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JUNE 2018 meconstructionnews.com
THE BUSINESS OF CONSTRUCTION
“we can now design and make an entirely different future, a future that we all want to live in”
LyneLLe Cameron on how sustainabiLity, teChnoLogy and ConstruCtion Can Come together for a better tomorrow
Contents
Issue 147 June 2018 09
14
16
24
30
36
14 On an upward trajectory
34 To The Pointe
06 MEConstructionNews.com OnlIne
The biggest stories from Big Project Middle East’s home on the web
analysIs
Matthew Bate analyses where the Dubai real estate market is headed in 2018
adVerTOrIal
Nakheel transforms waterfront dining and entertainment on Palm Jumeirah
07 Contractors face payment woes 16 Lynelle Cameron PwC Middle East publishes results of survey targeted at region’s infrastructure contractors
Lynelle Cameron of Autodesk explains how technology can drive sustainable construction
36 Made for the Middle East
10 ABB to boost MEA farming
24 Collaboration Control
40 Top Tenders
The bIg pIcTure
InTernaTIOnal news
ABB signs agreement with Heliospectra to explore ways to boost agricultural productivity
In prOfIle
sITe VIsIT
Big Project ME visits Nakheel’s flagship project – Deira Islands
12 Muscat property market outlook 30 Building for security MarkeT repOrT
Cluttons report examines the outlook for Muscat’s residential and office market after the first quarter of the year
rOundTable
Leading security experts discuss how the region can better address the issues and challenges around creating secure spaces
urban TranspOrT
Didier Pfleger of Alstom discusses the development of regional mobility solutions Tenders
Big Project ME lists the Middle East’s biggest construction tenders for June 2018
44 Funding needs change lasT wOrd
David Clifton explains why alternative funding will require a complete change of culture if it is to succeed in the GCC June 2018 1
Introduction
taking on technology
A
ttending Autodesk University Middle East is something I look forward to every year, because it’s always great to see so much buzz and excitement generated around topics that are crucial to the future of the country and its neighbours. The always popular event features familiar faces from the region’s construction industry, with a sprinkling of international voices, all coming together to discuss how technology can impact the way we build things. This year’s event was particularly exciting for me, as I got a chance to catch up with Lynelle Cameron, one of the keynote speakers for the event, and the vice president of Sustainability at Autodesk. Featured as this month’s In Profile, it was a pleasure to sit down with her and hear about how technology can be utilised across the construction industry, and how companies can make tangible gains with it in fields as diverse as sustainability, efficiency, energy consumption and performance. What was especially interesting was hearing about how research is underway on the use of robotics in construction, and how automation and robotics is the future for the industry. As a sci-fi geek, it was quite enthralling to hear how far advanced the technology is, with a robot that’s being trained to 3D print in stainless steel a particular highlight! It’s definitely going to be interesting to see how this develops. Also part of this month’s issue is a conversation between some of the region’s leading minds about security design in buildings. These experts shared their thoughts about some
4 June 2018
GROUP MANAGING DIRectOR RAZ ISLAM raz.islam@cpitrademedia.com +971 4 375 5471 eDItORIAL DIRectOR VIJAYA CHERIAN vijaya.cherian@cpitrademedia.com +971 4 375 5472 eDItORIAL eDItOR GAVIN DAVIDS gavin.davids@cpitrademedia.com +971 4 375 5480 SUB eDItOR AELRED DOYLE aelred.doyle@cpitrademedia.com ADVeRtISING cOMMeRcIAL DIRectOR JUDE SLANN jude.slann@cpitrademedia.com +971 4 375 5714 DeSIGN ARt DIRectOR SIMON COBON simon.cobon@cpitrademedia.com
of the major issues and concerns they had about buildings and developments in the region, and while there has been quite a lot of progress made, there’s much more that needs to be done. It’s definitely worth a read. Finally, while the mercury continues to rise and work slows down across the region, things here at Big Project ME are only getting hotter as we approach what’s sure to be a very busy second half of the year. As I’ve previously mentioned, our Value Engineering Summit is now happening on September 5, while our third ME BIM Summit is taking place on October 28. Agendas are being finalised and speakers are being contacted, so stay tuned for further announcements!
DeSIGNeR PERCIVAL MANALAYSAY percival.manalaysay@cpitrademedia.com PHOtOGRAPHY MAkSYM PORIECHkIN MARKetING MARKetING MANAGeR SHEENA SAPSfORD sheena.sapsford@cpitrademedia.com +971 4 375 5498 cIRcULAtION & PRODUctION DIStRIBUtION MANAGeR SUNIL kUMAR sunil.kumar@cpitrademedia.com +971 4 375 5476 PRODUctION MANAGeR VIPIN V. VIJAY vipin.vijay@cpitrademedia.com +971 4 375 5713 WeB DeVeLOPMeNt MOHAMMAD AwAIS SADIq SIDDIqUI FOUNDeR DOMINIC DE SOUSA (1959-2015) PRINteD BY RASHID PRINtING PRESS LLC, AJMAN PUBLISHeD BY
Licensed by tECOM to registered company, CPI trade Publishing fZ LLC whose registered office is 207 – 209, Building 3, Dubai Studio City, Dubai, UAE
Gavin Davids editor gavin.davids@cpitrademedia.com @MecN_Gavin
www.cpitrademedia.com © Copyright 2018 CPI trade Media. All rights reserved while the publishers have made every effort to ensure the accuracy of all information in this magazine, they will not be held responsible for any errors therein.
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FeATUReD
CONSTRUCTION
WOMeN IN CONSTRUCTION SeRIeS: The NeeD FOR bALANCe
UK government lacked ‘bravery’ as Carillion became a ‘time bomb’
CONSTRUCTION
Abu Dhabi government sign agreement to speed up construction licences
In Pictures: On site at Marina Gate II
CONSTRUCTION
Vox to set up new IMAX screens in Saudi Arabia
CONSTRUCTION
Premier Estates launches The Terraces project at Meydan
CONSTRUCTION
KEO and InSite complete Dubai’s new Bluewaters Bridge 6 June 2018
Feature: New schemes suggest Abu Dhabi market has bottomed out
I want to say thank you for doing your bit for ‘Women in Construction’ with these articles on the site. Greater diversity is an absolute necessity for the construction industry going forwards and one of the strengths of the industry in the region is its ability to draw on the experience and knowledge of people from many different kinds of backgrounds and experiences. In my opinion, there has been a lot of progress in terms of greater participation of female co-workers in the industry but there is still a lot more to done. In my experience, many of the roles women find are in administration or in the softer skills of construction such as design or architecture. That’s not just in the Middle East but across the globe, however slowly with time we will see more and more women on-site. Having said that, and reading some of the interviews you’ve published, it is heartwarming and reassuring to hear many of these professionals being treated as equals and with respect on projects. Name withheld by request
The Big Picture
Growing need for private sector finance The PwC report says 80% of respondents believe that over the longer term, private sector funding will continue to increase to help support major infrastructure projects across the region.
