MODUS Asia Edition Q2 2015

MODUS ASIA Q2 2015 RICSASIA .ORG

IN THIS ISSUE PUBLIC BENEFITS

Assessing the role of PPPs in global infrastructure / 20

ONE SIZE FITS ALL?

A universal language of property measurement / 24

BEST IN CLASS

Meet the RICS Hong Kong Annual Awards winners / 28

Contents MODUS ASIA Q2 2015 RICSASIA.ORG

“I was working for a big firm and one of their clients persuaded me to launch my own company … To my surprise I’m 12 years in, with five employees and we’ve become a key player in Hong Kong.”

06 DIFFERENCE OF OPINION Should governments and businesses across Asia be fully embracing building information modelling (BIM)? We hear two points of view 07-15 NEWS IN BRIEF Essential industry news, advice and information for RICS members 08 THINKING: ROY YING Developers can foster brand loyalty by creating Apple-style “ecosystems” of their services 13 PRESIDENT’S COLUMN Louise Brooke-Smith FRICS is excited at the potential for the growth of the profession in Africa

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11

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28

16 INTO AFRICA Foreign direct investment on the continent 20 BRIDGE THE GAP Cash-strapped governments are building up their use of public-private partnerships 24 MADE TO MEASURE Five experts discuss the new international property measurement standard for offices 28 KINGS OF HONG KONG RICS Hong Kong Annual Awards winners 34 COVER STORY Who better to advise on starting up your own business than those who already did?

38 FAST FIVE Surveying at speed with new technology

Foundations

06

Features

Intelligence

PAUL DWYER MRICS, DWYER & CO, HONG KONG COVER STORY, P34

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46

50

44-45 CAREERS Working for the company of your dreams; Mizuho Ogata FRICS, president, Japanese Association of Real Estate Appraisers 46 BUSINESS How to manage dispersed workers 47 REGULATION 101 If you need to terminate a contract, make sure you follow these steps 50 MIND MAP JLL’s Andrew Renshaw FRICS on international valuation standards PLUS 49 Events

42 SHANGHAI AND MIGHTY What the world’s second-tallest skyscraper taught the people who worked on it 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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Feedback USEFUL RICS NUMBERS CONTACT CENTRE +852 2537 7117 Enquiries / APC guidance / Subscriptions / Events / Training / Bookshop REGULATION HELPLINE +852 2116 9713 CONFIDENTIAL HELPLINE +44 (0)20 7334 3867 DISPUTE RESOLUTION SERVICES +44 (0)20 7334 3806 UK SWITCHBOARD +44 (0)20 7222 7000

Join the debate REACTIONS AND RESPONSES FROM PREVIOUS ISSUES

Do you have a comment about this issue of Modus? Email editor@ricsmodus.com, or tweet us using #RICSmodus TITLE CHALLENGE Sir, I have been a land surveyor for about 65 years now, and a RICS member for nearly 50 years. Modus usually provides me with one or two articles of interest – but I can not recall ever seeing anything relating to my discipline.

However, the RICS does provide an excellent bi-monthly journal to cater for land surveyors.

Formerly called Surveying World , i t h a s regrettably moved with the times to adopt the name Geomatics World. I am pleased to say that only the name has changed – the contributors and content are as good as ever. However, the “G word” is one that I will never embrace, as I am old-fashioned enough to believe that “surveyor” will do.

Nor will I ever adopt the title “Sr” [A salutation sometimes used by surveyors in Hong Kong] as a professional description. I don’t believe that RICS has gone this way yet – but if at any time it is considered we must have an abbreviated title, how about CS (chartered surveyor) or, if a special title by discipline is the in thing, then I would goalong with “LS Blogs”, or “QS Muggins”, etc.

And a word of appreciation for an article in the current Modus. “Return of the Rings” [page 24, Asia edition, Q1 2015] is interesting, and certainly gets the message across as it is written in English, Chinese (Simplified) and Japanese. Well done.

Gordon Andreassend MRICS, Hong Kong

@RICSAsia // #RICSmodus @j_bmilburn @RICSnews still irony in article

about technology helping and then the “one thing I know” part bemoaning technology #seamless #RICSModus @PeterDavy Only two tweets in

#RICSmodus this month. Is everyone far too busy to be tweeting? Is this an indicator of market activity? @RICSnews @ShyamVisavadia @f1ekg Great article in

the latest RICS Modus mag. I’m actually following your footsteps by gaining int. Ex and being involved with RICS! @ATurnerHRLLP Thanks to the RICS for

mentioning and highlighting the good work of @BIM4SME in this month’s #RICSModus magazine

UNKNOWN QUANTITY Sir, I’ve just flicked through Modus and am again somewhat disappointed. There appears to be a significant lack of information relevant to the quantity surveying profession, and the continued bias towards housing is somewhat frustrating.

Many of my peers are of the same opinion and most of us tend to not even bother looking at the magazine, as it will invariably include minimal information that would be helpful to us in our line of work.

Do you plan to provide more for quantity surveyors in the coming months, as it would be interesting to know if there is any benefit in continuing to receive the magazine.

Nick Hanson MRICS, Pick Everard, Leicester, UK Thank you for your comments. Modus aims to bring the diverse strands of the profession together by focusing on issues that unite members, such as business challenges and new technologies. However, we will certainly bear your thoughts in mind for future issues.

@VerticeDM #RICSmodus timely reminder

thank you. Courts can penalise parties who unreasonably decline to explore or use ADR/mediation @cole_rawcliffe Is it just me or are there any other RICS members vain enough to admit to searching for their mugshot in this month’s #RICSmodus @AshleyPerryUK Finally getting a chance to read #RICSmodus Dec/Jan issue. Great to see coverage of excellent @WorldGBC report on healthier offices.

MODUS ONLINE

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

FOR SUNDAY Editor Oliver Parsons / Art Director Christie Ferdinando / Contributing Editor Brendon Hooper / Production Editor Andy Plowman / Senior Designer Isabella Fernandes / Creative Director Matt Beaven / Account Director Karen Jenner / Advertising Sales Director Charlotte Turner / Advertising Manager Victoria Underwood / Asia Advertising ROF Media, Bryan Chan, +852 3150 8912, byan@rofmedia.com / Production Manager Michael Wood / Managing Director Toby Smeeton / Repro F1 Colour / Printers ROF Media / Cover Illustration Billie Jean / Published by Sunday, 207 Union Street, London SE1 0LN wearesunday.com / For RICS James Murphy and Kate Symons [UK] / Roy Ying and Jeanie Chan [Asia]

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Intelligence

News / Reviews / Opinions / Reactions

DIFFERENCE OF OPINION

Governments and businesses should be fully embracing of BIM. Discuss.

B UILDING INFORMATION MODELLING (BIM) IS THE FUTURE , and the quicker that we fully embrace the change in Asia, the quicker we will reap the rewards. Data shows that through the effective use of BIM, assets can be constructed up to 15% quicker, 20% cheaper and operating costs can be reduced by 10 to 20%.

In recent years there has been increased BIM maturity in Asia, most notably through the government mandate in Singapore, and South Korea and Japan’s adoption of BIM in the public and commercial sectors. The BIM implementation road map drafted by the Hong Kong Construction Industry Council in 2014 is another positive step. But if it’s so great, why isn’t everyone using BIM? DR DONALD DUOZHONG PAN DEPUTY GENERAL MANAGER, In Asia at least, we still face some key challenges that must SHENZHEN SOGAR ENGINEERING CONSULTANTS be addressed. First, we must secure the full return on investment. To unlock its true benefits, BIM requires the Although BIM’s adoption in China is transforming the whole team to share the same collaborative culture. This sector, engineers and government leaders are still debating includes clients, consultants, contractors, operators and the what, why and how of the technology. Governments are suppliers who must be engaged and aligned from the outset. implementing national programmes in the hope of reaping major benefits, Second, we must overcome the resistance to change. For but while some organisations are aggressively moving forward, others are many, BIM represents a culture shift and requires initial waiting for more details to emerge. Clarity on the current and future state of investment to develop protocols, educate and manage BIM is crucial because some key problems have not been solved. change. Organisations need to be aware of this and may need First, BIM rules and regulations are general requirements, not mandatory. to procure a fully BIM-enabled team to help them.

In particular, the BIM standards and related practice codes have only been Third, there are the misconceptions. BIM is a lot more officially applied to a limited range of project types for trial purposes. Second, than just software. To reap the maximum benefits, it should existing software such as Revit is too expensive. It may have been necessary be considered throughout the entire life-cycle of an asset, to use a platform from overseas in the first period of BIM, however, we must including operation and facilities management. This requires develop native software to lower the cost. Third, there is a bottleneck in the a BIM-enabled team who understand what the building is data storage and transfer of the BIM model. Because of the huge volume of going to be used for and how it will be operated. memory capacity required, it is inappropriate for an out-of-office user.

With regards to 4D and 5D BIM, every quantity surveyor wants to set up BIM: time to adopt or still teething? What’s your the actual model but not a virtual one. However, can we get the exact bill of view? Join the discussion on LinkedIn at rics.org/ quantities (BQ) from an actual BIM model? How do we measure it? In China quantity surveyors can provide a perfect 3D model based on CAD files. Using linkedin, or tweet using #RICSmodus BIM, we can get the exact BQ of the architecture and structural drawings in geometry. But is it possible for mechanical, electrical and plumbing?

There is extremely high demand for BIM in China, but we need to develop more suitable software to enhance its value.

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ILLUSTRATION MIGUEL MONTANER INTERVIEW BRENDON HOOPER

KEITH HOOPER FRICS ASSOCIATE, ARCADIS

Intelligence CHINESE OUTBOUND INVESTMENT BY ASSET CLASS (2008-2014) Desire for stable, trophy real estate assets in global cities reflected in overwhelming preference for offices Source: RCA, Cushman & Wakefield

NEWS IN BRIEF ricsasia.org/ modusasia

48%

25%

OFFICE

9%

DEVELOPMENT SITE

INDUSTRIAL

7%

7%

HOTEL

4%

RETAIL RESIDENTIAL

RESIDENTIAL

CHINA % OPENS DOOR 3.6%VIETNAM -7.1% TO FOREIGN OWNERS 2.3

®

4.5

5.8%

ASIA-PACIFIC GIGATONNES

AMERICAS

6.6

MIDDLE EAST & AFRICA US

EUROPE

.9 %

1%

1.4 %

3.2 %

3.5 %

4.5 %

5.7 %

THE DATA

Source: Knight Frank Research/Newmark Grubb Knight Frank

TO LET

90,000

15.8% TO LET TO LET 14.3% 14%

80,000 70,000

TO LET

60,000

20,000 10,000

6.1%

TO LET

5.9%

TO LET

5.9%

TO LET

5.8%

TO LET

5.2%

HONG KONG

TOKYO

SHANGHAI

SAN FRANCISCO

0

PARIS

NEW YORK CITY

2013

SYDNEY

SINGAPORE

MADRID

2012

FRANKFURT

HOUSTON

MEXICO CITY

2011

TO LET

LONDON

TO LET

11.4% 11.3% TO LET 50,000 10.3% TO LET TO LET 40,000 TO LET 8.8% 8.4% 30,000 8.1%

WASHINGTON DC

Experts discuss IPMS: Office Buildings, p24

MUMBAI

INFOGRAPHIC IAN DUTNALL

agency in the world to state its TO LET intention to use IPMS back in 23% October 2013. In the Caribbean, the Lands & Survey Department Construction in the Cayman Islands, as well as Manufacturing Jamaica’s National Land Agency Wholesale and retail trade; repair of motor vehicles and motorcycles have mandated the use of IPMS: Financial and insurance Office Buildings.

The International Information/communication estate has also MonetaryReal Fund Utilities announced its intention to reTransportation and storage measure its entire global portfolio Accommodation/food using IPMS. The fund works in 2005 188 countries and has been a vocal supporter of the initiative.

2.2 %

opportunities GIGATONNES elsewhere in the Asia-Pacific region. The new law will take effect from 1 July, but 1901 2000 2011 2013 is subject to restrictions on the Since its launch last November, volume of property that can be governments and organisations purchased, the purpose for around the world have been purchase and the length of tenure. expressing their support for 55% “The new law is expected to the first international property help create a more balanced, measurement standard, IPMS: transparent and sustainable Office Buildings. % residential property market in In the UK, the Valuation Office 4.3% 9.2 Vietnam,” said Dung Duong MRICS, Agency (VOA) will be working Vietnam has passed an amendment NEW % Gigawatts 0.80.9allows 0.7 0.5associate 0.5% director of research at closely with RICS on IPMS-based 3.4 NEIGHBOURS to 1.3 its housing1law that 1.9 US PHILIPPINES INDONESIA MEXICO ITALY ICELAND JAPAN Change in CBRE Vietnam. “Removing many guidance. The VOA maintains overseas investors to purchase legislation will of the conditions on the foreign the valuation lists of 1.9 million residential property. The groundmake it easier commercial properties and 24.7 breaking legislation will open up for overseas -14.4% ownership of property will boost investors to demand and help improve million residential properties in the country’s previously heavily % market -27 buy housing in liquidity, especially for mid- to highEngland and Wales. In 2013 it restricted housing market to markets such London (West End) end housing, as well as vacation collected about £48bn in nonforeign ownership, as well as nonas Ho Chi 2,737 or second homes. It will make the domestic rates, or business native residents who have a visa Minh City Paris 5,333 residential market more attractive rates. As the largest employer to live in Vietnam London (City) to locally based expatriates of chartered surveyors in the UK, Growth in Vietnam’s residential 5,583 Zurich looking to invest in property its Valuation Measuring Guide market has been slow in recent 6,078 and also stimulate demand from already complies with the RICS years as a result of factors such Stockholm ime office space does €100m buy?

9,240 Vietnamese residing overseas.”

Code as restrictions on foreign ownership, (m²) of Measuring Practice.

