunt

Having cash allows a business to operate. So managing your resources and making sure you have enough to meet your needs is absolutely critical. Cash – which includes credit balances at the bank and any unused loan and overdraft facilities – is needed to pay wages and buy supplies, for example, as well as for meeting your own personal financial requirements. Problems with cash flow often start when a business takes on an employee or a sub-contractor who requires regular payment, or when it buys assets on credit or offers credit to customers.

The key is a regular cash flow forecast, which can highlight when the business might run low on cash and prompt an action plan to remedy the situation before it happens.

Start with reliable accounting records. This might be a manual cashbook, a computer spreadsheet or accounting software, or a simple paid/unpaid system for bills. Whichever method you use, it is essential that your accounting records allow the business to see instantly what monies are owed from customers and the amounts unpaid to suppliers.

The accounting records provide the basis to prepare a cash flow forecast. Start with invoices outstanding from customers and owing to suppliers, and known weekly or monthly expenses, such as payroll, rent, and leasing or hire purchase payments. You can then build in predictions of receipts and payments from future sales and purchases over the forecast period, which can be anything from three to 12 months ahead.

Managing cash flow is, in part, a mirror image of the businesses investment in working capital. Generally, the higher the value of stock, work-in-progress or monies owed by debtors, the more difficult it is to keep control of cash flow. Maintaining a tight grip on stocks and debtors should help to free up cash to use elsewhere in the business.

a cash flow forecast can highlight when the business might run low on cash and prompt an action plan

receipts for customers For big-value sales on credit, check the customer’s credit rating first.

Agree the terms of payment before starting work.

Invoice as soon as services are rendered or the goods have reached the customer.

Regularly progress payment, starting after a few days.

If payment is not received within the agreed period, progress payment higher up the customer’s management, and

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consider how quickly you will stop supplies or services.

If the invoice remains unpaid, use a solicitor’s letter and threaten court proceedings.

If the invoice still remains unpaid, consider whether to go to court, or is this throwing good money after bad? payments to suppliers Agree payment terms with a supplier at the start of trading, and always try to stick to them.

If you think you might not be able to pay, contact the supplier concerned as soon as possible and ask for more time.

Provided that you usually pay on time, they will probably agree to delay payment.

Letting suppliers down will reflect in your credit rating and affect future supplies.

Alternative financing methods Bank loan or overdraft. These are the most popular forms of business finance, but be aware that you may be asked for personal guarantees for security. Also consider the interest rate and charges, as well as any covenants with the finance.

Factoring or invoice discounting. This type of lending can offer financing of up to 90% of the value of an invoice, which is likely to be a much larger percentage of the asset value than on an overdraft. It requires a more disciplined approach to credit checking and only business-to-business invoices can be covered.

Business angel. Potential high-growth businesses may be able to attract investment from a business angel, who can provide valuable expertise as well as capital in return for a share of the business. In the current environment, where banks are reluctant to take risks, more businesses are considering this option. clive lewis is head of enterprise at The Institute of Chartered Accountants in England and Wales, which offers a free advice service for small and medium-sized businesses. busi-

Information :rics news :diary :membership :resources

useful numbers RICS asia +852 2537 7117 General enquiries APC guidance Subscriptions Events Training Bookshop Regulation helpline +44 (0)20 7695 1670 confidential helpline +44 (0)20 7334 3867 Dispute Resolution Services +44 (0)20 7334 3806

Rewards survey RICS-qualified property professionals based in Asia earn 43% more on average than those without the qualification, according to the latest RICS and Macdonald & Company Asian Rewards and Attitudes Survey. The annual survey, which is the most comprehensive of its type with 1,291 professionals taking part, found that those with an RICS qualification working in Singapore earn the most (US$172,300), followed by those in Hong Kong (US$104,600). Nearly half (47.7%) of the respondents reported a base salary increase, with the average increase at 11.1%.

switchboard +44 (0)20 7222 7000

The value of a professional accreditation from RICS is clearly demonstrated by the survey

William Glover, international director of Macdonald & Company

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RICS Asia news//

Chairman re-election

Henry Li was re-elected as Chairman of RICS China at the 2012 RICS China Board Assembly in December. Three new board members were also introduced during the meeting: Dr Leou Xu from Tianyuan Horizon Consulting Institution, Ying Bao Xing from Shanghai

Oriental Investment Supervision and Shen Weichun of the China Electricity Council.

Henry Li is the vice board chairman of Shanghai BDGH Chartered Surveyors (BDGH) and has over 20 years of industry experience.