Infra contractors face payment challenge PwC Middle East publishes results of Capital Projects and Infrastructure survey PwC Middle East’s latest Capital Projects and Infrastructure survey has found that the biggest external challenges facing contractors in the region are payment delays by clients and the availability of funding. The fourth survey conducted by PwC outlines the current challenges facing the industry while promoting the importance that “alternative financing will have on future investment projects” in the region. According to the report, Middle East governments and industries also continue to face challenges and pressure to perform and deliver “more for less” on social and economic infrastructure projects, despite an increase in oil prices compared to 2016. PwC said the findings show a “more positive outlook and increased capital expenditure, with almost half (49%) of respondents spending more. One in six of those respondents expect 25% capital expenditure increase (compared with 21% in 2016) and
only 19% of 2018 respondents saw a marginal decrease in their capital expenditure, compared to 63% in 2016. “Project performance is improving, with only 34% of respondents indicating delay of six months or more, compared to 47% in 2016. There are a variety of reasons relating to project delays and overruns, such as changes or poorly defined scope of existing projects (from 60% in 2016 to 46% in 2018). The survey also highlights a stronger focus on building in-house project management capabilities and strengthening project governance and controls. “Meanwhile, the squeeze on funding for capital projects from the top down has rippled through the construction supply chain: by far the biggest external challenge facing contractors this period appeared to be payment delays by clients and availability of funding. Other reasons include increased cost of materials, labour and equipment, along with challenges
“By far the biggest external challenge facing contractors this period appeared to be payment delays by clients and availability of funding. Other reasons include increased cost of materials, labour and equipment, along with challenges relating to working capital”
relating to working capital.” And finally, the need for private sector financing appears to be growing, evidenced by the 80% of respondents who believe that over the longer term private sector funding will continue to increase to help support major infrastructure projects across the region, said PwC. “Governments across the region continue to face challenges and pressure to perform and extract the highest value from projects as possible. What this tells us is that the industry needs to evolve. This may be done through the entry of new competitors, new technologies or changes to regulation to facilitate the delivery of capex programmes,” said Maarten Wolfs, PwC Middle East Deals – Infrastructure and Government Leader. “It is important that the lessons learnt about project management and governance are not forgotten about in the wake of increased spending – in doing so, the industry may miss opportunities to improve long-term performance.” June 2018 7
The Big Picture
Al Ahli Group to develop Nomad project
92,903sqm entrepreneur and media hub will focus on growing local talent Al Ahli Group, a Dubai-based multi-diversified conglomerate, has announced plans to develop a 92,903sqm entrepreneur and media hub called Nomad. The project aims to enable and support the growth of local and international entrepreneurs. It will focus on growing, incubating and funding talent. The development is to offer flexible office and working spaces and will boast “state-of-the-art studios and makerspaces within the media, culinary arts, arts and design, and gaming and technology arenas; with one of the largest 3D printing facilities globally”. Additionally, Nomad is to offer subsidised co-living arrangements, which Al Ahli says is important to budgetconscious entrepreneurs who wish to live and develop a business in the UAE. The hub will also support SMEs and start-ups with business and legal framework. The Al Ahli group explains that operating costs will be significantly reduced and says members will see business boosted by access to its network
of partners and consultants. The project’s infrastructure will be developed over two years, with the first phase (coworking and studio resources and pilot co-housing community) launching at the end of 2018. The second phase will feature larger facilities and community development and is scheduled to launch at the end of 2019. “The sheer size, scope and proposition of Nomad will put the UAE on the map as a global game changer when it comes to the type of creative, disruptive and outstanding entrepreneurship that will guarantee a bright, thriving future for generations to come. Nomad will make it entirely feasible for both local people, and those from outside the UAE, with fantastic business
92,903sqm Size of the entrepreneurial and media hub
Collaborative community Nomad will be a collaborative community where people will work and live alongside those who share a common objective, said Noora Khammas, chief executive architect of Al Ahli Holding Group.
8 June 2018
ideas and talent, to put down roots here and see their company grow, supported by a range of practical and financial support services and advanced on-site facilities,” said Mohammed Khammas, CEO of Al Ahli Holding Group. Al Ahli believes Nomad will contribute towards the Vision 2021 directive to create a competitive knowledge economy in the UAE by the year 2021. It is also in line with the Al Ahli Holding Group’s goal of fostering creative entrepreneurship and innovation within the UAE. Nikhil Shah, director at Frost & Sullivan, added, “Our studies have shown that there is nothing like Nomad anywhere in the world, and it’s very rewarding to have been so involved in its concept creation. It will be a thriving business and living community with a true sense
of collaboration and community at its heart. It will make a huge impact on the way in which businesses can flourish for the greater good of a nation and will prove a standard bearer for radical innovation and economic sustainability.” Nomad’s Noora Khammas, chief executive architect, Al Ahli Holding Group, concluded, “Nomad will be a prospering collaborative community where people can see their ideas and dreams come to life. They will not only work but also live alongside other talented individuals who share a common objective. The hassle and obstacles inherent in setting up a business and running it during the early years are taken away, while opportunities that would not normally be available, such as reduction in operational costs or access to specific niche markets, are automatically provided. That is a big deal because in the normal run of business, that process can take many years, hindering progress and dampening aspiration.”
The Big Picture
Aldar and TDIC agree $1bn asset sale
Acquisition is one of the largest real estate deals in the UAE’s history Aldar Properties says its $1bn acquisition of a portfolio of prime real estate assets from Abu Dhabi’s Tourism Development & Investment Company (TDIC) is one of the largest real estate acquisitions in the UAE’s history. In a statement on WAM, Aldar said it has purchased key development assets from TDIC with a focus on Saadiyat Island. The deal comprises 14 operating assets within various sectors ranging from hospitality, retail and residential to education and infrastructure, in addition to a selection of prime strategic land plots and projects under development on Saadiyat Island. The operating assets being acquired include Eastern Mangroves complex, Saadiyat Island district cooling assets, Cranleigh School Abu Dhabi, Westin Golf & Spa and other community retail and leisure assets, and will deliver an incremental net operating income of approximately $32.6m to Aldar’s Asset Management portfolio on an annualised basis. The gross development value of the projects under development on Saadiyat Island is $680.6m. The land being acquired on Saadiyat Island is infrastructure enabled and includes approximately 1.1m sqm gross floor area. “Acquiring assets on Saadiyat Island presents Aldar with an unprecedented opportunity to add significant value to its portfolio,” said Talal Al Dhiyebi, CEO, Aldar Properties. “The opening of the Louvre Abu Dhabi has demonstrated the government’s commitment to make Saadiyat Island one of the most sought-after
Unprecedented opportunity Acquiring assets on Saadiyat Island represents an “unprecedented opportunity” for Aldar, said Talal Al Dhiyebi, CEO of Aldar Properties.