Frankfurt Niall Walsh, VOA chief the effects of a speculative housing 10,307 Moscowa lack of quality developers, operating officer and chief valuer, WHAT IMPACT WILL THE NEW LAW bubble, 11,814 said: “The VOA is keen to work have on Vietnam? Email your views and investors seeking more Warsaw 20,408 with RICS on all professional to editor@ricsmodus.com attractive and transparent Brussels 21,053 guidance and standards. We are Budapest pleased to have been involved 31,250 with the development of IPMS.” VACANT OFFICE SPACE BY CITY, AS PERCENTAGE The Dubai Land Department OF TOTAL OFFICE SPACE (END 2014) became the first government Governments and global bodies get behind IPMS

Q2 2015_MODUS A SI A

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“It is clear that tenants are now looking not only for premium floor space, but also tailored services that add value to their core operations”

I

f you are a regular user of Apple products, you might have a degree of reluctance to switch to an Android or Microsoft platform. By purchasing an iPhone, you’re buying into the entire Apple “ecosystem”, which includes the operating system, apps, add-ons, music, movies, books and more. The attraction for the consumer isn’t just about the device – it’s also about the products and services that interact with each other in an exceedingly user-friendly manner, which ultimately creates a high level of customer loyalty.

Such ecosystems are also developing in the real estate industry, but in a different fashion. In Hong Kong, shopping malls are spending millions on market research, asset enhancement, promotional activities and customer services to attract visitors to spend time and money in their properties. Retailers now expect the landlord to make recommendations on where their shops should be in accordance to their targeted shoppers’ buying behaviour, what kind of decor would best appeal to their target customers, which lines of merchandise they should display to reap the maximum return on investment, and how they should manage sales operations efficiently to improve their bottom lines. But when every developer is doing more or less the same thing, leasing teams are now having to think outside the box to attract new tenants and, more importantly, retain the existing ones.

Recently, the Sino Group, one of Hong Kong’s largest property developers, began to create their own ecosystem to service their tenants by establishing a subsidiary called Perfect Green – a one-stop-shop environmental hygiene service for the food and beverage (F&B) industry. After 08

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speaking with Terrence Ng, associate director of Sino Property Services, it became clear that this new subsidiary has aspirations not only to serve Sino’s tenants, but also to become a sustainable business venture by providing costeffective environmental hygiene services to F&B operators, so that they can instead concentrate on their core business.

This new kind of service has the potential to help solve the F&B industry’s manpower issue, and make savings in rent at the same time. Dr Lilian Wong, principal at the Tao Miao Institute of Hong Kong’s Vocational Training Council, says the recruitment of personnel is one of the biggest headaches for F&B operators. With unemployment as low as 3.3%, very few jobseekers are interested in applying for jobs washing dishes. F&B facilities are also seen as taking up valuable space, which could otherwise be utilised for revenue generating activities.

In addition, because commercial leases typically last three years in Hong Kong, F&B operators often have to relocate when their lease expires. If their dishwashing process is outsourced, they have an opportunity to plan for a smaller kitchen. Although there is still the statutory requirement in having a dishwashing station to keep the F&B licence, the scale could be much smaller.

Although the operator would need to purchase two to three times more tableware for the daily turnaround, there appears to be a long-term gain despite the initial capital investment.

No doubt environmental hygiene is one integral part of facilities management, but it is a function often better outsourced. If the landlord’s aspiration is to create an ecosystem, they may need to consider venturing into other services beyond the traditional real estate boundary. It is clear that tenants are now looking not only for premium floor space, but also tailored services that add value to their core operations. As Apple – and the Sino Group – have realised, diversification of their services is key to maintaining customer loyalty. I see this as a trend that will only continue to grow within the real estate industry.

WHAT’S YOUR OPINION on developers creating an “ecosystem” by providing add-value services to tenants? Email editor@ricsmodus.com

ILLUSTRATION ANDREA MANZATI

ROY YING HEAD OF COMMUNICATIONS & EXTERNAL AFFAIRS, RICS NORTH ASIA

Intelligence

-14%

EMEA

Huge swing in location of world’s property targeted by institutional investors forecast by 2031 Source: Pramerica Real Estate Investors, JLL

-8%

AMERICAS

WE LIKE

®

ricsasia.org/ modusasia

INFOGRAPHIC IAN DUTNALL

THE RICS FUTURES REPORT was launched at the Summit of Americas in April. Download the report at rics.org/futures

+25%

+18%

+5%

-5%

0%

-16%

-23%

GOING ACROSS? Multi concept dispenses with weights and cables in favour of magnetic system

The “Multi” rope-free elevator

+15.7%

$500-$750K

+10.4%

CLASSIC CARS

COINS

ART

0%

LIFESTYLE VINEYARDS

-2%

25% What’s that? It could be the world’s first cable-free, multi-directional elevator system, 160 years after the lift was first invented. Designed by ThyssenKrupp, the Multi can move sideways as well as vertically, powered 10% and held by magnetic force instead of weights and cables. The company says it will allow multiple 5% elevators to occupy a single shaft in a “near3% 3% 3% 4.5% constant” loop formation, helping increase passenger capacity by up to 50% and cutting waiting times.

Clever. But why? The Multi is expected to require smaller shafts than conventional elevators, so using them could potentially increase a building’s usable area by up to 25%, saving construction costs. “With this technology, the limits on high-rise structures will be removed and we will have futuristic buildings that previously could only be dreamed of,” enthuses Patrick Bass, head of research and development at ThyssenKrupp.

When can I ride it? Not for a while yet. To get the elevator ready for the market, it has to go through some rigorous testing. The company is even building a test tower in Rottweil, Germany – due to be completed at the end of 2016 – specifically as a testing ground for a full prototype, which should be ready around the same time. thyssenkrupp.com WINE

ANTIQUE FURNITURE

Urbanisation, changing population demographics and shifts in economic power will transform the way we live and how we do business.

A study by Oxford Economics expects global construction output by 2025 to grow by as much as 70% to $15tn. Notably, China and India, with growing middle class populations, are expected to contribute to a third of this output.

Considering these forecasts, and through extensive research and consultation with the global surveying profession, the RICS Futures project has been identifying the challenges and the opportunities facing the built environment and related markets.

The research for RICS Futures-8% looks at key themes spanning ethics and standards, leadership, future cities, technology and talent. As well as conducting individual interviews with property professionals from across the globe, more than 100 roundtable meetings and +16% workshops have taken place. +8.9% RICS Director of Strategy, -4.4% Dan Cook, said: “Scenario planning helps us deliver a more robust future for our profession and ensures that we’re ready to embrace change. It will be $50-$100K $100-$250K $250-$500K exciting to discuss actions for the future outlined in our research at the RICS Futures events that are planned over the coming months.”

+39%

JEWELLERY

+58%

CHINESE CERAMICS

+86%

STAMPS

NEWS IN BRIEF

RICS Futures research looks ahead

+22%

ASIA-PACIFIC

WATCHES

PUT ALL YOUR STOCK IN ASIA-PACIFIC

ONE THING I KNOW “In the UAE, good networking is good business” $750-$1M

CRAIG ROSS MRICS Head of project and building consultancy at Cavendish Maxwell, and RICS matrics chair, UAE Being involved in matrics was really important to me when I was qualifying back in the UK. I was able

+5.2%

to get great advice from members who had recently passed $1M+ the APC, who also helped dispel some of the myths about the interview process.

After a few years of recession-triggered anonymity, we’re relaunching RICS matrics in the UAE with a new programme of CPD and networking

events. In the UAE, good networking is good business, so getting involved in matrics is a great way to meet others in the industry and help the next generation of APC candidates to reach RICS qualification.

TO FIND OUT more about RICS matrics in the UAE, email ricsmea@rics.org Q2 2015_MODUS A SI A

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SECRET SURVEYOR

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ricsasia.org/ modusasia

“Many baby boomers got lucky with housing. They were the right age at the right time, when housing was affordable”

Brunei development minister calls on RICS’ ASEAN support

H

appy birthday to me: I’ve now reached one of those major milestones in life. Apparently, I now qualify for special rates on my insurance.

A new type of holiday brochure has started to arrive in the post, too.

And I am now eligible to move into some of the age-restricted housing that I am employed to maintain.

To say I don’t feel old would be an understatement. I’ll admit that I’ve (probably) started the second half of my life. I’ll even agree that my eyesight is not what it once was. But old? Me? Surely not.

Most of my current portfolio of properties were built in the 1970s, when being old was a very different experience. My retirement flats were comfortable and convenient in the days when walking to local shops and catching buses were things that suburban people did.

The current “older” generation tends to find these properties unattractive. Many baby boomers got lucky with housing. They were the right age at the right time when housing was affordable, mortgages were easy to get and builders were

RICS held a successful meeting with Brunei’s minister of development, YB Pehin Suyoi, at a surveyors’ dinner in February.

At the meeting, the ASEAN team introduced RICS and its global objectives, and discussed various international standards that would help improve the mobility of surveyors in Brunei and across the ASEAN region.

The minister gave a speech to 300 RICS members and local professional bodies Pertubuhan Ukur, Jurutera dan Arkitek (PUJA) and the Brunei Institution of Geomatics (BIG) about the need for international standards and the role RICS can play in supporting the development of the profession in Brunei.

Surveying professionals need “to constantly update their skills and knowledge through consistent practice and professional development to gain the public’s trust”, he said, while encouraging RICS to support local RICS members and other professional bodies to develop local standards.

Recent developments such as the passing of Strata Title Act and the establishment of the ASEAN Economic Community (AEC) 2015 in the region will require local land surveyors to enhance their professional competence.

Dedicated iPad version of popular CPD app launched A recent upgrade to the Apple version of the RICS CPD app includes notifications when your planned activities become due for completion, reminders as the annual CPD deadline approaches, and multi-lingual display, notifications and instructions for selected languages, based on the settings of your device.

The new release is also available in an iPad-specific version. Search for “RICS CPD” in the Apple app store.

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building like never before or since.

Many thousands of people were also able to buy their council houses at very favourable prices.

That’s not to say this generation doesn’t have its problems with housing. Half of all people now classified as living in poverty own their own homes. Being asset rich but income poor is a growing issue, and many find themselves unable to heat or maintain their houses.

But unlike previous generations, they are mainly expected to deal with their problems on their own.

Social provision is now more of a safety net for people in crisis than the helping hand it once was.

So sheltered flats like mine tend to fill up with people with far more problems than they were designed to take. Meanwhile, the next generation is often resentful because, whether rented or bought, having a home of their own is so much more difficult for them.

Welcome to my world.

ARE YOU INTERESTED in writing a future Secret Surveyor column?

Email editor@ricsmodus.com

INVESTMENT

CHINA OUTSHINES EUROPE IN LONDON SHOW OF TOWER Chinese insurer Ping An bought Tower Place for £327m ($487m) in January

Chinese investors in London’s commercial property market accounted for more inward investment in 2014 than all European buyers collectively, Savills has found.

The firm’s research showed that of the £21bn ($31.3bn) spent in the London market last year, US investors spent the largest amount at £3.4bn ($5.07bn), followed by investors from China and Qatar.

Chinese insurance companies were found to be increasingly active in London.

“Chinese investors coming into the UK market are mainly developers and insurance companies,” commented Eric Zhao, a Chinese capital

markets specialist at Savills. “Top Chinese developers are being driven by challenges in the domestic market and global branding needs, while insurance companies are beginning to diversify their huge capital outside China after the restriction on overseas investment was lifted by the regulator.

“We have already seen the top Chinese firms make a statement in London and we are expecting more to follow.”

IMAGE OKI HIROYUKI

NEWS IN BRIEF

Intelligence

A VERY COOL HOUSE The home as hermetically sealed refuge from the cold is a deep-rooted notion, particularly for northern Europeans. But in other cultures, the home can be more porous, with inside and outside blending more comfortably. A case in point is this refurbishment project by Vietnam-based architect Tropical Space, where perforated brick walls enclose the concrete structure of an old house in the coastal city of Da Nang. The brickwork grilles bring cooling shade and allow air to flow freely through the living space, reducing temperatures during the hot, dry season. Meanwhile, glazing is used where necessary to protect from the elements during the rainy season.

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Intelligence

HONG KONG

TOKYO

NEW YORK (Manhattan)

$2,260

$2,400

$2,980

$6,330

Value of prime floors in office towers far outstrips those of other cities ($/ft2) Source: Knight Frank

$4,180

HONG KONG KING OF THE WORLD

LONDON (City)

SAN FRANCISCO

INVESTMENT

-8%

-8%

-4.4%

+8.9%

+16%

+15.7%

STERLING EFFORT Samsung SRA Asset Management placed Frankfurt’s Silver Tower under offer for €455m in November 2014

$50-$100K

$100-$250K

$250-$500K

$500-$750K

+22%

-5% -16% -23% 0% “Africa’s built environment is seeing unprecedented change”

+5%

LOUISE BROOKE-SMITH FRICS RICS PRESIDENT

$750-$1M

CLASSIC CARS

COINS

ART

WATCHES

T HROUGHOUT THE PAST YEAR I HAVE BEEN THROWING MY ENERGIES INTO supporting RICS’ growing presence in Africa. I have visited Ghana, South Africa and Kenya to promote RICS research, services and professionalism.

In March our Governing Council meeting in Johannesburg brought together industry leaders from across Africa and members of our senior governing body from around the globe. It was an opportunity to showcase what RICS can offer in a continent that is growing more quickly than almost any other 25% region, and to assure ourselves that our approach is the right one.

Africa’s built environment is undergoing unprecedented change. Rapid urbanisation is underway – a recent UN report predicted that the proportion 10% of Africans living in cities will reach 56% by 2050. This trend is driving a need to invest $1tn a year in African infrastructure.