He became the first mainland Chinese citizen

to obtain the MRICS (GP) designation and is the first Chinese to gain an elected position on the RICS China Board as Chairman.

‘Together with the Board and the support of the RICS China office, I believe we can make RICS even stronger,’ he said.

Sustainable shopping RICS CEO Sean Tompkins recently paid a visit to the newly opened TaiKoo Hui (TKH) mixed-use retail development in Guangzhou, and declared it to be one of the best examples of sustainably designed shopping centres in China. Owner Tai Koo, also known as Swire Properties, opened TKH last September, and with a total gross floor area of around 358,000m sq, it is Swire Properties’ largest investment in mainland China.

Comprising a shopping mall, two Grade-A office towers, a cultural centre and a Mandarin Oriental hotel, TKH utilised innovative design, materials and techniques to increase the energy efficiency of the scheme, which obtained a LEED Gold pre-certification for its Office Tower 1 in 2010. One example is the use of triple-glazing low-energy glass for the roof of the TKH’s shopping mall, and to mitigate the urban heat island effect, a 8,000m sq rooftop garden has been built on top of the retail podium to help cool the building.

‘I see not only a beautifully crafted mixed-use property,

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but also a strong commitment to sustainability investment, from the top management all the way down to the frontline team and extended to the suppliers and clients,’ said Sean Tompkins. ‘It’s not difficult to understand why TKH has become a highly soughtafter property for international retail brands in Guangzhou.

It’s a prime example of how sustainability rewards those who are willing to invest.’

Additionally, to assist any tenant’s requirement for a greener, more energy-efficient workplace, Swire Properties also offers a free energy audit on a voluntary basis, providing tenants with advice on energy saving measures. ‘Our vision is not just optimising the energy efficiency of the common facilities, but actively working with our tenants to make the whole property sustainable throughout its life cycle,’ said Guy Bradley, CEO, Mainland China at Swire Properties. swireproperties.com Written by Roy Ying, Head of Communications, RICS Asia

PRESIDENT’S COLUMN

‘RICS members worldwide have a responsibility to support each other during times of difficulty’ See Lian Ong FRICS, RICS President

O

ver the past decade, those of us working in or connected with the property profession have enjoyed the high times and the low in equal measure. Today, however, we are operating in a world of economic turbulence. In the UK, some families are suffering a marked drop in living standards, and unemployment is the highest it has been for many years – not since the mid-1970s has there been a worse three-year fall in real incomes.

It is, perhaps, during times of uncertainty that the value of RICS membership takes on a whole new meaning beyond that of chartered professional status. I have often heard surveying described as a ‘people profession’ that opens up opportunities to contribute beyond our day jobs. This is certainly something I have observed during my career, and is undoubtedly the quality that offers comfort to members.

Hard times could befall any of us, but being part of a community such as RICS can provide the strength, support and encouragement needed to overcome personal and professional adversities.

As I spend time with groups of members worldwide, I am struck by the sense of camaraderie and affiliation that is not bound by geographical borders, but

instead enhanced by shared values and the best interests of fellow professionals.

LionHeart, the benevolent fund founded in 1899 and run by RICS members as an independent charity, is a symbol of the community spirit that continues to pervade RICS today. Since its inception, the charity has helped thousands of RICS members and their families worldwide, offering welfare advice, counselling, befriending and financial assistance.

It is perhaps no surprise, given the current economic climate, that an increasing number of those supported through the charity’s efforts are facing difficulties due to unemployment. However, LionHeart does much more than hand out cash. It provides expert and dedicated advice to help members and their dependants to help themselves, for example by offering guidance on state support programmes, recruitment and healthcare advice. Already this year the charity has set up schemes dedicated to supporting retired members through the Retirement Fellowship, and helping people back into employment through the Back to Work Scheme.

As an independent organisation, LionHeart receives no statutory funding, and relies purely on the goodwill and generosity of RICS members worldwide to carry out its work. I am a longstanding supporter, and am enormously grateful for everything LionHeart does. I urge as many members as possible to show their support by making a donation when you pay your RICS subscription – after all, we can never be sure that we or those closest to us won’t need the service too one day.