destinations in the world. “We believe this landmark acquisition will further advance Abu Dhabi’s real estate sector and accelerate the development of Saadiyat Island, taking it to the next level. “This is a very exciting time for the market, and as its leading player we’re well placed to take advantage, with the injection of these new assets representing a strong addition to our impressive portfolio,” he said. Aldar explained that the acquisition of TDIC’s operating assets will “enhance Aldar’s asset management business with an additional stream of recurring revenue in line with its growth investment plan. “The acquisition of the
“We believe this landmark acquisition will further advance Abu Dhabi’s real estate sector and accelerate the development of Saadiyat Island, taking it to the next level”
land and projects under development will form part of Aldar’s development destination strategy. The acquisition will immediately positively contribute to the performance of both the Development and Asset Management business in 2018 and beyond.” The acquisition is expected to fully complete by the end of June 2018 and is subject to fulfilment of certain conditions. According to a Gulf News report, the deal will be funded through a mix of “cash and undrawn existing debt”. The association with TDIC represents the next step in Aldar’s focus on Saadiyat, with the developer having recently confirmed an alliance with Emaar. June 2018 9
The Big Picture
2.7%
1. ABB And HeliospectrA working to Boost MeA fArMing ABB says it is working with intelligent lighting technology for greenhouse and controlled plant growth environments specialist Heliospectra AB, to explore solutions that will boost the productivity and the sustainability of the greenhouse and controlled environment agriculture produce industry in the Middle East and Africa. The collaboration will explore new food production technologies and commercial infrastructure such as light control systems, refrigeration, renewables, robotics and industry 4.0 digital technologies, to increase flexibility and to address increasing demand for sustainable agricultural products while reducing costs and improving capital efficiency, the company said. Heliospectra makes advanced light control systems using fully adjustable spectra LED technology, which accelerate food harvest cycles and time to market. It will provide the technical foundation for the new technology co-development. Additionally, the partners will create programmes educating growers in best practices for sustainable agriculture.
10 June 2018
Figures released by the Office for National Statistics indicate that construction output in the UK has declined by 2.7% in the three months to March
2. oger internAtionAl Acquired By JordAniAn investor Oger International, a French construction engineering, design and project management group and subsidiary of Saudi Oger, announced that it has been acquired by Ala Al Khawaja, a Jordanian investor, through his French company, AMK Capital Investment. The company said that the agreement overlaps
with the termination of a job protection programme as well as the end of the business protection processes supported by the Bobigny Court. Omar Joseph Baroud, chairman and CEO of Oger International, said that the French and European markets would become the compnay’s priority, but that it would still continue to operate in the Middle East and Africa.
Since 2016, Oger International has been involved in a process of reorganisation under a protective regime (debt freeze for 18 months), said Baroud, with the objective of addressing its temporary cash flow difficulties and reorganising the company structure. The new shareholder undertakes to support Oger International’s business and development, he added.
3
The Big Picture
14km
Construction on Asia’s largest bi-directional tunnel has begun in Jammu and Kashmir province in India
4
2 1
144MW Construction of Goldwind Australia’s 144MW Cattle Hill wind farm is now underway in Tasmania
3. dp world suBsidiAry And sMip Announce gloBAl MArinA developMent deAl P&O Marinas and Monaco government-owned Societé Monégasque International Portuaire (SMIP) have agreed a deal that will see the DP World Group subsidiary help construct and develop marina projects in the Mediterranean and in other locations around the world. According to a statement
on UAE news agency WAM, an MoU has been signed in Monaco to invest, develop and manage yachting destinations dedicated to superyachts. The agreement was signed by Mohammed Al Mannaei, CEO of P&O Marinas, and Aleco Keusseoglou, chairman of SMIP, in the presence of several officials from both companies. P&O Marinas operates five Dubai marinas and is building the calm seaside Mina Rashid
Marina project in Dubai. There are three phases to the project: the first Marina Cube launched last November and features 500 quays, and the other two, once finished, will be able to harbour 20,000 yachts. Once completed. Marina Cube is expected to be a new tourist maritime and entertainment attraction stretching over 13sqkm, and will feature a number of facilities, including an integrated entertainment city.
4. russiA lAuncHes first floAting nucleAr power plAnt Russian state energy solution provider Rosatom has announced that the Akademik Lomonosov is now being towed to Murmansk, where fuel will be loaded into its reactors. The powership is the world’s first and only nuclear floating power unit (FPU) and is scheduled to be deployed in Pevek, Chukotka, in Russia’s far east. According to Rosatom, construction works to create on-shore infrastructure are already underway in Pevek. The pier, hydraulic engineering structures and other critical buildings crucial to the mooring of the FPU and operation of a floating nuclear power plant (FNPP) will be operational by the time the vessel arrives. Following fuelling and the onboarding of crew in summer 2019, the nuclear FPU is expected to be towed to the sea port of Pevek at an average speed of 3.5-4.5 knots. The Akademik Lomonosov will replace Pevek’s aging Bilibino nuclear power plant and Chaunsk coal-fired power plant, and is expected to save about 50,000 tons of CO 2 emissions per year. Once connected to the grid, the FPU will become the northernmost nuclear installation in the world.
June 2018 11
Market Report
Muscat ProPerty Market outlook
Cluttons report looks at the Muscat property market in the first quarter of 2018 other locations recorded no change in average rental rates.
Work permit ban The Ministry of Manpower’s January decision to temporarily ban the issuance of work permits to expats in 10 key sectors for six months is likely to have repercussions on the Muscat property market.