4.5% 5% 3%RICS’ “Unleashing Sub-Saharan African Property Markets” research has highlighted increased demand in the real estate markets in South Africa, Kenya, Ghana, Nigeria and Tanzania. Recent research by JLL lists Kenya and Ghana among the top five real estate markets worldwide for improved transparency since 2012.

Our approach is one of cooperation, building partnerships with existing institutions. We have had a presence in South Africa for some years, and we are building it up to cover the wider Southern Africa region. Kenya is fast becoming a location for organisations wanting to establish a regional base in East Africa, and Ghana is our choice for a regional hub in West Africa.

There seems little doubt that Africa would benefit enormously from a larger pool of built environment professionals. If, across Africa, measurement standards could be implemented in conjunction with ethical standards, and these could all be effectively – and independently – regulated, we might create market conditions in which investors, clients and the public as a whole have high confidence, and in which growth is sustainable.

Our experience so far is that genuine collaboration between professional +10.4% of the built environment – and between national and bodies across all areas+5.2% international entities – promises to bring significant economic dividends, which ultimately benefit society as a whole. This can be just as true in Africa.

Follow Louise on Twitter @LbsLouise LIFESTYLE VINEYARDS

INFOGRAPHIC IAN DUTNALL ILLUSTRATION BERND SCHIFFERDECKER

WINE

JEWELLERY

CHINESE CERAMICS

ANTIQUE FURNITURE

Korean institutional investors are diversifying their real estate portfolios in Europe and the US in greater numbers, JLL has found.

The trend has been more significant since 2013, after an increased inflow into pension and insurance funds resulted in more South Korean investors seeking real estate assets overseas, as an alternative to the country’s limited domestic market. Korean investors invested $3.6bn in overseas real estate in +86% +58% +39% +25% +18% 2013 and JLL expects total volumes for 2014 to surpass this figure.

“We’re starting to see Korean institutional investors expand their reach,” said Lucy Fletcher MRICS, vice-president, international capital group and Americas capital markets NATION at JLL. “We’ve seen increasing activity in BUILDING cities such as Los Angeles, with investors RICS is building allocating capital to core office assets, and partnerships we are also seeing them diversify in terms with existing of sector and geography. Typically, Korean institutions to increase investors have favoured office assets, but the pool of built we’re seeing more activity in core industrial environment and good-quality retail.” professionals In Europe, South Korea was the most in the region dominant Asian investor in Germany in 2014, accounting for half of all inbound capital from Asia-Pacific. JLL forecasts this trend will continue across 2015: “The 3% 3% Korean real estate market is relatively small and domestic institutional investors are typically overexposed to it,” commented Alistair Meadows MRICS, head of the international capital group, Asia-Pacific, at JLL. “Therefore, Korean asset managers have little option but to seek opportunities -2% 0% outside their home market.”

STAMPS

KOREANS WIDEN -14% OVERSEAS TARGETS

$1M+

Q2 2015_MODUS A SI A

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RICS A SI A .ORG

Intelligence NEWS IN BRIEF

OFFICES

LOW YIELDS FORCING INVESTORS OUT OF ASIA-PACIFIC’S CORE MARKETS

®

ricsasia.org/ modusasia

Asia Annual Review reports progress on strategic plan RICS enjoyed a fruitful past year in Asia, achieving and – in many areas – exceeding its corporate goals. Both members and executive staff have worked hard to make significant progress on the strategic plan for the region.

The 2013-14 RICS Asia Annual Review includes a snapshot of RICS’ performance, achievements, highlights and commitment to its members and the communities within which it operates.

The review focuses on RICS’ effort to realise its corporate vision, which is to be recognised in key international markets as the leading body that develops and enforces professional standards, and offers access to the most sought-after professional status.

DOWNLOAD the digital copy from bit.ly/RICSAsiaReview2014 Steur becomes first non-UK Global Valuation Board chair The RICS Global Valuation Professional Group Board (GVB) has appointed its first chair from outside the UK. Mike Steur FRICS is based in Sydney and he takes over from the UK’s Mark Gerold.

Informing the organisation’s global valuation work, the GVB was instrumental in aligning the RICS valuation codes with the International Valuation Standards (IVS) and embedding the RICS Red Book across global markets.

The board comprises members from diverse global locations and professional specialisations.

It also includes practising academics to ensure appropriate understanding and responsiveness to member needs.

Steur originally hails from New Zealand and boasts more than 30 years’ experience in the property industry across the Asia-Pacific region.

SECOND BEST Yield compression in core markets is fuelling investor demand for offices in second-tier cities such as Osaka, Japan

Office property investment yields in Hong Kong and Tokyo are the lowest in the world, while San Francisco and Sydney’s are among the most attractive, research from Savills has found.

The firm’s World Office Yield Spectrum, published in conjunction with Australia’s Deakin University, reports that the core markets of Hong Kong and Tokyo continue to be expensive, and better value can be found in Seoul and Singapore. Ho Chi Minh City in Vietnam was found to have the highest market yield in

the Asia region at 9.71%, while Manila in the Philippines had the second highest at 9%.

In the US, the emerging economic recovery, the end of quantitative easing and the prospect of rising interest rates is contributing to a wide variation in office investment yields in the country. New York, San Francisco and Los Angeles are reporting returns in the mid 5% range, while Dallas, Washington DC, Houston and San Diego are achieving yields of around 7%.

“Because Asia-Pacific remains challenging in yield terms, there are early indications that capital flows are reversing and more real estate capital is leaving the region than entering it,” commented Simon Smith MRICS, senior director at Savills Research Asia-Pacific.

“In 2014, $22.4bn flowed into the region, while $37.4bn left, mostly for Europe and the US. Initially targeting first-tier cities, this capital is now looking for opportunities in fringe and secondtier locations. Cap rate spreads remain healthy in some local markets and Tokyo, Osaka, Sydney and Melbourne continue to attract significant investor demand.

“Most notable has been a decline in the appeal of China, where yields remain heavily compressed, overbuild is evident in many markets and economic growth has failed to match expectations.”

PAGETURNER DETAIL IN CONTEMPORARY RESIDENTIAL ARCHITECTURE 2 DAVID PHILLIPS AND MEGUMI YAMASHITA Featuring the work of architects from around the world, this book presents 50 of the most recently influential house designs, including Toblerone House by Studio MK27 in Brazil and Gingerbread

House by Laura Dewe Mathews in the UK. Architect Phillips and architecture journalist Yamashita thoroughly analyse the technical and the aesthetic importance of details in modern residential design.

Each chapter comes with photographs, site plans and drawings in standard architectural scales. A bonus CD lets you get to grips with the digital drawings in both EPS and DWG (generic CAD) formats.

What are you reading?

Let us know at: editor@ ricsmodus.com Q2 2015_MODUS A SI A

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Africa

INTO AFRICA S

outh Africa has a population of 53 million and at least 80 shopping centres of more than 30,000 m2.

Nigeria, by comparison, is home to around 170 million people and has just two malls of the same standard, neither of which is larger than 25,000 m2.

This is the kind of statistic that makes real estate investors’ mouths water when they look at Africa, even if many have yet to bite.

Foreign direct investment (FDI) into the continent still accounts for less than 4% of global capital flows, but it has grown steadily to reach $57bn in 2013. And while its vast natural reserves may have been the main target for foreign investment to date, its real potential lies in its people.

Africa is a continent of youthful people – the median age in 2012 was 19.7. And although it is home to three-quarters of the world’s poorest countries, it also has the fastest growing middle class of anywhere on the planet – numbering 120 million now and, says the African Development Bank, predicted to reach 1.1 billion by 2060. This represents a vast market for consumer goods and services, in which global companies are keen to gain a foothold. UN figures show that investment in manufacturing and services aimed at Africa’s middle classes grew from 7% of FDI in 2008 to 23% by 2012.

It is sub-Saharan Africa that holds the greatest potential – 23.5m km2 of populous, rapidly urbanising territory, where GDP growth is predicted to average 5%-6% between 2014 and 2022.“The fundamentals are very compelling,” says Michael Chu’di Ejekam, director of real estate for investor Actis in Lagos, Nigeria. “By 2035, 50% of people in sub-Saharan Africa will be living in cities, and they will demand places to live, work and shop, and places to stay.”

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Historically, overseas investors have taken more out of the great continent than they have put in. Could this be the year the status quo starts to change?

Words Katie Puckett Illustrations Angus Greig

Actis is one of a handful of investors that have begun developing sub-Saharan Africa’s first high-spec commercial property in key markets such as Nigeria, Kenya and Ghana.

A secondary market is now emerging in the completed assets, which suggests that African real estate is set to occupy the place that maturing eastern European or Asian markets held a few years ago, as investors seek to diversify their portfolios and take advantage of high yields that accompany the heightened risks of emerging markets.

Demand has really taken off in the last two years, says Nick Lambert MRICS, senior director of complex and emerging markets at CBRE. “People have been looking for a while, but we’re now starting to get deals coming through. We’ve reached a tipping point where many global corporates have identified Africa as the next key market. We receive enquiries almost daily from potential occupiers or investors, among them hedge funds, sovereign wealth funds and ultra-highnet-worth individuals.” Lambert believes that Africa is now at the stage of development

that China – itself now a significant investor in the continent – reached 30 years ago.

Oil and gas companies have often been the first investors to enter a market, followed by financial services, telecoms and, with increasing wealth, consumer goods. This is now driving growth in manufacturing, partly as Africa becomes a new low-cost centre, but also to serve a growing local market.“Global companies are noticing that, say, one-third of their products are being exported to Africa, and they’re asking themselves why they’re not manufacturing in Africa,” says Knight Frank partner Peter Welborn FRICS. “If you look at the average middle class African household, everything is imported, from the loo roll holder to the oven. The sand and cement are the only things that aren’t.”

Countries that produce raw commodities are also seeking to develop their processing capabilities, says Welborn. For example, Cote d’Ivoire is the world’s largest producer of coffee and cocoa beans, but now hopes to become the world leader for processing, too.

Given the scale of Africa’s natural resources, the scope for expansion is dizzying.

The key hubs for manufacturers are South Africa, Kenya and Nigeria. Angola is also booming thanks to oil and diamond wealth – prime rents in the capital Luanda are among the highest in the world. Cote d’Ivoire and Ghana are fast developing, as are Uganda, Tanzania and Mozambique, following recent oil and gas discoveries. Zambia, meanwhile, is the top destination for a small number of investors in African farmland.

Notably absent from the investment radar is northern Africa, badly hit by the fallout from the Arab Spring. Political stability is definitely the top requirement for foreign investors. “It’s my number one, two and three,” says Welborn. “If you’ve got »

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VIEW FROM CHINA

A continent of stable growth In view of the world’s overall development, the African continent has huge potential, some of which has become more prominent due to the development of southern African nations, specifically emerging countries in the region.

In the first decade of the 21st century, Africa sustained relatively stable growth, a rare phenomenon since the 1960s.

For most of the last decade, Africa has maintained stable GDP growth of 4%-5%, higher

than the global average. Some African nations have developed even faster than this. In 2011, for example, most sub-Saharan nations maintained healthy development, with an average growth rate exceeding 5%.

Moreover, six of the 10 fastest -growing nations in the world were in Africa, and Ghana topped the list with a 13% growth rate.

That same year, the growth rate of most European nations was less than 1%, and that of the United States was just over 1%.

In 2012 the sub-Saharan economies achieved growth at an overall rate of 5.5%, making it the fastest-growing region in the world. It is especially impressive that 14 of the 25 fastest-growing nations in 2012 were located in the sub-Saharan region, with each of these countries achieving GDP growth of more than 6.5%.

As projected in a report by the African Development Bank, even if the global economy was still unstable without deteriorating, 2013 growth in sub-Saharan

Africa could reach 5.4%, or 6.6% if South Africa is not included, making it the fastest-growing region in the world.

One key reason for Africa’s relatively rapid development in recent years is the low baseline, but sustained, rapid, and stable growth has given people outside of Africa great hope for the future of the continent.

Liu Chaon is chairman and president of North China Power Engineering Co Ltd Q2 2015_MODUS A SI A

17

political stability, you’ve got little risk on currency, consumer demand and a system where you can make money.”

Even where there is relative stability, the barriers to development are high. Local funding markets are underdeveloped, costs are high due to a reliance on imports, there is a lack of construction expertise to international standards, and a chronic shortage of reliable market data. “The opportunities are definitely there, but there are so many considerations in the African market that you don’t have elsewhere,” says Lambert. “Can you get in, can you own the freehold, can you sell and get the money out?

But it is becoming more transparent, as governments realise that the way to attract investment is to make it easier for investors.”

Finding the right land, in the right location with the right title is by far the greatest challenge, says Lucy Corkin, adviser at RMB 18

RICS A SI A .ORG

We want money to be where it can make an impact. Inefficient capital in the system won’t grow our GDP or the economy 



AKIN OLAWORE FRICS

Westport, a Mauritian-domiciled fund that invests in commercial property in Angola, Nigeria and Ghana. “Claims and counterclaims are par for the course. Often the only way to see who’s going to make a claim is to hoard off the site and wait. Land is a highly emotive issue in these countries, so we don’t cut any corners. There is always due process, it just takes longer than it would elsewhere.”

Securing land and bedding down legal structures with a local partner can take several years, she adds. “It’s very easy to get caught up in the euphoria of Africa’s growth story, but it’s not a place you can make a quick buck. If you don’t understand the social and cultural factors, it’s incredibly difficult to make a success of a project. You have to do proper due diligence and really understand the people you’re working with.

Relationships are as key as feasibility.”

Investors must also overcome local scepticism. “Many developers overpromise and under deliver,”says Corkin.“Until you’ve built it, people don’t believe you’re going to do it. We come up against that prejudice all the time, and it becomes difficult to let a development because people don’t believe it’s going to happen.”