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respondents expect rising levels of distressed assets in the next quarter*

Number of countries (of 25 surveyed) that reported a rise in investor interest – but the pace of demand fell in nearly half of these*

Investor demand picked up dramatically in Malaysia, compared to -13 in Q2*

Reversing the trend seen in the last quarter, levels of demand by specialist funds in Russia fell into negative territory*

France has seen a considerable uptick in the pace of expected foreclosure this quarter, up from +22 in Q2*

More countries expect supply to rise beyond increasing demand from investors in the coming quarter, up from 11 in Q2*

Distressed property is under a foreclosure order or being sold by its mortgagee, and usually sells below market value. *Highlights from the Global Distressed Property Monitor Q3 2011. rics.org/economics

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Events For rics events bookings and enquiries ricsasia@rics.org // +852 2537 7117

CHINA Real Estate Investment World China 2012 19-22 March, China World Hotel, Beijing With a six-year track record, this is China’s most established and credible real estate investment management forum for domestic and international property developers, asset managers, funds and investors.

Combining worldclass content, industry experts and great networking opportunities, REIW China 2012 is where you can access top market intelligence, influence seniorlevel decision makers and cement key relationships.

15% discount for RICS members.

Contact: yeelim.tan@ terrapinn.com; +65 6322 2701 For more information, visit terrapinn. com/2012/realestate-investmentworld-chinaconference

hong kong RICS Hong Kong annual dinner 2012 9 March, JW Marriott, Hong Kong More than 300 RICS members and key players in the real estate industry will join this inaugural

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Annual Dinner. The prestigious black-tie event will provide an ideal networking opportunity, with entertainment provided by a variety of performances and interactive games.

The first RICS Hong Kong Property Awards Presentation will also be held during the evening.

Members HK$1,500; non-members HK$1,600 ricsasia.org RICS Hong Kong Annual Conference: Building Towards 2021 – Vision for Hong Kong as a World City 4 May, Hong Kong Convention and Exhibition Centre, Hong Kong Building on the success from the past three years, RICS Hong Kong presents the annual conference, with the theme ‘Building Towards 2021 – Vision for Hong Kong as a World City’, which will explore the interaction between the commercial, residential, urban renewal and leisure/ cultural environments.

Case studies from Australia, US, Hong Kong and other Asian countries will be presented. ricsasia.org/ hkconference

IFMA’s Integrate 2012 Conference 5-6 June, Hong Kong Convention & Exhibition Centre In collaboration with Build4Asia, this spotlight event provides an unparalleled opportunity for professionals and other from the facility management community to acquire insight into the hottest topics and recurrent challenges from local and international industry experts. Visit integrate.ifma.org.hk

singapore Real Estate Investment World Asia 2012 26-28 June, Marina Bay Sands, Singapore The region’s most established event to showcase the

strategies, personalities and companies that represent real estate investment management, development and finance. This is where institutional investors, developers and deal makers meet to discuss innovative financing vehicles, investment structures and capital raising strategies across the risk-returns and geographic spectrums for the listed and private property investment community.

15% discount for RICS members.

Contact: yeelim.tan@ terrapinn.com; +65 6322 2701 For more information, visit terrapinn.com/ conference/realestate-investmentworld-asia

Fit for the future – a grand transformation for property, land and construction 28-29 March, Beijing A two-day flagship conference, which looks at a range of major emerging themes in property, land and construction, and how the major changes of today will impact on the measurement and management of the property lifecycle. Never before has there been a greater need for professionals from all points in this cycle to seek collaborative solutions to some of the world’s major challenges. Speakers include many prominent international figures.

Members RMB2,500; non-members RMB2,900 ricsasia.org/fitforthefuture

RICS Annual Asia Valuation Conference 2012 4 September, Pan Pacific Hotel, Singapore Building on last year’s success, the conference will be themed ‘Valuation and investment – an assessment of partnership’, and will highlight the intricate relationship between valuation and investment, and provide an update on International Valuation Standards.

Prominent speakers will share their experience on assessment of partnership and application of the latest internationally recognised valuation methods in the financial environment.

Visit ricsasia.org/ asiavaluation conference

Singapore CoreNet Global Summit 27-29 March, The Ritz-Carlton, Millenia, Singapore Key topics will include the Global Economy: Emerging Markets and the Changing Balance of Power, the Global Economy Conversation; and NextLab: Unleashing the future on your company and competition. As well as an exclusive tour of Marina Bay, the event will also feature a number of breakout sessions with topics including reimage, optimizing resources, workplace strategies, sustainability, technology and service delivery.

RICS members receive a discounted rate. Visit ricsasia/org

Membership The dilemma: Conflict of interest My firm has a potential conflict of interest but I cannot disclose the specific details of this to all parties without breaking client confidentiality. What do I do?

The best way to deal with potential conflicts is openness: you must declare any concerns to all parties, being as clear as you possibly can. Where client confidentiality is a concern, you can still discuss your worries, giving the other side(s) enough information to make a decision about whether they are content for your firm to take the instruction.