12 June 2018
were Azaiba/Ghubrah North (-4.6%), Muscat Hills (-1.6%) and Madinat Sultan Qaboos (-0.4%). While the declines were marginal in Madinat Sultan Qaboos, we have noted a fall in the number of enquiries from tenants for this submarket. The increased level
of congestion and rising level of construction activity is likely to further undermine rents here through the course of 2018. Bausher (4.5%), Shatti Al Qurum (2.8%) and Qurum (0.6%) were the only locations to register a rent rise during Q1, while all
Average residential rental values by submarket – Q1 2018 1,600 1,400 1,200 1,000 800 600 400 200 0 Ruwi
Apartments
Qurum
Villas
Shatti Al Qurum
Madinat Sultan Qaboos
Al Khuwair
Bausher
Azaiba/ Ghubrah North
Muscat Hills
Al Mouj
Al Hail/ Mawalleh
Source: Cluttons
Sales price in AED/sqft
RESIDENTIAL MARKET Rents stabilise for first time in two years Undoubtedly, the improving economic profile for the sultanate has filtered through to the property market as well. Following the sharp corrections in residential rents over the last two years, in the aftermath of the oil price drops, rental rates in Muscat appear to have stabilised, with a marginal 1.1% decline in average rates in the three months to the end of March. This follows on from a 0.9% rise during Q4, which lifted the annual rate of change to 0.6%, the first positive increase in rents since 2014. The slight drop in rates during Q1, however, has pegged the annual rate of change back to -0.5% and leaves monthly average rents at OMR 714. The weakest performing markets during the first quarter
Visa rule changes to lead to reduction in number of expatriates? Although the total number of expatriate workers in Oman grew from 1.35 million in February 2014 to 1.85 million in February 2018, the last two years have seen the number of expatriate workers with further/higher education qualifications decline by 7.5% due to challenging economic conditions. A further hurdle for the market has arisen following the Ministry of Manpower’s decision in January to temporarily ban the issuance of work permits to expats in 10 key sectors, covering 87 job types: sales, administration, marketing, insurance, HR, media, airports, engineering, marketing and technical professions. The temporary ban is likely to result in a further drop in
Market Report
Performance of office rents across Muscat’s key submarkets 16
OMR psm/month
14 12 10 8 6
Al Kuwair
the number of professional expatriates, particularly if it is extended beyond its current six-month period or is widened. The inevitable fall-out from a reduction in the number of new expatriate workers coming to the country for work, coupled with the fact that many may find themselves out of work upon the expiry of their current work permits, is likely to hurt demand in the short to medium term. Outlook stable for now At present, all signs suggest that the residential market is at or near the bottom of the current property cycle, but while the number of downside risks appears to have diminished, the expat visa ban rule detailed above is currently the single biggest risk to our flat baseline outlook for 2018, which remains unchanged from last year. Residential rental demand is at or close to historic lows across the city, and the current rental stability follows the 21.5% decline in average rental rates over the past four years. While the flatlining rents suggest that a plateau of sorts may be emerging, we consider the sector still vulnerable to further downward pressure. Should the visa ban be extended, it would certainly cause our forecast of stable rental values to unravel and result in further but limited
Ghubrah
Shatti Al Kurum
Q1 2018
Q4 2017
Q3 2017
Q2 2017
Q1 2017
Q4 2016
Q3 2016
Q2 2016
Q1 2016
Q4 2015
Q3 2015
Q2 2015
Q1 2015
Q4 2014
Q3 2014
Q2 2014
Q1 2014
2013
2012
2011
2010
Qurum
Azaiba
declines in the second half of 2018. Conversely, if we continue to see gains in oil prices, then this will continue to drive the economy upwards and is likely to result in a boost to the residential market, particularly in terms of demand.
Despite this apparent stability, the limited number of deals in the market continue to be concluded below headline asking rates, underscoring the challenges faced by landlords in attracting and retaining high-quality occupiers.
OFFICE MARKET Rents remain unchanged The office market in Muscat remains flat, with average headline rents holding steady in the city’s key submarkets during Q1 2018. This follows stagnation during 2017, with the exception of the CBD area, where rents dipped by 250 baisa to OMR 2.75 per sqm at the end of last year. The CBD retains its position as the cheapest submarket in which to rent an office in Muscat.
Quality still commands attention Even in a market that has faced setbacks in the form of a demand slump following the shock oil price rout four years ago, there remains a handful of occupiers drawn to high-quality buildings and committed to upgrading space, despite the uncertain economic conditions over the last four years. Mixed outlook Like the residential market,
Oman’s professional workforce in numbers 180,000 160,000 140,000 Number of degree holders
CBD
2009
2
2008
4
the downside risks to the office market from the expat visa change rule are a concern. While the impact of the low oil price environment has taken its toll on headline rental rates, with markets like the CBD seeing a drop of nearly a third over the last four years and Ghubra and Azaiba seeing rents slip by just over 20%, the effective limitation on recruiting new staff in the professions outlined above may well impact on organisations’ growth strategies. This will inevitably filter through in the form of weaker demand and may cause office rents to slip further from their current historic lows, should the economy weaken as a result of the decision. That said, for this scenario to play out, the expat visa ban would need to be extended beyond the current proposed period. It nonetheless remains a potential barrier to the recovery of the office and residential markets. As with the residential market, however, continuing increases in oil prices are likely to add impetus to the sector, particularly in terms of demand, though we consider it highly unlikely that there will be any increase in rental values over the course of this year.
120,000 100,000 80,000 60,000 40,000 20,000 0
|
Feb 14
Diploma/Higher diploma
|
Feb 15
Bachelor’s degree
|
Feb 16
|
Postgraduate qualification
Feb 17
|
Feb 18
|
All with further/higher education
June 2018 13
Analysis
On an Upward TrajecTOry Matthew Bate, CEO of Engel & Vรถlkers Dubai, analyses where the Dubai real estate market is headed in 2018 Over the last few years, the Dubai property market has been a hotspot for investors from around the world, with the Dubai Land Department (DLD) recently releasing statistics that show that British real estate investment in Dubai amounted to more than $8.46bn over the last four years.
With foreign investors finding 14 June 2018
that the UAE real estate sector is a business-friendly landscape with low taxes and world-class infrastructure, the DLD has proposed a new mortgage and finance law which aims to bring more capital into the real estate market. The main objective of the mortgage law is to attract
foreign investors and public joint stock companies listed on Nasdaq, while it also aims to encourage alternative financing models, the DLD said. It also highlighted that the law would cater to investors with small and medium-sized portfolios. Given these changes, Big Project ME spoke to Matthew
Bate, CEO of Engel & Vรถlkers Dubai, for an analysis of where the market is headed. What percentage of foreign investors are attracted to the Dubai real estate market?