That scepticism is well founded, given that many advertised developments never

Africa

get off the ground. Akin Olawore FRICS runs his own surveying practice in Lagos and becomes aware of new projects every day. But is there really demand for so much new space? Olawore is not convinced: “What investors are building is not within the reach of the population. Local companies will do without grade A space because the cost of running it is so high. A small manufacturer would rather generate its own power and be able to turn it off when it doesn’t need it, rather than having air-conditioning running 24/7.” There may be global corporate appetite for these offices, he points out, but developers will have a safer investment if they can appeal to local occupiers.

Retail developments may struggle to attract not only tenants, but paying customers. Nigeria’s young population like to hang out in food courts, he says, but they cannot afford pricey, imported labels. And those who can might not necessarily want to buy them at home: “Some people will not buy their clothes in Nigeria because they don’t want to find somebody else wearing the same thing, or for people to know where they bought it.”

Chu’di does not agree, citing the success of Actis’ malls in Lagos. Footfall at Ikeja City Mall has steadily increased since it opened in 2011, to reach 9 million a year by the end of 2014. “The question used to be whether retail would work in this part of the world, whether people would be interested in shopping or have the capacity to buy. That question has been answered with a resounding ‘yes’.” There is a snob factor, he concedes, but adds that the convenience of

not having to get on a plane is a powerful draw.“There are very limited options here at the moment,” he says. “I am of the firm opinion that if the items were available, people would be happy to shop here.” Chu’di believes that the bigger challenge is to entice international brands to enter these markets.

What everyone does agree on is that investors need better-quality information and advice – a gap that RICS members are well placed to fill. Olawore has been working for the last four years to establish a central platform on which firms can pool their data.

So far, 12 have signed a commitment to share information in this way. “Data does exist within individual firms but it’s not recorded in a way that foreign investors can use to make decisions. We want money to be where it can make an impact. If there is inefficient capital within our system, it doesn’t help to grow our GDP or the economy.”

There is also a shortage of professional property and construction expertise in local markets. To date, South Africa has been the primary source of experienced workers and there is a need for a great many more people on the ground. “There is always a need for quality professionals in this marketplace,” says Chu’di. “There are very few companies that have the depth of experience of developing quality real estate. We need to bring international best practice to bear locally. Professionals should not stay at a distance, they should be interacting with groups like Actis to see how they can participate in what we’re doing here. It’s about raising the bar, and doing projects that can really uplift the whole continent.”

IPMS IN AFRICA

Global standards open doors Varying property measurement standards can make it difficult to compare assets globally, particularly in Africa’s fastdeveloping property markets.

That is why several local bodies that represent property in Africa, including the Ghana Institution of Surveyors (GhIS), have joined the International Property Measurement Standards (IPMS) coalition, a grouping of 58 organisations that is developing a set of measurement conventions for use across world markets.

“Ghana has seen a lot of interest from property investors over the past 10-15 years, but if our local standards vary from the norm, we could lose out,” says James Dadson, land officer for Ghana’s Lands Commission and past president of GhIS. “We have to do what the rest of the global market is doing. This standard is important for attracting foreign investment in property, and property is very key because it opens the way for other investment in the economy.”

He points out that, unlike challenges such as determining land title, measurement is scientific and therefore more easily resolved, leaving surveyors to focus their efforts elsewhere.

Adopting IPMS would also enable Ghanaian surveyors to compete internationally: “It’s important that we update our skills so that we can develop our own property market and ensure projects take account of local context. And using common standards also gives our firms a market beyond Ghana.”

The GhIS will be working with the Ghanaian government to enshrine the standard in legislation, and has begun running member workshops.

“We’ve not had any opposition from members,” says Dadson.

“There’s every advantage to be obtained and no disadvantages.

After all, the land and property market is one global village – we can’t afford to be left out.”

FIND OUT MORE about Ghana’s drive for global standards at ghisonline.org and ipmsc.org Q2 2015_MODUS A SI A

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BRIDGE THE

Private finance

Public-private partnerships are gaining in popularity as cash-strapped governments attempt to plug a $57tn hole in global infrastructure spending Words Dean Gurden

A

GAP

fter enduring arguably its worst period in modern history, the global economy finally seems to be on an – albeit precarious – road to recovery. But national governments, keen to see money flowing back into their countries, are now facing a further obstacle: a chronic infrastructure deficit that threatens to hold back their countries’ fragile recovery, both in mature and emerging markets. A recent report by consultant McKinsey & Co estimates that a mind-boggling $57tn will be needed to finance infrastructure development worldwide through to 2030. It is no wonder, therefore, that governments are finding PPPs (public-private partnerships) an increasingly enticing proposition to help kick-start non-existent or under-funded services or replace ageing schemes.

The benefits of this model do not stop at a much-needed cash injection from the private sector. Often overlooked is the coming together of all the key stakeholders very early in the procurement process, says Dr Martin Haran, senior research fellow, Built Environment Research Institute, at Ulster University in Northern Ireland. “Unlike more conventional contracts, it enables a lot of issues, barriers and misunderstandings to be ironed out quickly and establishes clarity of vision and continuity as to what is required.”

Then there is the preservation of the value of the asset in question with the introduction of asset life-cycle maintenance. “In any time of financial squeeze, one of the first things to go is often your maintenance budget, so the value of your asset diminishes,” comments Haran. “PPP has a built-in asset maintenance schedule, so over the 25- or 30-year concession period, depending on individual contracts, you have an asset that will be preserved.”

Critics, however, argue that no value is created when the fees paid back to private companies over the term of a PPP contract end up vastly outstripping the cost of construction – even taking into account maintenance schedules.

Ultimately, PPP is about the ability to transfer risk from the public sector to a private sector that is better able to manage it, says Professor David Eaton MRICS, professor of construction economics and finance at the University of Salford, north-west England. Research commissioned by RICS and carried out by Ulster University in 2013 found that tangible infrastructure assets that are able to offer stable and strong returns over a sustained period of time have become more appealing to institutional investors still smarting from the global downturn. However, the report adds that the sporadic nature of infrastructure construction activity since 2007 is a “disincentive for institutional investors” and “further fragments the flow of new infrastructure projects”. » Q2 2015_MODUS A SI A

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Private finance

RAISED EXPECTATIONS Phase one of the Hyderabad metro opens this month.

India has become increasingly reliant on PPP to fund rail projects (previous page)

To assess how effectively PPP has been harnessed to date, all eyes tend to shift to Canada. The Canadian model is often held up as an exemplar of efficiency and expediency, and it has clearly excelled in streamlining and foreshortening the length of time from initiation of project through to sign-off.

In the UK it can take up to 36 months, whereas Canada has it down to 14-18 months. “Fundamentally this is about skills,” says Professor Alastair Adair FRICS, pro-vicechancellor at Ulster University. “PPP is all about marrying up different skills, such as procurement, onward maintenance, project management and the finance expertise in how you price and transfer the risk.

“In the UK, all of these skills tend to sit in separate silos.

Once you combine them, you have a fundamentally different animal, and RICS members are unique in being able to cross over these different silos. Canada has been very successful in bridging these skills silos. It’s not that the UK can’t do it, it’s that these large projects are bedevilled by political risk, as changing governments keep moving the goalposts.”

In part, Adair is referring to the UK government’s acceptance a couple of years ago that its PPP model needed reforming, which caused activity to stall as a period of uncertainty and adjustment followed. Despite this, figures from the European PPP Expertise Centre show the UK still has the largest PPP market in Europe, followed by Turkey and Belgium in terms of value, and Germany and France by deals.

Elsewhere in Europe, it will be interesting to see how Greece’s new government – led by the far-left Syriza – tackles the existing PPP landscape. The previous administration returned to PPPs last year in the belief that the model can play an important role in stimulating its economy and improving its public infrastructure, and the country now has a strong pipeline of projects. That said, the recently appointed and Syriza-aligned governor of Attica, Rena Dourou, has already attempted to block four large waste management initiatives that were at their advanced planning stages, so Syriza majority leader Alexis Tsipras will need to act fast to dispel any nervousness among private investors.

CASE STUDY

One river, two projects, two models and one winner The Ohio River Bridges Project in the US is constructing two river crossings between Louisville in Kentucky and the neighbouring state of Indiana. The outcome of the project might finally provide conclusive proof for those arguing over the relative merits of PPP and conventional infrastructure contracts. But they will have to wait.

One of the bridges is being built by the state of Indiana using a PPP finance model – which its legislation allows – while the other bridge is being built by Kentucky, using a conventional contract.

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RICS A SI A .ORG

“It’s been a real problem comparing PPP and non-PPP projects, as no two projects are quite the same and there are always different factors at play,” admits Keith Perry, head of lenders and investors at EC Harris. “So this is shaping up to be an interesting experiment.”

With the costs of the individual bridges lumped in with other associated builds, it is difficult to make a comparison of initial figures. But after starting as a conventional contract, the Indiana bridge changed to a PPP, established construction savings of

$225m and shaved eight months off its completion date, according to Indiana’s Department of Transportation.

However, we will have to wait a tad longer for a true comparison. The PPP bridge includes a 35-year maintenance and operating agreement, which has been taken on by WVB East End Partners.

So the question is whether the bridge will cost less to maintain, be in better condition and represent better value than its neighbour at final handover.

Watch this space – for 35 years.

IMAGE © 2012 SOUTH COAST BRITISH COLUMBIA TRANSPORTATION AUTHORITY DOING BUSINESS AS TRANSLINK

FINE LINE Vancouver’s Canada Line was built under a PPP contract.

The line opened in 2009, 15 weeks ahead of schedule (right)

PPP is all about marrying up different skills … and RICS members are unique in being able to cross over these different silos 



IMAGE AERIAL INNOVATIONS

PROF ALASTAIR ADAIR FRICS Ulster University

In the US, president Barack Obama also believes the country can build its way to recovery through large-scale infrastructure projects. He used his last State of the Union address to again urge legislators to focus their efforts on roads, bridges, rail and high-speed web access and the incumbent administration has committed a significant amount of money to infrastructure projects with the express aim of stimulating the economy during the recession.

As Keith Perry, head of lenders and investors at EC Harris, says: “Everybody has been waiting for the US to get going, especially after Obama’s first term when he talked about addressing its infrastructure needs.” Despite federal investment, figures from the American Society of Civil Engineers in 2013 indicated that getting the job done would still cost in the region of $3.6tn. Although partnership-based procurements are beginning to gain traction in the US, they need to be embraced more fully if its huge funding deficit is to be met.

“It has taken the US a long time to get their legislation right,” Perry explains. More than 30 states have now enacted PPP legislation, but it is still relatively untested. “It’s generally believed that PPP activity will soon start to happen with some sort of scale,” he adds, “but people tackling the US with all its individual states will need to have a strategy – are they going by sector and looking for similar projects, or by states where they understand the drivers and players?”

Where PPP could be at its most effective is in developing nations that are having to create vital services from scratch – on a national level. India’s economy might have been steadily growing, but to sustain that growth it desperately needs to develop its infrastructure in areas such as telecommunications, health, education, energy, water, urban transport, roads and ports.

Admittedly, India has its work cut out. A 2013 Deloitte report indicates a private sector injection of around $100bn is required between 2012 and 2017 to fill its funding gap. And although the world’s largest PPP is constructing the Hyderabad Metro, last year highways minister Nitin Gadkari signalled that the government would return to state-funded

roadbuilding in the short term, citing weaknesses in its PPP framework and less appetite for risk from investors.

It should be noted, however, that PPPs are certainly not suited to all projects or to all countries. In the UK, the model was heavily relied upon by the Labour government from 1997, often on schemes for which it was not, economically, the best solution. Take the Princess Royal University Hospital, built for the South London Healthcare Trust by a private consortium in 2003. It cost £118m ($176m) to build, but the payback over the 35-year term of the contract was estimated to be £1.2bn ($1.8bn). The trust’s repayments were so crippling that, by the time it fell into administration in 2012, it had run up debts of more than £150m ($220m).

Arguably, hospitals need to be rapidly evolving institutions to take account of improvements in technology, and not bound by protracted and complex legally binding contracts.

However, when applied to slow-changing technology or projects with reliable past histories, PPPs are genuinely viable funding mechanisms, Eaton insists: “Roads and bridges are really good because we’ve been building them for 2,000 years and they don’t really change a great deal. Projects that are long lasting and don’t have radically changing requirements are very suited to PPP, because you’re making predictions that are often 30 years into the future.”

Where PPPs are applicable, governments should be making them as attractive as possible to private investors.

According to RICS’ research, this can be achieved by “removing the perceived political risks associated with PPPs, namely around a lack of visible long-term government commitment to funding … The introduction of transparent project pipelines can also attract private investment as it provides a clear view of future projects and reinstates government commitment to infrastructure investment.”

As a funding solution, PPPs may have become increasingly attractive to governments. Now it is their turn to make them as attractive to the private sector. 

STATE OF PLAY Indiana is constructing the Ohio River’s East End Crossing (above) using PPP, while Kentucky builds a second bridge downstream using a conventional contract

READ THE REPORT: The Global Infrastructure Challenge: the Role of PPP in a New Financial and Economic Paradigm at rics.org/ppp Q2 2015_MODUS A SI A

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The Code of Measuring Practice has been updated to reflect IPMS for offices.

Modus finds out why the international standard should be adopted industry wide Words Cherry Maslen

A

s part of an international coalition of more than 60 professional organisations, RICS last year participated in the launch of the first ever international property measurement standard, IPMS: Office Buildings. The standard will be the first internationally adopted system for measuring office property and will ensure consistency and transparency in the way information is collected.

To bring RICS best practice in line with IPMS, its Code of Measuring Practice (sixth edition) has been revised to include the Professional Statement for the Measurement of Office Buildings. The statement was published in April, following a consultation with RICS members. “This is evolution not revolution,” says Alexander Aronsohn, RICS’ Director of Technical International Standards. “The existing Code of Practice is still the most well-known guidance on measurement standards. We expect a period of dual reporting from members as we move towards IPMS.” Following IPMS: Office Buildings, similar agreements and consultation will follow for residential, industrial, retail and mixed-use measurement standards. Although these standards have been created internationally, they are delivered locally, and RICS will work with members and their stakeholders to support the transition to the new paradigm.