If you can’t disclose enough information for all parties to make an informed decision, then you must refuse the instruction.

You should consider whether there are ways to manage a possible conflict: can you separate out work that may conflict and just take on neutral work? If you are part of a larger firm, can you create a Chinese wall between those surveyors and staff acting for different clients? Once you have agreed how

a potential conflict will be managed, confirm this with the client(s) in writing. The golden rule for conflicts of interest is to act with integrity. Ask yourself whether you would like to be treated this way if you were the client.

Do referral fees and commissions represent a conflict of interest?

Transparency and openness remain the key.

For example, if you pay an estate agent a referral fee for recommendations for building surveys, you should make sure the client knows. It goes without saying that any advice you give to your client should be utterly professional and free from any motivation of getting additional referrals. Are you providing a professional service for a professional fee?

Eve Salomon, Chair of the RICS Regulatory Board If you have a dilemma or situation that you would like discussed in this column, email regulation@rics.org. Alternatively, call the confidential regulation helpline on +44 (0)20 7334 3867.

new route to membership

In January, RICS introduced a new route to membership for property professionals who have the expertise required to join without undertaking a period of further study. Applicants will need to have a bachelor’s degree or a degree-equivalent professional qualification recognised by RICS, a minimum of five years’ relevant post-degree experience, and be able to demonstrate all the essential knowledge and skills for professional practice in their chosen field. If you know someone who may be suitable for RICS membership through the professional experience route, direct them to rics.org/experience.

RICS President’s capital visit

43% Those with a RICS qualification earn 43% more than those who are ‘not professionally qualified’

5% 82% Percentage of respondents who have been made redundant in the last 12 months (down from 7% in 2010)

The majority of survey participants are fairly or very satisfied with their current employment

35%

Percentage of respondents who believe that the property market will get better over the next 12 months

48%

Percentage of respondents who received a bonus. The average bonus was US$24,954 (US$28,791 in 2010)

First for Malaysia

54%

Three RICS members have been elected to the first RICS Malaysia Board, following a ballot of the membership: Aziah Mohd Yusoff, director of CH Williams Talhar & Wong Sdn Bhd; Low Han Hoe, senior manager of DTZ Nawawi Tie Leung Property Consultants Sdn Bhd; and Ting Kien Hwa, head of the Centre for Real Estate Research at the University Teknologi Mara. The tenure of these positions is for two years, expiring on 30 March 2014.

*The RICS & Macdonald & Company Asian Rewards & Attitudes Survey 2011

Ahead of the Fit for the Future conference in March, See Lian Ong visited Beijing in December to meet partners, supporters and sponsors, including the UK Ambassador

to China, Sebastian Wood. The ambassador has also been involved in RICS’ discussions with the Chinese authorities regarding the liberalisation of valuation practice licenses.

Percentage of respondent who received a base salary increase. The average base salary in 2011 was US$89,851

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Measure//

digging deep global mining of natural resources

15,000Mt

The number of mega tonnes of rock moved every year. Two-thirds are waste.

5,000

The number of mines in the world producing industrial minerals.

Illustration by Ian Dutnall

400 100,000 The number of mines under construction at any one time.

The number of quarries in the world producing aggregates for construction purposes.

The most important metals/gems (ranked by the average annual value of mined production over recent years/US$bn per annum).

Aluminium 32 Gold 30 Copper 23 Iron ore 15 Diamonds 10 Zinc 9 Nickel 6

20,000 The number of prospectors active in the world.

US$80bn

The annual global cost of mining and processing.

US$450bn The average annual total value of global mine production – US$200bn attributed to coal/lignite, US$150bn to metals and gems and US$100bn to industrial minerals and aggregates.

m k 0 0 4 , 2 The largest underground mine system is El Teniente in Rancagua, Chile.

Predicted ore reserves (2010)

4% 0 0 000 0.0 The percentage of gold in the Earth’s crust.

19x

Silver occurs in nature 19 times as frequently as gold.

Bauxite 200 years

60,000

The approximate number of employees in mining and quarrying in the UK.

6.185bn tonnes

Copper 30 years

Gold 20 years

Global hard coal production (2010)

6.316bn tonnes

Global hard coal consumption (2010)

Number of coal mines (2010) China 18,557 US 1,458 India 562 UK 46 World (est) 24,000 Sources: nma.org; worldcoal.org; mining-journal.com; reuters.com; wikipedia.org; unido.org

50

ricsasia.org

3.9 km

The deepest mine in the world is TauTona in Carletonville, South Africa.

The deepest borehole in the world is the Kola Superdeep Borehole in Russia.

m k 6 2 .

2 1