Recent industry reports have shown that foreign investments make up at least 20% of the
Analysis
The strong preference exhibited by international investors has helped position Dubai as one of the world’s top cities attractive for foreign real estate investment – a feat that is accompanied by the strategic enhancements made to make real estate processes more transparent and faster. The growing preference towards Dubai’s real estate segment has also resulted in an upward trajectory that noticeably jumped during the second half of 2017, especially across the luxury real estate segment. The Dubai Land Department has revealed that Indian investors accounted for over $5.55bn in sales value over the last 18 months, followed by Pakistani nationals with over $1.9bn invested from January of 2016 to June of last year. One key driver to the segment’s growth can be seen in the continuous support received from both the private and public sectors, which in turn has helped in reinforcing the reputation of the emirate’s prime development projects in the international markets. The country’s wise leadership has implemented strategic programmes and initiatives that have earned the confidence and trust of foreign investors. The growth is expected to surge even further as we come closer to Dubai Expo 2020 and as other major developments are rolled out to help achieve the goals and objectives of UAE Vision 2030. emirate’s real estate market, demonstrating a significant share of the market as compared to the other countries within the region. The market share translates to around $41.1bn of investments made by international investors coming from the KSA, India and the UK, to name a few.
What is your assessment of the current situation of the real estate market, compared to 2017?
We are seeing increased preference for the local luxury segment, which is evident in the high number of transactions during the first quarter of the year across well-known luxury community development projects
“The growing preference towards Dubai’s real estate segment has also resulted in an upward trajectory that noticeably jumped during the second half of 2017, especially across the luxury real estate segment” like Al Barari, Emirates Hills, Palm Jumeirah and Jumeirah Islands. In line with this, we are looking at a continuous increase in transactions within this segment, as more attractive opportunities are expected to be offered to investors in 2018. Dubai’s real estate industry performed well in 2017,
generating around $77.5bn from over 69,000 transactions. With the market still moving towards achieving more stability, experts forecast more enhancements to be made, which can further strengthen the emirate’s reputation as an industry leader. As compared to the previous year, some developers are looking into reductions of the apartment sizes, while others are offering more affordable property prices and payment plans, or special and limited time discount schemes. In connection with this expected trend, transactions made by the middleincome segment are likely to keep strong throughout this year. What is your assessment of VAT? Will it have an effect on the real estate market in terms of selling?
The implementation of VAT for property transactions is not expected to majorly affect the market, especially in terms of interest from foreign investors. Industry experts have explained that despite the introduction of VAT, the levied 5% still remains one of the lowest rates for value added taxing in the world. In addition, VAT being levied by one side and claimed in return by another party is not likely to leave a large impact on the buying market. At Engel & Völkers, we understand that implementing VAT is common and also higher across other markets where we also operate in. We believe that the input and output of tax balances itself, hence leaving minimal effect on the projected growth of Dubai’s real estate market. This is widely evident in our recent performance reports, which show that March and April have been our best months so far and reflect that investors, both local and foreign, have accepted the implementation of VAT into the prices of today’s real estate offerings. June 2018 15
In Profile
“automation and design technology is not only changing how people work, but fundamentally, it’s also changing what we can design and make. that’s the difference. we can now design and make an entirely different future, a future that we all want to live in”
Big Project ME meets Lynelle Cameron, vice president, Sustainability at Autodesk and CEO of the Autodesk Foundation, to learn how technology can be used to meet the region’s sustainability and smart city goals 16 June 2018
In Profile
June 2018 17
In Profile
a
little over two years ago, in April 2016, HH Sheikh Mohammed bin Rashid Al Maktoum launched Dubai’s 3D Printing Strategy, an initiative that aims to use technology to “serve humanity and promote the status of the UAE and Dubai as a leading hub of 3D printing technology, by the year 2030”. The strategy aims to adopt an emerging technology that will help cut costs across many sectors and industries. As a result, local economies and labour markets are expected to undergo a comprehensive restructure and redefinition, with productivity increasing and efficiency improving as new ideas and methodologies are embraced. One of the main sectors expected to feel the impact of this strategy is construction, as by 2025, as per Dubai Municipality regulations, every new building in Dubai will be 25% 3D printed. This movement will begin in 2019, starting at 2% with a gradual increase to the 25% goal. As a byproduct, the 3D Printing Strategy will reduce labour by 70%, cost by 90% and time by 80% across different sectors, the Dubai Future Foundation predicts. These statistics are what Lynelle Cameron, vice president, Sustainability at Autodesk and CEO of the Autodesk Foundation, believes will drive the adoption of the technology in the regional construction industry. In fact, given the economic conditions and the overriding desire to cut costs, she believes more and more construction related 18 June 2018
firms will turn to technology to improve efficiency, productivity, sustainability and performance. “I think the AEC industry has traditionally been slow to adapt to new technology, and construction certainly. However, I feel that we’re at a pivotal moment in time where we’re going to see this technology adopted, because it enables construction [to be] faster and better, and with less impact,” she tells Big Project ME at Autodesk University Middle East. “The economics are going to play out – that we need the best technology on construction sites to make these decisions. I’m optimistic that the adoption speed is going to accelerate in the construction market. “What our customers care about is cost and time, and so when a tool enables you to make better, greener decisions – and save money and time – then you don’t need to sell the idea. Better design is sustainable design, everybody is trying to reduce energy, and everybody is aware that materials equals cost savings. So really thinking about it in terms of economics, it’s going to drive speed and change in the industry,” Cameron asserts. With regard to the 3D Printing Strategy, she points out that having a stretched target, as set out by the Dubai government, will drive the behavioural change that will push the industry forwards, regardless of whether the target timeline is hit. “I’ll give you a good example,” she says. “Architecture 2030 is a voluntary initiative that companies around the world have signed up for, it aims to make 100% of their portfolio net-zero energy by 2030. I don’t know if we’re going to get there by 2030, but many of our customers around the world are shifting and making their portfolio net-zero, and that’s the kind of trend that I think we need – one
thinking in economic terms Lynelle Cameron says that if sustainability and technology adoption principles are presented as being economically beneficial to companies, there will be a strong uptake within the construction industry.
“Visionary goals are needed, frankly. That’s going to be the one component that’ll drive the transformation towards the future that we all need to live in”
which is going to drive the market. “Visionary goals are needed, frankly. That’s going to be the one component that’ll drive the transformation towards the future that we all need to live in.” She stresses that developing an entrepreneur ecosystem in the regional construction industry is going to be crucial if this is going to be achieved. This is because it will be this segment of the market that will push the boundaries and innovate, using these technologies. “We have the Autodesk Foundation, which I also lead. That has grown out of a history of supporting start-ups and clean tech entrepreneurs around the world, because these are the
In Profile
“I think the AEC industry has traditionally been slow to adapt to new technology, and construction certainly. However, I feel that we’re at a pivotal moment in time where we’re going to see this technology adopted, because it enables construction [to be] faster and better, and with less impact” companies that are, in many ways, leading the transformation and pointing the way towards the future. I’m not as familiar with the entrepreneur ecosystem in Dubai, but I think that in many parts of the world, they’ll be the ones out in front. As these small companies get acquired by big companies, that too will start to change the whole industry.” As vice president of Sustainability at Autodesk, Cameron’s main role is focused on understanding the trends around sustainability, ranging from netzero energy buildings through to circular construction and zero waste, and all the way through to the development of smart
cities. As a passionate advocate of marrying technology with the desire to be more sustainable, she insists that technologies like 3D printing will help reduce waste and improve cost savings for companies, no matter their size. “I have heard a statistic that states that 30% of every project results in construction waste. That’s a really significant number. I think that one of the trends we’re going to see shift that is 3D printing. The more that we can 3D print our structures and buildings, the less waste that we’ll have,” she says, pointing out that R&D work is being done with a robot called Ash, which is being taught to 3D print in stainless steel.