Modus sought some perspectives on what benefits their adoption would bring.

Professional

MARC MOGULL FRICS

MANAGING PARTNER, BENSON ELLIOT CAPITAL MANAGEMENT, LONDON

TINA PAILLET MRICS

HEAD OF UK AND NORTH AMERICA, GENERALI REAL ESTATE From an investor’s standpoint, it’s important to have measurement benchmarks to make sure we’re not over- or underestimating value. We may simply want to know the price per square metre, but so many variables are derivatives of the surface area measurement, such as rental values, tax rates and capital expenditure.

Comparisons between different countries and cities can be difficult. For example, in multitenanted buildings in France, each tenant will pay rent pro-rata for all common areas, which are part of the building’s lettable area. In the City of London, no matter how big the lobby, it won’t be included in the lettable area.

In France, several systems for measuring a building can apply simultaneously. There is one for the planning permission process, another for the leasable areas, and yet another to calculate the amount of tax owed. There is also a different method of calculation depending on whether the space is office or retail.

Even within the same city there can be different systems. One way we try to solve inconsistencies is by taking comparables from the same geographical sub-market, based on the idea that there is consistency within that location – although there are exceptions, such as where the full leasable value of a building was being applied even to the parking levels.

An international standard is important for investors but even more important for end users. They need to know what they are paying for to be able to calculate their comparable area usage and cost per workstation. The future of IPMS will be driven by the end user.

There are two problems with inconsistent property measuring. One is the differences between countries, the other is lack of standardisation within a country. Even with established standards such as those used by the US’s BOMA (Building Owners and Managers Association) and RICS in the UK, we still need to translate between those two systems.

The bigger issue is countries where there are either no standards or where the standards are not enforced. The inability to pin down how a building is measured is a risk that affects the letting strategy. How do we predict revenue streams? Risk drives pricing and uncertainty is always going to raise the cost of capital.

The lack of an international standard is a particular challenge for investors in emerging markets, which already have multiple layers of investment risk. No prospective investor will take lightly the possibility that a building could expand or contract because of how space is measured. You could go to sleep with a building of 12,000 m2 and wake up to find it’s only 10,000 m2. Emerging markets need to make it easier, not harder, for international investors.

One way to tackle inconsistencies is to become local, but this kind of commitment just raises the investment bar higher, becoming another barrier to market entry. Investors want diversification in their portfolios, but don’t want to be deeply rooted in every market in which they buy one or two properties.

If we’re going into a market in which one of our principals doesn’t have prior experience, then we need an IPMS. If the seller of a building says it’s 20,000 m2 and the IPMS says it’s 15,000 m2, then we have a useful reality check. As markets internationalise, the ability to rely on measurement models becomes increasingly important.

PAUL BENNISON FRICS

HEAD OF ASSET MANAGEMENT, GLL REAL ESTATE PARTNERS, MUNICH We manage property portfolios at asset level worldwide, including in North America, South America and Europe. We use the measurement standards established in the UK by RICS and in the US by BOMA, along with the German standard, GIF. In addition, local standards also exist in many countries. In Spain, for instance, the local standards allow you to take parts of the roof into the measurement for letting space if there are terraces.

Even within the same city, properties can be measured using different systems, some using RICS, others BOMA and some with the local system. Obviously, assessing which buildings are the most efficient becomes very difficult.

As the real estate investment business becomes more and more global, the need for an international standard is increasing. Once we have an internationally agreed system in place, we will only need to use that one building measurement system for global property portfolios.

It is a problem for tenants as well as investors. They ask, “Why do I need different amounts of space for the same number of employees?” It doesn’t mean any of the measuring systems are wrong, just different, often because of the type of properties that developed in that city or country historically.

IPMS is a very big step for all of us working on a global scale. It is impossible to remeasure everything overnight so, naturally, it’s going to be a long process. But once it has begun it will hopefully pick up its own momentum. »

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Xxxxxxxxx

ROB JACKSON

RICS DIRECTOR FOR MIDDLE EAST AND NORTH AFRICA

DAMIAN HARRINGTON MRICS

REGIONAL DIRECTOR OF RESEARCH, EASTERN EUROPE, COLLIERS INTERNATIONAL

IPMS provides a unifying standard to which all other systems relate.

The critical step is for valuers and practitioners to understand, adopt and embrace this initiative

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

DAMIAN HARRINGTON MRICS Colliers

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Understanding the differences in measurement standards between countries and markets is critical, especially considering the surge in fresh capital being invested in commercial real estate, in some cases by those new to the sector. It has been pointed out by RICS that current global measurement inconsistencies can create a 24% difference in valuations between markets.

Within central and eastern Europe, there are clear differences in measurement standards.

Bulgaria has its own state standard (BDS), which almost corresponds to net internal area, although there is no generally accepted measurement practice in place for retail.

Russia and Ukraine use either their own BTI measurement practice to calculate lettable areas, or default to BOMA standards, depending on the property. In Slovakia, gross internal area measurements vary by developer. In addition, there are often very different interpretations of these methods to calculate what is effectively the net lettable area. So creating comparability across markets can be a real challenge.

With this in mind, RICS’ initiative to unify standards has positive implications for both investors and occupiers. Prior to consultation, there were fears that the adoption of IPMS could mean an immediate loss in the value of an asset for landlords, or for occupiers the prospect of paying more rent for exactly the same space.

The new approach, however, provides a unifying standard to which all other systems relate. The critical step is for valuers and practitioners to understand, embrace and adopt this initiative, as it will help create greater transparency for both owners and occupiers.

Inconsistency in measuring standards exists between countries globally, but in Dubai it is prevalent even within a single market. Dubai’s real estate market is growing and maturing at a rapid pace and there are property professionals working here from every corner of the globe. In the absence of a rigidly enforced government standard, many of these professionals follow the dominant standard from their own country.

This means that an international measuring standard is extremely important.

In recognition of this, the Dubai government was the first in the world to adopt IPMS. This will improve transparency by ensuring consistent space measurements are used for valuations, and will also benefit Dubai’s rental index. The index is based on a price/ft2 for different zones of Dubai and was introduced to protect the public from unfair rental increases in periods of rapid growth. We have seen examples of landlords selecting measurement standards that provide larger “apparent floor spaces” so they can apply a higher total rental value.

RICS is also involved with numerous disputes and legal cases between vendors and buyers, in which the property sizes are reported with undisclosed standards or methods of measurement. In many cases the buyer ends up with a property that has different floor spaces to those reported in the documents. Improved measurement practices will help deliver trust and confidence and help secure sustainable funding to drive the market forwards.

Implementing IPMS may present challenges, but I have yet to meet a stakeholder who is not in favour of it. It is expected that Dubai will lead the implementation of IPMS in the GCC (Gulf Co-operation Council). The Emirate of Ajman is introducing IPMS and we have had productive meetings with representatives of member states such as Saudi Arabia and Bahrain.  DOWNLOAD IPMS: Office Buildings, from ipmsc.org/office

KINGS OF HONG KONG The jury was delighted with the overwhelming response to this year’s RICS Hong Kong Annual Awards, for which a record number of entries were received

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he RICS Hong Kong Annual Dinner and Awards Presentation Ceremony 2015 attracted a record number of entries this year. “More than 60 submissions were received – an increase of nearly 50% over last year,” said Organising Committee Chairman Christopher Wong FRICS. “The submissions were of a very high standard. The Awards are gaining further recognition and popularity among the profession and industry in Hong Kong. RICS in Hong Kong will continue promoting professionalism and raising awareness of its members’ outstanding contribution to our society.”

Philip Lo FRICS, Chairman of the Jury, commented: “It is my honour to lead the judging process of the RICS Hong Kong Awards 2015.

I was genuinely excited to see the high quality of nominations. It also gave me great pleasure to work closely with my fellow judges, who are all profound and experienced in various areas.”

The jury was glad to see the overwhelming responses received and the introduction of new award categories this year. “We are particularly amazed with the impressive candidates for the Young Achievers Award Category,” said Lo (left).

“Their passion and energetic minds enlightened us to the potential opportunities ahead of all of us in the industry.

Well done to all!”

PROPERTY/FACILITY MANAGEMENT TEAM PREMIER PLUS – MTR CORPORATION Premier Plus, a brand that specialises in high-end developments, manages Two International Finance Centre in Hong Kong’s Central district.

The team highly values the property’s occupiers and has embarked on a “customer care experts” programme to keep in constant communication with them. The building has been upgraded to a 4G mobile phone network and an additional transformer and two back-up generators have been fitted. Turnstiles have been installed to prevent unauthorised access and a smartphone app has been developed with which security can easily identify tenants and visitors. Replacing fluorescent lighting for motionsensitive LEDs has also contributed to a 2.5% reduction in energy usage.

SUSTAINABILITY ACHIEVEMENT RIDER LEVETT BUCKNALL, MACE, SIMON KWAN & ASSOCIATES, CUNDALL, JRP AND ADI – HONG KONG SCIENCE PARK DEVELOPMENT, PHASE 3 A back-to-basics approach by the project team used the site’s environment to provide natural ventilation and light. For example, the buildings are positioned so the prevailing wind can increase ventilation. Automated actuators were introduced to reduce the demand for air conditioning and energy consumption. The west facade was designed as an insulated wall to minimise solar gain, while others were constructed using ultra-high performance, double-silver low-E glass units, external solar shading devices and with a low windows-towall ratio. The site is 40% green space, which minimises solar heat absorption and landscaped areas are planted with local and adaptive species to minimise irrigation needs.

The project has incorporated 39 sustainable design features – by far the most in a single development in Hong Kong.

INDUSTRIAL/DATA CENTRE/LOGISTICS TEAM CBRE Institutional leasing, the focus for CBRE’s industrial and logistics services team, was challenging in 2014 because of the acute lack of supply in Hong Kong. Despite this, the team still secured the largest portion of big-ticket transactions brokered in the year: 300,000 ft2 in 15 deals. It prevented Forewide (HK) from a forced relocation by leveraging long-term relationships with portfolio landlords to find space that met the client’s needs, and helped Easycrate and Dachser Hong Kong expand their footprints. It has also established itself as the voice for the sector, highlighting the extreme lack of warehouse facilities to support Hong Kong retail, and the need to enable growth to support local trade development. It is also a member of Self-Storage Association Asia.

CORPORATE SOCIAL RESPONSIBILITY PROJECT WHEELOCK PROPERTIES Wheelock wanted to bring a new sense of hope to the thousands of lessprivileged youngsters in Hong Kong that leave school each year by bringing them the opportunities, experiences and skills they need to build rewarding and fulfilling futures. In 2011 it launched Project WeCan – the largest community educational support programme ever undertaken by a private organisation in Hong Kong. The programme offers students key learning experiences, scholarship incentives, visits to corporations, goal planning opportunities, overseas visits, mentoring programmes and practical initiatives such as work experience. Project WeCan now covers more than 40,000 students in 44 schools across Hong Kong. » Q2 2015_MODUS A SI A

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YOUNG ACHIEVER ADAM DRAPER MRICS Local director Adam Draper MRICS helps to lead the retail team’s strategic direction and the development of JLL’s retail representation business. The 29-year-old has been instrumental in building JLL’s tenant representation business, driving growth of more than 60% in terms of client appointments and has maintained a 100% success rate in competitive pitches over the last two years. He is actively involved in CSR initiatives and volunteers his time for charity outside the office. Adam has been a qualified MRICS since 2008, and joined the Hong Kong retail team in 2012 after moving from JLL’s London office, where he was responsible for the European roll-out of brands such as Abercrombie & Fitch and Hollister.

Since his arrival, Adam has secured more than 15 exclusive or preferred mandates from some of the world’s biggest retailers, in the face of fierce competition from rival firms.

REFURBISHMENT/ RESTORATION TEAM ARCHITECTURAL SERVICES DEPARTMENT OF HONG KONG GOVERNMENT The project to conserve the former Police Married Quarters and convert the heritage building into a landmark has created around 630 jobs and benefits creative industries, the neighbourhood and the local community as a whole. The concept of the transformation was to show the history of the building, so non-invasive construction methods were adopted to preserve archaeological relics. A glass “Cube” was inserted between the two existing main blocks and the glazing of this new addition was made of low-iron glass, to ensure crystal-clear vision through the structure so the historical facade of long corridors could be appreciated from both inside and outside. The exterior, streetscape and interior areas were maintained and the old layout for lodging was adapted and reused for workshops, shops, restaurants and exhibition space. An arborist was also commissioned to preserve the stone wall trees along the site.

And when the design had to change due to uncertain underground conditions, the team worked expeditiously to resolve the issue.

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BEST DEAL CBRE CBRE was appointed by Citi as the sole adviser for the bank’s long-term strategy in Hong Kong. CBRE successfully assisted Citi in acquiring East Tower, One Bay East, Kowloon East – a 21-storey property totalling 512,000 ft 2 – from Wheelock Properties for HK$5.425bn ($699.5m). A landmark deal for the Hong Kong market, the transaction stands as the largest en-bloc office purchase ever in Hong Kong. The deal was delivered by a CBRE team with knowledge, perspective and a track record of results. Citi’s office portfolio is spread across five locations in Hong Kong. CBRE conducted occupancy scenarios that allowed Citi to review every suitable lease and purchase option in the market. From this, the team decided to investigate a purchase instead of leasing.

Few corporate occupiers have purchased assets in Hong Kong, which made this an even more challenging and complex project.