“She [the robot] is able to do it on her own and 3D print structures without the typical amount of waste. We then took her out of our research team and partnered with a company called MX3D in Amsterdam, which is robotically 3D printing a bridge, and the waste reduction is enormous. “This is all new technology, but when you think about scaling up and the role that the Dubai government has set for 3D printing, then that begins to change the amount of waste that gets created.” Also tying into the idea of greater efficiency and performance is automation, which Cameron believes is one of the
most exciting things happening in the industry at the moment. She asserts that the automation technology available today will truly augment the human ability to design and make the future. “This is the perfect marriage of sustainability and technology. We couldn’t actually design this complexity in the past, as humans. We needed help, and automation can help us there. “Data is the foundation of all of this. We now have machine learning, which leads to artificial intelligence, which then enables us to make use of the incredible amounts of data and bring that into the design process. That wasn’t possible June 2018 19
In Profile
“We now have machine learning, which leads to artificial intelligence, which then enables us to make use of the incredible amounts of data and bring that into the design process. That wasn’t possible five years ago, it certainly wasn’t possible ten years ago” five years ago, it certainly wasn’t possible ten years ago.” With the regional construction industry relying heavily on manual labour, Cameron adds that automation will actually help solve a number of challenges that the industry faces, while also being more efficient and environmentally friendly. “I gave a talk in Berlin last week about whether automation and robotics will destroy us or save us, and there’s a lot of dialogue about fear, but I fully believe that the automation technology available today is exactly what we need to be able to solve those challenges. We need to be intentional about how we’re using this technology,
so that we can use it for good.” Finally, Cameron turns to the concept of smart cities and underlines just how important it is to use technology and data when it comes to urban planning and city management, with population figures continuing to rise. “When you look into the future, there’ll be ten billion people in the world by the year 2050. That’s 30% more than there are today. 75% of those people will live in or near a city, which will either be crumbling, or won’t have the infrastructure to support them. In fact, many of them will be in cities that haven’t even been built yet. “In fact, one in four people on the planet in 2050 will be living
in Africa. We know that there’s an opportunity to design many new cities. What that means is that we’ll need to build 5,000 buildings today, and every day into the future, just to keep up. It’s a huge opportunity to rethink how we’re designing buildings and cities to house this many people in the future. “I’m optimistic about this region, and certainly being here in Dubai, the magnitude of design and construction, the vision and the mindset, if we apply that to really designing sustainable and smart cities, then we have the technology to make that possible,” she asserts, adding that the data generated and the technology used can be combined to minimise
and find better sources of energy and material, making it more affordable and liveable for billions of people around the globe. “I think that the power of automation and design technology is not only changing how people work, but fundamentally, it’s also changing what we can design and make. That’s the difference. With technology today, we can now design and make an entirely different future, a future that we all want to live in. A future for billions of people, not just for one billion people. And that’s what’s most exciting about the work that our customers are doing, while using our technology,” she concludes.
utilising technology Cameron says that Autodesk is currently in the midst of research and development with a robot called Ash, which can 3D print in stainless steel (pictured).
20 June 2018
26 November 2018 Double Tree Hilton JBR
Dubai, United Arab Emirates
The awards are a great platform to share knowledge and the achievements of the industry. We enjoy the opportunity to network and collaborate at the event, as it is very well organised with a great turn out from all players in Construction. The Big Project ME awards highlights the best projects, people and innovations in the region.
KeZ TaYLOR
Chief Executive Officer, ALEC
BigProjectmeawards.com
Site Visit
24 June 2018
Site Visit
Coordination Control Big Project ME takes an exclusive tour of Deira Islands and speaks to Shatha Al Suwaidi, director of Infrastructure Projects at Nakheel, to find out how work on crucial infrastructure projects is progressing June 2018 25
Site Visit
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arlier this year, Nakheel, a Dubaibased master developer, released its financial results for the first quarter of 2018. Chairman Ali Rashid Lootah hailed an impressive start to the year, with a net profit of $420 million. Since the start of the year, the company has signed construction contracts worth $1.36bn, including a $1.14bn contract for Deira Mall at Deira Islands and a $105m contract for its first joint venture on the same project – an 800-room beachfront hotel and waterpark with Spain’s RIU Hotels and Resorts. Deira Islands figures
prominently in the developer’s thoughts, with the massive master project seeing numerous multi-million-dollar contracts awarded over the course of the last year. These include four contracts worth a collective $117m for infrastructure projects around Islands A and B: a sewage treatment plant, a district cooling plant, a substation and piling work for the resort. At the time, Nakheel said it had invested more than $2bn in infrastructure and construction contracts for Deira Islands. Almost a year down the line, work on these infrastructure projects is now in full swing, and Big Project ME was invited on an exclusive tour of the works with Shatha Al Suwaidi, director of Infrastructure Projects at Nakheel Projects Construction. “We’ve completed Stage One of infrastructure works, which is two lanes of the main
StAtS: 15.3sqkm – Total size of the Deira Island master development 40km – Coastline that is being added to Dubai 21km – Beachfront to Dubai 40 – Number of hotel plots already sold 6 – Number of marinas being built at a total cost of $45 million $272 million – Cost of infrastructure works at Deira Islands $2.31 billion – Total amount invested by Nakheel into construction and infrastructure development, so far
road around the island and the successful completion of the sewage network,” she relates during a drive around the various projects, which also includes the construction of four substations. “Stage Two has started already. We’re progressing a lot on this side. We’ve had the asphalt laying done, and our milestone is to finish the infrastructure near the Night Market first, since it’s the first retail project to be launched – it’s due for completion towards the end of this year.” She explains that as master developer, Nakheel has been involved with the infrastructure works project right from the beginning, taking it from planning to design with the infrastructure consultants, all the way through to the tender process and the hiring of the contractor. “Our role is to monitor and supervise the construction activities on the site and manage
Working to deadline Nakheel intends to complete infrastructure work near the Night Market before the retail project is launched at the end of 2018.
“There’s a lot of construction happening now, and a lot of contractors involved. The coordination with these people has increased on a technical level. That’s because we’re doing the infrastructure work, and the infrastructure is going all around the island” 26 June 2018
Site Visit
Completion ahead of schedule Having successfully delivered Stage One ahead of schedule, the infrastructure team at Nakheel now intend to do the same with Stage Two of the project.
the coordination with the authorities involved, and to make sure that the right specifications are used, along with monitoring quality assurance. We also coordinate with other departments in Nakheel.” On a day-to-day basis, Suwaidi explains that Nakheel has to deal with the contractors and the ongoing projects around the island, while also ensuring that the crucial infrastructure work continues without hindrance. “For Stage Two, there are a lot of people on-site. There’s a lot of construction happening now, and a lot of contractors involved. The coordination with these people has increased on a technical level. That’s because we’re doing the infrastructure work, and the infrastructure is going all around the island. Because of that, there’s a lot of coordination happening with the Nakheel team and the hired contractors from the third-party developers. “You need to face these people and coordinate with them. Sometimes we close roads and have to do diversions around the island, so we need to inform them, for example. There’s a lot of coordination that has to happen around us, that’s the main challenge for us.” Given the developer’s strong background in building communities, Suwaidi asserts
that Nakheel will leverage this experience on the project works at Deira Islands, pointing to the company’s track record of successful delivery over the years. “We’re used to building communities, we have this relationship with people around projects. Most of our projects are in communities where people are living and working. We’re used to having this coordination with different stakeholders around, as well as coordination with third-party developers. We’re open to suggestions, and we try to make sure that everything
is in line without disturbing whoever is around the site. “With Deira Islands specifically, there are still no residents around, it’s only developers and construction crews, so it’ll be a little bit easier than our other projects,” she states confidently. From a personal point of view, Suwaidi sees this project as an important milestone in her career with Nakheel. Having started out seven years ago as a road engineer, she has progressed through the ranks to her present role. However, despite her rapid
“We’re used to having this coordination with different stakeholders around, as well as coordination with third-party developers. We’re open to suggestions, and we try to make sure that everything is in line without disturbing whoever is around”
Groundworks in progress As part of the infrastructure works, vibro-compaction is ongoing across the islands, preparing the soil ahead of construction commencing.
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Site Visit
Managing movement on-site Nakheel’s security and logistics department manages the movement of vehicles, materials and equipment in and out of the massive construction site.
rise, she says the Deira Island project has taught her many valuable lessons along the way. “I started as a road engineer with Deira Islands. Then when it stopped (and subsequently restarted), I felt that this was a new challenge and that I had to prove myself all over again. I was very happy to be a part of the team working on Deira Islands again, it felt like my own project coming back to life! “That was on a personal level, but career-wise, it was a new challenge and it was a new Nakheel project. I had to
prove myself and make sure that everything was delivered on time. That’s exactly what happened with Stage One of the infrastructure works. We delivered it ahead of time, and we’re now trying to do the same with Stage Two, despite the challenges we’re facing.” Combining both labourer and staff figures across the master development, Suwaidi says there are more than 4,000 people on-site, with numbers increasing by the day as projects pick up pace and come online. As such, a key component of
Picking up the pace Once the summer work restrictions are over, Suwaidi says that work on the infrastructure projects will pick up rapidly.
28 June 2018
the project management been the logistical management of the site, she explains. “We have a security point at the entrance – this is under Nakheel’s security and logistics department. We coordinate with them to facilitate the way construction trucks move in and out, as well as the timings and the gate passes, in case of anyone visiting the site. We have regular coordination meetings, processes, forms and such to be filled out, so as to make sure that everything is manoeuvring in the right direction.”
Furthermore, with the summer work restrictions in place and ongoing Ramadan regulations, the team has had to manage the construction programme so as to ensure that work continues according to schedule while also respecting the worker health and safety laws in place. “We plan for it from early on, while doing the programme of construction. There’s a plan that’s been previously done and studied, in order to compensate for all these phases in the timing of the schedule. We try to overcome it later, after all these restrictions have eased. Sometimes we’ll need to do a night shift to overcome these delays, but it depends on the urgency of the project. Sometimes we’ll do two shifts, and sometimes it’s just one. “It also depends on the contractor, about how he plans to recover later. If he thinks it’s fine, then it’s fine. But if he feels that we’re going to be short on time or delayed, then we’ll do it in two shifts,” she outlines. Health and safety is also an important aspect of the project for Suwaidi and her six-person Nakheel team, and their responsibilities on-site include constant monitoring and management of worker welfare. “We do daily visits and daily reports. What we do
Site Visit
“There’s a plan that’s been previously done and studied, in order to compensate for all these phases in the timing of the schedule. We try to overcome it later, after all these restrictions have eased” Big Project ME Ad.pdf 1 5/24/2018
is, even when we’re driving around in the car, if we see something – like if the workers aren’t wearing safety gear, or if there isn’t enough shade or water supply – then we have to check it. We check on break timings, we discuss that and other things on a weekly basis during our progress meetings. “We also have the Nakheel safety department, who come and manoeuvre around all the construction sites. If there’s something we didn’t see or highlight, they’ll report back to us. We take this very seriously. We work in a very hot and humid climate, and we have to make sure that everything is covered, from water supply through to shade – whether it’s mini shades or the main resting hubs for the labourers, which are fully equipped with ACs. In cases of emergency, we have ambulances around (for a quick response),” she adds. Finally, Suwaidi says that Primavera is used in conjunction with the consultant to manage the infrastructure works, but from a construction technology point of view, she reveals that vibro-compaction has played a big part in the preparation work on-site. At present, groundwork and vibro-compaction is underway 9:24:20 AM
for Deira Mall, Deira Towers and the two resorts, she outlines. “Vibro-compaction is because we’re on an island and it’s a way of improving the soil. It’s done to avoid cracks and things like that. There are some tests that usually happen prior to construction, and depending on the soil test results, it tells you what type of measures need to be taken. “This is why there are some areas that need to be vibrocompacted more than others. It depends on the nature of the soil. “[Once excavation works
begin], we do dewatering, just to make sure that such things like water ingress don’t happen on-site. We take that into consideration while tendering is happening, that this is an island and that there might be some challenges of this nature. “That’s why we hire professional people to plan for and take care of such things. And in case these challenges show up on-site while construction is happening, we’ll take the right measures to handle them,” she states confidently.