RETAIL TEAM JLL JLL’s retail team cemented its position as the market’s leading service provider in 2014. Its 12 agents have overseen more than 120 transactions, leasing just less than 500,000 ft 2 of retail space this year. Among the key instructions was the only new retail space completed in Sham Shui Po in 2014 (30,000 ft2 in the TST Tower) and 11,000 ft2 of retail space in the KP Tower – at 38,900 ft 2 the largest development completed in North Point in 2014. The team won several key new brands in 2014, among them Lush Cosmetics, American Eagle Outfitters and Italian fashion group Calzedonia. The team debuted Jamie Oliver’s 16,000 ft2 Jamie’s Italian concept in Hong Kong to huge success and found luxury watch brand Montblanc a prime flagship store on Russell Street in Causeway Bay – a challenging remit because prime retail space is so scarce in the area and rents have been escalating.

RESIDENTIAL TEAM KNIGHT FRANK Despite winning this award for the third year running, Knight Frank’s residential team continues to forge ahead by providing a comprehensive service that meets the needs of increasingly international clients, regardless of budget and territory. In 2014, the team rolled out 17 international projects for 13 overseas developers and concluded 210 deals, totalling more than $205m in gross sales value. The launch of its RPS system – the world’s first global database that enables the sharing of international clients and property transactional data – has broadened the scope of their services in 2014.

Meanwhile, the international project marketing team continues to launch projects that fulfil the increasing Asian appetite for overseas homes, such as Lillie Square in London’s Earls Court, which was a huge success. The team sold 48 units totalling £48m ($71.1m) in March. The team also secured for a Chinese client a spacious, sea-view apartment in West Kowloon, took care of the lease termination upon his departure, and connected him with the London office, which found him a home within days of arrival. »

PROFESSIONAL SURVEYING SERVICES TEAM KNIGHT FRANK

OFFICE TEAM JLL The JLL office team’s performance outstripped its award-winning 2013 results, consolidating its marketleading position. They built a market share of 37% on deals above 10,000 ft2 and, in the first 10 months of 2014, advised on more than 2.2m ft2 of office transactions, with a further 3.7m ft2 in the pipeline. Among their star deals are the largest occupier appointment in the market in 2014 at 550,000 ft2 for JP Morgan’s Hong Kong portfolio; the largest banking and finance new letting of 32,000 ft2 for Wells Fargo at Pacific Place; the biggest sublease in Hong Kong’s history of 33,000 ft2 on behalf of Credit Suisse; and key sole leasing agent appointments for 535 Jaffe Road, Citibank Plaza, KP Tower, Pioneer Place, KC100, Fontaine Building and 29 Austin Road – totalling more than 1m ft2. Furthermore, in the biggest mixed-use transaction of the year, JLL brokered a deal for Nissan to take 60,000 ft2 of flagship retail and office space in Wan Chai’s Hopewell Centre. The team determined Nissan’s specific needs and came up with a resulting commercial package that was unique to the local market, and secured at a competitive, below-market rate.

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Knight Frank is a panel valuer for more than 50 financial institutions, and is responsible for valuing almost 70% of assets owned by the listed entities that comprise the Hang Seng Property Index. Its consulting services are used by leading investors, landlords and government agencies and, by integrating consultancy services with other disciplines, it provides comprehensive advice to its clients. The team was commissioned to undertake the integrated development consultancy project for the West Kowloon Cultural District Authority to provide solutions for the implementation of an mixed-use art, cultural and property development comprising more than 9m ft 2. The property consultancy work also required design, construction issues, programme costs, retail planning, economics, financial modelling and government liaison. During course of the consultancy, Knight Frank’s team worked diligently to produce 18 information notes containing technical work, detailed evidence and analysis for the client, which helped frame various discussions and were invaluable in the decision-making process.

CONSTRUCTION PROJECT TEAM GAMMON CONSTRUCTION For years, Hong Kong’s western district has been an affluent residential area, which buffers the central business district. The extension of the Island Line into the western district shows what Gammon is good at: complex and large-scale projects in very congested areas. Considering the scale of the project, there were several challenges, one of which was soft ground tunnelling. To eliminate the risks associated with ground settlement, ground freezing techniques were employed. In addition, limited space on station platforms and sharing access with other contractors caused significant logistical and building service installation safety issues. Gammon adopted a construction method of modularisation of electrical containment to minimise the time and space needed for temporary storage and fabrication procedure. Thus, work efficiency and safety were enhanced. Gammon also engaged full-time staff members as caring ambassadors to provide assistance to the neighbourhood – a first for the company in Hong Kong.

LIFETIME ACHIEVEMENT VICTOR SO FRICS Victor So FRICS, chairman of the Urban Renewal Authority (URA), has extensive experience in the development and management of commercial and residential portfolios. From 1981 to 1990, Victor was property director of the Mass Transit Railways Corporation, followed by 12 years as executive director of the Hong Kong Housing Society from 1990 to 2002, and two years as executive director of Sun Hung Kai Properties. Between 2004 and 2007, he took the helm of the Link Management Limited as executive director and chief executive officer, before moving on to become executive director of Kerry Properties from 2008 to 2010. Chairman of the URA since 2011, he has been committed to improving the living conditions of Hong Kong’s residents in dilapidated urban areas. “This award is not only a recognition of my humble achievement since becoming a chartered surveyor in 1976, it also encourages me to join hands with my colleagues in tackling the tenacious urban decay problems and making Hong Kong a better place to live,” he said on receiving his accolade. 

THE JURY

Meet the decision-makers PHILIP LO FRICS CHAIRMAN OF THE JURY Global board chairman, Rider Levett Bucknall CHEUNG HAU WAI MRICS Vice-chairman, Hong Kong Green Building Council CHEUNG TIN CHEUNG FRICS Deputy director of buildings, Buildings Department, Hong Kong Government HUI CHIU KIN MRICS Chief property services manager, property services branch, Architectural Services Department, Hong Kong Government EDDIE HUI MRICS Professor, Department of Building and Real Estate, Hong Kong Polytechnic University STEWART LEUNG MRICS Chairman of the executive committee, Real Estate Developers Association of Hong Kong MABELLE MA MRICS Director, development and valuations, Swire Properties

MICHAEL J MOIR FRICS Director of property, Hong Kong Jockey Club JAMES KENNETH PONG FRICS Adjunct professor of Hong Kong University of Science and Technology, director of Sundart Project Management & Consultancy NICHOLAS SALLNOW-SMITH Chairman, The Link Management Limited TAM KING LEUNG Director of estates, Estates Office, University of Hong Kong SANJAY VERMA FRICS Chief executive officer, AsiaPacific, Cushman & Wakefield IVAN WONG Director – registration services, Construction Industry Council

BE PART OF 2016’S AWARDS Does your team or project deserve to be an RICS awardwinner? Find out how you can apply for next year’s awards at ricshkawards.com

BRIGHT STARTS

Setting up on your own? Few people are better placed to advise you than RICS members who have successfully launched a company and have the benefit of hindsight. We asked some of them what they wish they had known before they started Interviews Roxane McMeeken

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Start-ups

“ACCEPT THAT YOU ARE THE BOSS”

ALISTAIR GEORGE MRICS took over a struggling department from his then employer Hawkins Group in 2010. Hence George & Company was born. The firm advises commercial and residential clients from its office in the English town of Rugby.

At the time of its launch, recalls George, the fledgling company comprised four people from Hawkins. “We knew each other well, we were very friendly and we were taking a risk together, so although my name was on the door, it felt like we were in it together.”

Since then, George & Company has thrived. This growth has included taking on eight further employees, mostly through two acquisitions – something George says he was not quite prepared for: “I had a sudden realisation that I’m an employer.

I had to deal with various human resources issues. For instance, the new staff had contracts that we needed to update with our company name and they had their own terms and conditions.” As a result: “The atmosphere changed from that of a small, friendly team to a more formal office.”

A year after the mergers, although he misses the informality, he is seeing the benefits of enlarging the firm: “Now the wheels are turning, they have moved me out of the front office because I’m not needed there all the time. I have moved upstairs and can concentrate on strategic planning, growing the business and looking after clients, which is great, really.”

“THE ONLY PERSON MOTIVATING YOU IS … YOU”

“BEING ETHICAL PAYS OFF”

PAUL DWYER MRICS launched Dwyer & Co in Hong Kong in 2002. The consultant provides advisory services to office landlords and retail landlords and tenants.

It has advised landlords on leasing properties to international names such as Goldman Sachs, JP Morgan and Cartier.

“I was working for a big firm in Hong Kong and one of their clients persuaded me to launch my own company,” says Dwyer.

“He felt that there was a lack of independent advice for landlords in Hong Kong and he wanted me to provide it. It was exciting but I strongly suspected that he would be my only client. I honestly thought the business would last two years.

“I didn’t have a business plan. I simply followed the RICS code of ethics, particularly avoiding conflicts of interest. For example, I advise office landlords but, unlike many other firms operating here, I don’t advise their tenants.”

Running a business in Hong Kong turned out to be remarkably simple, Dwyer found.

“Corporation tax is only 15%, whatever the size of your business, and there is no capital gains tax or tax on work done overseas. We even file our accounts in English.” He adds: “I don’t have rules for my staff and I have never looked at the audited accounts.”

Today, Dwyer’s firm is showing little sign of crumbling. “To my surprise I’m 12 years in, with five employees and we’ve become a key player in Hong Kong. It seems that just doing the right thing has kept the clients rolling in.”

JOHN DUFF FRICS, Honorary Secretary for RICS Scotland, launched his one-man planning consultancy John Duff Planning in Edinburgh in 2002. He says: “You have to be hugely passionate about running your own business to be successful at it, because no one else is going to motivate you. There are no personal development reviews or bosses to encourage you. It’s down to you to have the drive to follow up every lead and always deliver on time.

So if you stumble into running your own business and you’re not really doing it by choice, you will end up watching daytime TV.” Although you might feel that it is a disadvantage, the very fact that your company is small can win you work, Duff has discovered. “My sales pitch is that the only person you will get doing the work is me.” In other words, he avoids the practice larger firms are sometimes accused of, whereby a senior member of staff pitches for a job but then passes the everyday work on to a junior employee. Into the bargain, Duff can charge less, “because I don’t have the overheads of big companies.

“Don’t grab any job that comes over the horizon,” he recommends. “If it’s not the type of surveying that you specialise in, say so, and recommend someone else who can do it well. This is better than trying to do something that you will do badly, and clients like it because it’s honest.” As a result, they might come back for your services another time. “In the short term you’ll lose out, but I have found that in the long term, you win 10 times over.” »

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THREE-POINT PANEL

How to …

HIRO ISOBE FRICS founded Tokyo-based Japan Valuers in 1983. Today, the firm is one of the largest independent real estate valuation firms in Japan. However, Isobe admits: “I had absolutely no experience when I set up and for the first six months I received no calls from prospective clients.

It was not a good start.”

He says that, in Japan, valuation contracts are rarely awarded based on tenders – even by the public sector. In this market, introductions and recommendations are particularly important, which makes starting a business with no experience or contacts difficult.

Isobe decided to offer his services to a more established firm as a subcontractor.

“It was not what I wanted and I couldn’t put my signature on the reports, but this was one of the few sources of jobs for me in the beginning.” The strategy paid off, bringing Isobe the experience he lacked.

He combined this with frantic networking and finally began to win his own clients.

Try not to ask potential clients straight out to give you work, Isobe advises. He found that: “Clients won’t commission you just because you have met many times or even asked for a job many times.” Networking is an important first step, he says, but then: “They will only hire you based on the quality of the service that you are offering.”

And make sure that service stands out: “Show that you offer something different from the others and you will get clients sooner or later.”

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“WRITE EVERYTHING DOWN …”

DAYLE BAYLISS FRICS started her own surveying business – now known as Dayle Bayliss Associates – in September 2011 after being made redundant. A few phone calls later, she had three clients and was back working five days a week. “It wasn’t planned – there was hardly time to think. I just jumped straight into it with no strategy,” she recalls.

“At the start, I just had my whole strategy, my client list and my methodology stored in my head.” This, she now realises, was a highrisk approach. “I took on another member of staff, and if something had happened to me, it would have been impossible for them to keep the business running effectively.”

Success in a local newspaper competition gave Bayliss access to a business mentor, who encouraged her to write a business plan.

“It was hard work but I ended up with a set of high-level objectives – and how I was going to achieve them in the context of market conditions and forecasts,” she says. “It has given me something tangible to go back and monitor myself against.” The document also helped her impress bank managers while she tried to secure extra funding.

Bayliss has now extended her new-found meticulousness to other aspects of the business. Recording time spent on projects and collating invoices is a breeze thanks to smartphone- and tablet-based apps.

“Previously, I spent time at the end of each month scraping around for invoices and timesheets – whereas now everything is automatically recorded in one place. Having everything documented properly makes life so much easier.”

… ENSURE RESILIENCE “We have contingencies in place for any unexpected event that might have an impact on cashflow. Work with clients that pay quickly and keep an eye on your financial position, because it is easy to find yourself turning over millions but not making a profit. Always make sure wage bill payments are made – to ensure this we keep a reserve to enable the smooth running of the company.

“For a small firm it is fairly easy to keep the business going if the office is inaccessible due to a disaster. All staff can work remotely and most of our systems are based on cloud storage so we can access it anywhere.”

Matt Fedigan MRICS, director, Domec, Liverpool, UK … ACHIEVE SUSTAINABLE GROWTH “When we started, our growth was organic. We took on a graduate each year, gave them a lot of responsibility and helped to nurture their skills.

Three years ago we decided to bring in people at senior level to engage with a wider variety of clients. The confidence to think more strategically about recruitment comes with longevity.

“I like to take a steady approach to recruitment – you do not want to be in a position where you find yourself overstaffed at the end of a job and then have to make redundancies.”

Ian McKee FRICS, managing director, GLM, Edinburgh, UK

ADDITIONAL REPORTING COLIN MARRS

“SUBCONTRACT TO SURVIVE”

… DRUM UP NEW BUSINESS “Face-to-face meetings are very important for building relationships.

I attend quite a few events arranged by a range of organisations. You might not get work immediately, but if people remember you they will get in touch when they require your services.

“Social media has become really important. Twitter and LinkedIn really help get your name out there – I tweet articles and tips on a daily basis. On one occasion a local retailer responded and it led to an instruction. What you don’t want to do on social media is just sell, sell, sell. It is about informing and interacting – just like real networking.”

Kirsty Harvey MRICS, director, KTD Surveying, Letchworth Garden City, UK

TOUCH OF GENIUS SURVEYING BY TABLET

Building surveys can be much faster when you use a tablet. In fact, at least two developers – Kykloud and GoReport – claim that their software cuts the time taken to conduct a survey by half.

Chris Coleman MRICS, associate at Aecom, has been using Kykloud’s software for three years and has found it makes the process “between 30% and 50% faster. Data collection becomes a matter of touching buttons and you cut out the time you would spend travelling back to the office and then writing up hand-written notes and downloading photos.”

Coleman was involved with Aecom’s original trial of Kykloud. He remembers: “We were bidding for a contract with the [UK] Education Funding Agency that would involve three firms carrying out condition surveys on about 7,500 schools in nine regions.

This was to be delivered in two years and it wouldn’t have been possible to get it all done using paper.”

Aecom found that with tablet-based software, data collection and collation could be faster while also customised in detail, both to the firm and the particular job. A deal with Kykloud helped Aecom to win the schools contract. Since then, Aecom has used Kykloud across many more projects.

Kykloud also provides RICS-approved survey and report templates. These templates cover dilapidation, stock condition, planned maintenance, valuation, energy and carbon, and commercial building surveys.

However, Coleman adds: “To produce a report for a client, you need to do a little more work. And there’s still sometimes a need for a high-quality digital camera as well as the good old dictaphone.”

FIVE

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HOT SHOT

THERMAL IMAGING VIA SMARTPHONE Clients seeking to cut energy bills are increasingly asking professionals to provide images that show where a building is losing heat. This typically entails using an infrared camera and then later downloading the data, carrying out analysis and preparing a report.

But now you can provide this service more efficiently using your smartphone.

An app from FLIR Systems, a company that develops technology for surveying and security, allows you to see and capture thermographic images using a mobile device. FLIR Remote allows professionals to control thermal imaging cameras remotely via an iPad, iPhone or iPod Touch. The images or video can be streamed to interested parties in real time, allowing them to use the information immediately or to direct image gathering. You can also edit and create reports using the app.

Surveying might be a venerable profession, but it is no slouch when it comes to innovation, as these technological triumphs prove Words Roxanne McMeeken

Technology

EYE IN THE SKY

DRONES TARGET HARD-TO-REACH JOBS No longer must building surveyors clamber over damaged roofs or teeter at the wrong end of a cherry-picker. Now, an unmanned aerial vehicle (UAV), or drone, with a camera attached allows you to survey places that are hard to reach. Both the drone and camera are remote-controlled.

Andrew Bonnington FRICS, who runs Bonningtons Chartered Surveyors in the West Yorkshire town of Haworth, northern England, bought his first UAV in 2009 – an investment he says was in the tens of thousands. He now has three. “The drone is faster and can often work out cheaper than erecting scaffolding or hiring a cherry-picker and driver,” he says. Bonningtons charges between £800 and £1,000 ($1,200-$1,500) for a day’s surveying by UAV. “Surveying by drone is ideal for investigating the roofs of very tall buildings, dangerous environments that are structurally unsound or where vehicles or scaffolding aren’t allowed – for example, a cathedral, or a large building that you would survey by moving a cherry-picker to multiple points,” says Bonnington.

In the UK you need permission from the Civil Aviation Authority (CAA) to fly an unmanned aircraft that weighs 20kg (44lb) or less for commercial purposes and this includes proving that you have had training. The CAA stipulates that such drones may fly only up to 500m away from the pilot and to an altitude of 400ft (122m). The authority also requires that small UAVs remain in the pilot’s line of sight.

To meet the regulations while also ensuring that he takes the right photographs, video or thermal images, Bonnington’s UAVs come with video goggles.

These allow him to see the drone, where the drone is going and what the camera is capturing. But it is not easy to mentally process all this information at once.

A further challenge, Bonnington explains, is that when you fly the drone back once the survey is complete, “you have to start thinking in reverse because the machine’s left is now your right.

Basically, you need a 3D brain.”

In addition, there is the time pressure. The short battery life of lightweight drones means that, if fully laden, Bonnington’s two 1kg (2lb) UAVs can only fly for up to 20 minutes and his 5.5kg (12lb) drone no longer than 40 minutes. The pilot, therefore, must also keep an eye on a laptop that displays the battery’s life.

And don’t think staff efficiencies can be achieved through drone deployment, either – at least not until the novelty value of seeing one in action wears off.

“They attract a lot of attention, so you’re constantly shepherding people away from the machine,” says Bonnington. The CAA stipulates that unmanned aircraft must not fly close to people. As a result, he needs a colleague to help each time he flies a UAV. There is, of course, a wider debate about the impact of drones on people’s privacy. If this debate continues, it is possible that new rules could be introduced that limit their use. » Q2 2015_MODUS A SI A

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Technology

SEE THE FUTURE

BIM SOFTWARE BUILT ON VIDEO GAME PLATFORM

The joys of losing yourself in virtual worlds no longer need be confined to your free time. Using technology from the video games industry, a new piece of kit called Seeable allows you to virtually walk around a building or construction site.

Severn Partnership, a high-tech land surveying firm in Shrewsbury in England’s West Midlands, launched Seeable last year.

Director Nick Blenkarn MRICS explains: “BIM [building information modelling] models contain millions of points of data and it can be very difficult to pick out the bits that you need, especially if you’re a client who isn’t trained in BIM.” Seeable takes the information from BIM that you require and, using the game creation engine Unity, generates a 3D model of the environment that anyone can understand, or “see”. Using a mouse you can move around this environment as you would a video game. “It brings data to the masses,” says Blenkarn.

Severn, which in 2013 created a BIM model of RICS’ headquarters, says Seeable can be used not only for interpreting BIM models, but also for marketing, health and safety training, and for introducing operatives to a site before they get there.

You can also walk around a site with the app on your tablet and cross-reference the real with the virtual. “This allows you to see if there is supposed to be a CCTV camera on that corner or whether a litter bin is in the correct place,” Blenkarn adds.

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MAPPED OUT

DIGITAL OVERLAYS THAT CONVERGE INFORMATION In the UK it is now possible to overlay Ordnance Survey maps with all sorts of useful local information for professionals, such as planning precedents, flood risk, ground conditions and even Japanese knotweed.

Paul Lewis MRICS, who runs Terra Firma, a surveying start-up in south Wales, is using .Map software developed by GroundSure.

The mapping tool, he explains, “allows you to highlight the area you want, so you have a completely bespoke map. Then it provides the reports you want for that specific site.

The maps are available in a range of different formats [GIS, PDF, CAD] and are suitable for submission to planning authorities.

“It’s based on existing data so it’s not the same as going out yourself and inspecting the site,” adds Lewis, “but it’s a very useful starting point.”

SHANGHAI AND MIGHTY Building the world’s second-tallest skyscraper set so many precedents, it might well influence the whole of the profession in China.

Helen Roxburgh reports

Developer Shanghai Tower Construction & Development Co Contractor Shanghai Construction Group Architect Gensler Structural engineer Thornton Thomasetti Quantity surveyor Rider Levett Bucknall

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LOCAL KNOWLEDGE Upon completion, the Shanghai Tower’s owner will set up a project management company to share the experience gained on the development

I T IS FAR FROM UNUSUAL to see skyscrapers in Shanghai; especially in the central business district, Pudong. But for the last six years, the construction of one in particular has towered above the rest, even in this “supertall” city.

The Shanghai Tower became the tallest building in China, and the second tallest in the world, when it topped out in August 2013.

The twisting, 121-storey structure stands at 632m high with a total floor area of 6.2m ft2 (574,000 m2). Developed by the Shanghai Tower Construction & Development Co, the project is being portrayed as much as a symbol of national pride as a striking addition to the city’s skyline.

In construction terms, the project has set a lot of firsts even for China, where 13 of the 20 world’s tallest towers are being built.

Divided into nine different zones, each 12 to 15 storeys high, the emphasis has been on building a “vertical city”. To achieve this concept, designers have focused on creating a pleasant internal environment, not just a striking design from the outside. A third of

DOUBLE GLAZING The tower’s “transparent second skin” of glass will insulate the building, cutting costs for both heating and cooling, and reduce the need for electric light

VERTICAL CITY The tower is built in five office sections, plus shopping floors, observation areas, and a 320-room Four Seasons, which will be the highest hotel in the world

IMAGES GENSLER

BASE FUNCTIONS The tower’s five-storey podium contains retail, banking, restaurant, conference, meeting and banqueting facilities, set within a site that is one-third green space

the project will be green space, and each of the zones will feature its own “sky lobby”, featuring public landscaped gardens.

Holly Ying MRICS is deputy director of the first engineering division of the Shanghai Xian Dai Architecture, Engineering and Construction Co, and is managing design consulting for the project. “Design has been very important in this project,” she says.

“There were a lot of designers, both local and from abroad, with different ideas and different concepts, with new techniques and materials to use. The most important part of our job is to get all the designers to cooperate.

“And because in China every project has to be approved by the government, you need to coordinate not only the designers, but also the government and the suppliers.”

Xu Zhen Yu MRICS is associate director at quantity surveyor Rider Levett Bucknall, which was appointed to the scheme in 2008.

“From a quantity surveyors’ point of view, the biggest difficulty with the tower is its height – data from previous projects and

relevant standards simply can’t be applied,” he explains.“To determine the initial budget for the expansion of this project, we did a comparison of collaborative design over a variety of programmes and construction units. The construction process used a lot of innovative products and technologies, and we needed to understand all these specific processes to accurately calculate costs.”

Sustainability is prominently on the agenda in China and the Shanghai Tower was required to achieve LEED Gold and a China Green Building Three-Star rating, making it one of the world’s most sustainable skyscrapers. The building’s “transparent second skin” is a key part of this – it will insulate the property, reducing costs for both heating and cooling, and allow for maximum daylight, lessening the dependence on electric light. Exterior lighting will be powered by 270 wind turbines.

Other measures include ice storage systems, ground-source heat pump systems, and rain water reuse systems, says Xu. In

total, 43 sustainable technologies have been employed to cut energy consumption by 21%, reducing the tower’s carbon footprint by 34,000 metric tons a year.

And as these new technologies are implemented, they improve the knowledge base in China’s construction industry.

“Through this project you meet a lot of experts in their areas,” says Ying. “You meet the best designers, the best suppliers around the world, and you learn a lot.”

“Our central idea is that we can build local skills as much as possible, and bring outstanding domestic enterprises together to gain experience and work together to build their own brand,” Xu says. “High-tech products are often monopolised by foreign companies, but in Shanghai many of these products are now undergoing national patent applications. So, the rise of Shanghai Tower is also the Chinese people’s pride. We are proud to have been involved in a building that has had a huge impact on China’s construction industry.”  Q2 2015_MODUS A SI A

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Careers / Business / Legal / Training

Foundations CAREERS We all dream of working for a perfect employer. But short of doorstepping the CEO, how do you turn fantasy into reality?

EMPLOYEE SURVEY

The difference between merely doing a job and having a great job is an employer with an ethos that suits you. Company cultures vary widely, so it is worth investigating them before you apply for any job.

John Campbell MRICS, a general practice surveyor who swapped a large company for a smaller, specialist employer, says: “I had been working with DTZ and then Colliers in the City of London but it was not the right environment for me. I was up for a new challenge and a recruitment consultant told me that commercial property adviser Devono was looking for a senior, qualified professional. I knew the company was different in the UK in that it represented only corporate tenants, so that forms a part of its culture.”

He scoped out the firm by speaking to some of its employees and talking to director Luke Philpott, with whom he had dealt in the past. “I knew it was a young and energetic company that goes the extra mile for clients and it sounded like a good fit for my next challenge,” says Campbell.

Now a director in Devono’s office agency team, Campbell adds: “When you are looking for the right company, be clear about what you want from an employer and clued up about the companies you target. Talk to as many relevant people as possible.”

Once you have found someone who works at your target company, these questions will give you a glimpse of its corporate culture: 01 What is it really like to work there?

Try to ask more than one person about this 02 What must you do to be considered a team player?

03 What hours do people typically work? Are you likely to find yourself working late and on weekends?

04 How do colleagues react to suggestions and new ideas?

05 What does it take to get promoted – officially and unofficially?

06 What kind of activities does the company put on after work? If everyone loves sport but you hate it, you may be in the wrong culture.

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Employers also look for cultural fit in candidates. Because Devono only represents tenants, director Adam Landau says he looks for candidates who show a genuine interest in this “no conflict of interests” model of working.

“Enthusiasm and dedication to this different way of doing business will encourage our decision to hire,” he adds.

When choosing your preferred companies, John Lees, author of How to Get a Job You Love, says: “Think about the kind of organisational culture that works for you. Target organisations that offer products and services you like, plus employers praised by their employees.

Research the list and record what you learn so that you can compare them.”

Martin Wood, managing director of recruiter Prima Ardelle Associates, advises: “Obtain marketing collateral from the company to see how the brand is promoted, look at the company website to see what their staff are like, look at their size to scope career opportunity, and research industry commentary both online and offline.”

For other useful sources of information, look out for blogs and press interviews by senior figures – do they sound like people with whom you could work? Better still, seek out people from your target companies and ask them what it is like to work there (box, left).

Recruitment consultants can help.

James Blaber, principal consultant at recruiter Eden Brown, says: “We spend all our time talking to companies, so we know those that keep staff or where turnover is high, what type of culture they have and what kind of people thrive there.”

NEXT MONTH: VIDEO INTERVIEWS For further careers advice, go to rics.org/careers, and for the latest jobs, see ricsrecruit.com

ILLUSTRATION MAGOZ PORTRAIT MARTIN HOLTKAMP WORDS LINDA WHITNEY

IN GOOD COMPANY

Foundations

BUSINESS BRIEFS

MY WAY INTERVIEW MAGGIE HOHLE

SUPPORTING STRESSEDOUT STAFF When managing stress in the workplace, it’s important to know how to recognise the signs, what support is available and how employers can make the workplace environment stress free.

Demands Pay attention to the way jobs are designed, training needs and options for flexible working.

Control Think about how employees are involved in decision-making, the contribution made by teams and how performance reviews can help identify strengths and weaknesses.

Support Give employees the opportunity to talk about the issues causing stress, provide a sympathetic ear and keep them informed.

Relationships Check your policies for handling grievances, unsatisfactory performance and for tackling harassment. Ensure staff are aware of policies, and line managers are trained to spot potential issues early.

Role Review your induction process, ensure accurate job descriptions and maintain a close link between individual targets and organisational goals.

Change Plan ahead. Consult with employees so they have a real input, and work together to solve problems.

STEWART GEE is head of information and guidance at Acas acas.org.uk/stress

MY WAY

Mizuho Ogata FRICS

PRESIDENT, JAPANESE ASSOCIATION OF REAL ESTATE APPRAISERS (JAREA), TOKYO, JAPAN

I’ve been on the management team of JAREA for around 20 years, working to improve appraisal quality. Last November, I was immensely proud to receive one of Japan’s highest honours for a citizen, the Medal with Blue Ribbon, for my contribution to the improvement of the industry. I was also chosen to represent the recipients in thanking the emperor for the award. JAREA is a public services body, and I was given the medal in recognition of its activities in upholding the performance and standard of the appraiser industry. No doubt I’ll be working even more diligently now!

Real estate valuation is a public system here, not private as it is in other countries.

The valuation standards of real estate are created through an exchange of opinions between the Ministry of Land, Infrastructure,

Transport and Tourism and JAREA, and the ministry publishes the valuation criteria.

I didn’t start out with a particular interest in real estate, but after a few years of training and gaining work experience, in 1983 I founded my own appraisal company. Now I act as managing director, while also devoting a lot of time and energy to JAREA. In recent years, women have been more assertively entering the real estate industry in Japan, and we have some very experienced female executives in my company. I suppose my advice for those considering a professional career would be the same for anyone, regardless of the industry: do not give up easily. It’s important to keep your hopes up and work towards your goals, no matter what.

I think the benefits of being member of RICS are not clear enough in Japan at present.

As RICS continues to increase its influence in global markets, we can expect its standards to become a touchstone for personal and intellectual property valuation in Japan. It is also essential that RICS sources members from a variety of fields, such as accountancy, construction, and land surveying. fudousan-kanteishi.or.jp

“Last November, I was immensely proud to receive one of Japan’s highest honours for a citizen, the Medal with Blue Ribbon, for my contribution to the improvement of the industry” Q2 2015_MODUS A SI A

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OUT OF OFFICE ASSISTANCE

When “work” was a place to which staff went, rather than an activity they actually did, people management was a considerably easier process. Seeing staff physically in the building was half of the battle. Today, though, not only are the days of employees sitting in an office all week eroding fast – for instance, the number of people in the UK who regularly work from home has risen 10% since 2007 – but experts predict dispersed working will only increase.

And it is not just technology making this possible. Since June 2014, all staff in the UK have the right to request flexible working, whereas previously it applied only to parents or carers. “[Employing] dispersed workers definitely makes management harder,” observes Erin Meyer, professor of organisational behaviour at business school Insead in Fontainebleau, France. “These people don’t bump into other members of staff, or create informal conversations, so they don’t develop a sense of what is happening around them, so managers have to agree times to talk, catch-up, and report in.” This is not easy, she says, because it can often appear to signal a return to old-fashioned command-and-control management, just at the point where being able to work remotely is supposed to be seen as a sign of confidence.

“The thing managers need to remember is not to think about geography, but relationships,” says Alex Swarbrick, senior work consultant at Roffey Park Institute in south-east England.“Too many managers think of the miles between them NEXT MONTH: BUSINESS RELOCATIONS and their staff, rather than the quality of the relationships.” He adds: “Both manager How to move office locations without and employee need to be able to reassure heading for disaster. To take part in each other that they have the same goals, future business advice columns, and that the same things matter.” email editor@ricsmodus.com 46

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ILLUSTRATION MAGOZ WORDS PETER CRUSH

BUSINESS Fostering a good workplace ethos is tricky when few of your staff work in one

To do this requires taking traditional management techniques and, says Swarbrick, “turning them up a notch”.

Communication must be crystal clear, staff shown that they are valued and, most importantly, any actions not left assumed.

These steps, argues Meyer, develop “effective trust” – which is characterised more by friendliness between manager and employee, rather than reliability.

“Only once this level is reached,” she says, “is proper trust established, and distance between people becomes irrelevant.”

At Alan Dick Communications, which supplies structural engineering design and site services to a variety of industries, having dispersed teams is almost the norm – and they are typically field based.

For co-owner Mark Weller, safety is also a huge consideration: “We can’t afford to have people feel they’re under pressure to do stuff to a particular time if they feel that makes them unsafe,” he says.“So, part of our dispersed worker rules is giving them power and authority to walk away.”

He adds: “We’ll equip staff with roaming SIMs so there’s minimal chance they will be out of signal if they need assistance.

Our vehicles also have trackers so we know where people are.”

Despite all this, Weller is certain that maintaining face-to-face communication matters most, and best influences levels of engagement and performance: “We’re trialling giving staff iPads so they can connect to our intranet, but it’s the face time that shows we care. It’s a chance for us to pass on company news, but as managers, we also learn what matters to them, and what makes them tick.” He adds: “You can study all the management books you like, but my simple rule is that you have to treat people as you’d expect to be treated. I make a point of seeing people monthly. I’d like to be less busy to do it more often.”

Powered Now, a mobile admin app for building tradesmen, has been developed largely by dispersed workers. This would not have been possible without having “an auditable system of communication”, says its CEO, Benjamin Dyer.“People work best when lines of communication are short, when staff know who is accountable and who they can turn to for help.”

What Dyer is adamant about, though, is not crossing a line that ends in micromanagement. “Managers still look at inputs (hours) rather than outputs,” he says. “But over-management causes real disruption.” In cases where staff do require

Foundations

LEGAL 101...

more supervision, Dyer suggests this may be because some take a while to get used to being at arm’s length. “Some need to acclimatise more than others. Hold regular team meetings and keep them consistent.

We have a Monday planning call and a Friday progress call. That way, everyone knows what’s expected, and it creates focus without being too controlling.”

“Managers can get away with being average when everyone’s in one place,

“Too many managers think of the miles between them and their staff, rather than the quality of the relationship. Both must reassure each other that they have the same goals” ALEX SWARBRICK Roffey Park Institute but they can’t when people are dispersed.

So, everything has to be done with more thought,” says Alison Maitland, visiting fellow at Cass Business School’s Faculty of Management in London, and co-author of The Future of Work (box, below). “Being clear about what you want from staff shouldn’t derail the autonomy that working remotely offers them. Managers should ‘support’, rather than ‘police’, their dispersed staff.”

Swarbrick adds: “If you normally email staff, phone dispersed ones instead. If you normally phone them, see them personally.

Managing dispersed people is really just about doing all the things you normally do, but to the next level up.”

MAITLAND: HOW TO MANAGE DISPERSED WORKERS  Have clear objectives so

staff feel part of the process.  Create “virtual coffee meetings” by scheduling calls – but take care to not launch into work straight away.

Talk about them and what is happening in their lives.  Do not let dispersed staff feel abandoned. The worst thing managers can do is

book calls and constantly cancel them. Nothing should be more important than talking to dispersed staff.  Everyone works differently, so even though you have to set regular touch-points, it is vital managers treat people as individuals.  Social media can give the illusion of connectivity, but nothing beats seeing people for real. If distance is too great, use video-conferencing rather than instant messaging, texts or emails.  Try to physically meet staff.

It takes longer to trust people you do not see often.

Terminate with caution EUGENIE LIP FRICS executive director at Davis Langdon KPK, an Aecom company

Terminating a contractor’s employment is a serious step. Apart from having a partially completed building and an unoccupied site, it also means delays and additional costs. Although most contracts contain termination clauses, it should only be pursued as a last resort. If termination is inevitable, there are followup actions that an employer must take while arranging for another contractor to complete the works.

Notify the insurer Upon termination, the employer as a joint insured party should immediately notify the contractor’s insurer and arrange additional cover for the temporary buildings and equipment left on the site.

The policy must remain operative until fresh cover can be effected under the new completion contract.

Protect completed parts of the building and secure the site As the area may pose a safety risk, steps must be taken to prevent accidents and collapse. The completed work should be protected until work can resume and the site secured to prevent unauthorised entry, theft and vandalism.

Comply strictly with contract provisions Termination clauses set out the grounds and contractual procedure that must be followed. The employer should be guided by his legal experts to avoid challenges for unlawful termination.

Do not delay appointment of the new contractor Depending on the nature and extent of works completed at the time of termination, the new contractor can be appointed through competitive tendering or by negotiation.

The employer should not unreasonably delay the appointment of the new contractor to complete the works, since it would be taken into account when computing the amount of delay damages to be recovered from the original contractor.

Be clear on financial settlement matters After the project has been completed, financial matters between the employer and both contractors must be settled. This involves the preparation of an account of the costs and expenses incurred by the employer in completion of the project and a hypothetical final account had the original contractor’s employment not been terminated. The resultant difference will be a sum payable from the original contractor to the employer, or vice versa.

Beware the effects of direct payments Although termination clauses provide for the employer to pay nominated subcontractors directly, where the contractor’s employment was terminated because of insolvency, it is important to exercise diligence.

Under insolvency laws, the contractor’s assets – which include any monies due to subcontractors – must be distributed equally among all unsecured creditors. aecom.com Q2 2015_MODUS A SI A

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Foundations

EVENTS

BOOK RICS EVENTS ONLINE ricsasia.org For enquiries, call +852 2537 7117

BUSINESS BRIEFS

ILLUSTRATION ARON VELLEKOOP LEÓN

CREATING A BRAND THAT HAS IMPACT Beware the blank canvas myth. You already have a brand. Without doing anything, people have formed an idea of your development based on its location, your company, media reports, and so on.

Before you do anything else, find your starting point.

Create, don’t imitate.

A brand that works for one product will not work for another. Successful brands are grounded by the pillars that make them unique. They are fresh, authentic expressions – not easy imitations.

Immerse yourself deeply.

Research, discover, and do whatever you have to do to get into the heart of what makes your development unique and interesting.

What is the developer’s vision? What impact will it have on the community?

Is there a rich history you can draw on?

Collaborate. The best property brands are a collaboration between developer, agent, interior designer, architect and design agency. When parties work together, it ensures the brand is consistent and coherent and gives every stakeholder an opportunity to contribute and be part of the creative process.

Mark Davis is a director at me&dave, me-and-dave.com

HONG KONG

››RICS Hong Kong Annual Conference 21 May On the conference agenda: should cities be building capacity before demand comes; how can Hong Kong continue to grow with limited developable space; what can it do to remain attractive to businesses, tourism and investors by 2041; which segment of the market does Hong Kong not have the capacity to deal with in the next five to 10 years? ricshk-conference.org

MALAYSIA

››7th International Surveying Conference for Undergraduates 22-23 May, Nilai Organised by RICS, the Royal Institution of Surveyors Malaysia and the Association of Approved Land Surveyors Malaysia this conference aims to serve as an outreach platform for surveying undergraduates from RICS-accredited courses in Malaysia, China, Singapore, Thailand, Hong Kong and other countries in the region.

››RICS ASEAN BIM Conference 2015 4 June, Kuala Lumpur A conference gathering key industry leaders and practitioners of BIM, who will present case studies of key projects from around the world.

Delegates will listen to practical examples and best practices that will provide invaluable and usable knowledge for their own organisations’ BIM projects and plans. bit.ly/1IrcxV2

AUSTRALIA

››COBRA 2015 8-10 July, Sydney The world’s leading construction, building and real estate research conference dedicated to providing stimulating debate and discussion between researchers from around the world, providing the basis for new areas of research for construction. Run in partnership with the University of Technology Sydney, the Australasian Universities’ Building Educators Association and University of Western Sydney. rics.org/cobra2015

RICS FUTURE CITIES SUMMIT 2015

17 June, Shanghai, China

The wealth of nations are increasingly dependent on how their key urban centres perform, and especially on how their cities position, profile and operate as an integral part of the global community amid rapid urban expansion. Themed “The Making of Global Cities of the Future”, this summit will discuss the key qualities of a successful global city and how they affect the land, property and construction industries.

Q2 2015_MODUS A SI A

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Mind map

HOW WILL INTERNATIONAL VALUATION STANDARDS AFFECT GLOBAL PROPERTY? Andrew Renshaw FRICS, head of valuation, JLL and UK board member, International Valuation Standards Council

No single set of global standards for estimating the value of assets has been comprehensively adopted across the world, which makes it difficult to compare values when making investment decisions.

International valuation standards also knit together with the development of international financial reporting standards (IFRS), and international property measurement standards (IPMS).

Multinationals and sovereign wealth funds are increasingly investing around the world and want consistency in the way property market data is analysed and reported.

International valuation standards are exciting because all countries’ or regional standards will need to comply with them. RICS is one of the main supporters, and has incorporated the framework into the Red Book.

Last October, 20 country standardsetters pledged to adopt international valuation standards in the next three years.

It’s a big step forward.

ILLUSTRATION ROBERT NIPPOLDT

The new standards will help provide greater market transparency. If a person invests in Brazil, Hong Kong or France, they will be able to understand the report they get and be comfortable with the process it’s gone through in arriving at the market value.

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