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June 2018 29
Roundtable
A lack of understanding People in the local design community don’t understand the importance of CPTED
building for security
Big Project ME speaks to leading experts to find out why the regional construction and real estate industry needs to take security design seriously
In the times that we live in, with international hyper-awareness about security and safety, one of the key aspects that building owners, architects, engineers, contractors and all other stakeholders on a project must consider is: how secure are their buildings? As recent tragic events have shown, there is an urgent need for buildings and public spaces to be designed in ways that keep their occupants safe from harm, whether
30 June 2018
it’s an active shooter situation or a hostile vehicle on the loose.
One key principle that can help to achieve this is Crime Prevention Through Environmental Design (CPTED), which can be best described as designing a physical space with security principles in mind. In order to do so, it is crucial for designers and architects to bring in security design professionals at an early stage if they are serious about improving
security, a leading group of industry professionals told Big Project ME during a roundtable hosted by Safety Design in Buildings, an initiative co-founded by Intersec and Messe Frankfurt. “From a design perspective, I don’t think people in the design community understand what CPTED is,” says Steve Velegrinis, head of Master Planning and director of Operations at AECOM. “We run into a lot of problems
from a cultural perspective, and there are a lot of assumptions where they don’t know what the answer is. For example, in an Emirati housing community, the automatic response is to put up a two-metre wall around the entire property. That means you can’t look in, and you can’t look out. “I think most of the ideas around environmental design driven crime prevention is around the idea of eyes on the street.
Roundtable
That means making sure that the lighting is right, that windows look out to those places, and the attention is on the assumption that everyone wants complete privacy, in the form of a high wall. If you try to argue away from that, people don’t want to hear, so there is a tension there.” Furthermore, he explains that from a design perspective, there is a much broader idea of safety and security, centred around the idea of the building being resilient. This attitude means that specialist security consultants aren’t generally considered, with clients preferring to have a system in place that serves as an answer to many problems. “Resilience takes into
account terrorism, social ills, unemployment, environmental risks, etc. Risks are now being conflated into one giant basket of issues. Few have all the answers to all aspects of these problems, so there’s a mixing between all of these issues into one basket, and there are people that can help with different aspects. The problems are all so interwoven that it requires a very complex solution, and few people can help.” John Cowling, director – Middle East for Acutech, adds that another reason clients don’t want to use security consultants is that they add to the price of the project. “Security is seen as a cost that no one really wants to bear or hear about. For example, I was once with a client – a five-star hotel in Erbil – and he didn’t want to put in hydraulic blockers at his entrance. He asked if he could put in tyre spikes, and I said that it doesn’t do the same job. Eventually, I explained that this meant that he would be the weak link among all the hotels in the area, and that would make him a target. Then he thought about it. “Another time, I was working at a newspaper that was installing a new digital printing press and it had protestors because they were replacing the old manual printing press. The newspaper asked, ‘How do we stop them from getting in?’ They had never designed gates into their construction – to retrofit them, we had to rip things down. “Developers and designers see security professionals as a blocker, when what they want is to work out all the parameters and then help the designers build and operate with the intended function from the outset. Often at this level, we will give all the advice, but if it doesn’t conform to the architect’s vision, they’ll just
“From a design perspective, I don’t think people in the design community understand what CPTED is. We run into a lot of problems from a cultural perspective, and there are a lot of assumptions where they don’t know what the answer is”
try and push you away,” he asserts. Having security consultants come in at the last minute often causes additional challenges, says Attila Tamas, senior security consultant at Jensen Hughes. He explains that coming in late on a project can limit a security consultant’s ability to integrate security elements with the architect’s design vision or provide a holistic approach that might minimise conflicting aspects. “You can look at it and say, ‘Well, the only thing we can do here is to install hydraulic vehicle barriers and put up cameras, and that’s it.’ This is because you’ve already passed the point of designing and building something aesthetically pleasing that will act as a hostile vehicle mitigation measure, instead of the usual ugly hydraulic barriers. Or, we have passed the point where we can design and build a hedge of bushes and maybe install the concrete bollards inside, so they are hidden from view. Hence, you’re leaving us only with the options that often impact
security starts at the beginning Attila Tamas says that security design must start right at the beginning of the planning process for a building, as once something has been built, it will be too late to incorporate proper protective measures.
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Roundtable
negatively on the aesthetics of the project.” Because of this, Tamas says security consultants are often looked at as the enemy of beautiful design. However, he insists that the key is early involvement. “What I try to do, every time I meet with a planner, architect or designer, is to say, ‘Involve us at an early stage, at least for a discussion.’ Then we can look at if there are conflicting environmental, security and safety issues. Even though safety and security are often considered the same thing, security can be about locking things down in case of an emergency event, while safety needs to open things up in case of an evacuation and give access to emergency response services. Since these aspects may be in conflict they need to be resolved, and it is possible, provided you work together early.” Velegrinis adds that the lack of planning and haphazard nature of sharing information in the region can cause complications during
32 June 2018
“I’ve worked in the region on data centres, ports, nuclear plants and airports. It doesn’t get to be more critical infrastructure. Yet, they [governments] will not share anything with you. They expect you to tell them the answers – what are the risks and threats?”
bridging the knowledge gap John Cowling says there are often knowledge gaps on projects due to a lack of information sharing, which leads to security being compromised.
the construction process. While he agrees that early involvement would be beneficial, he cites an example from a recent project, where a security consultant was brought in to do a threat and risk assessment, but the client couldn’t give an answer. As such, he suggests
that a national strategy be implemented and adopted by government-backed developers, where they lead the way when it comes to sharing and disclosing information that is pertinent to the success of projects. By doing so, he hopes that smaller developers and the rest of the construction industry will follow suit. Tamas points out that addressing the culture in the region is a major challenge, especially since the type of security issues prevalent in other markets aren’t so common here. Cowling adds that there is often a disconnect between what is shown and the reality. In the GCC, he explains, there is often no access to government data, and often that is not shared with the companies building the projects, which in turn leads to gaps in knowledge, gaps that can be exploited. “I’ve worked in the region on data centres, ports, nuclear plants and airports. It doesn’t get to be more critical infrastructure. Yet, they [governments] will
Roundtable
not share anything with you. They expect you to tell them the answers – what are the risks and threats? They’ll take your reports, but very rarely will they comment on them, about whether we’re on the right track or not,” he explains, but stresses that this is also common in other countries, such as Australia. “So you’ve just got to make these assumptions and move forwards. Interestingly enough, one of my former employers had what was called a risk assessment map for 226 countries, where they broke countries down into regions and gave them a threat rating based upon various criteria. Now, it was great for geopolitics, but it was too high-level to get down into specific neighbourhoods and areas, and that’s where this security kind of stuff is needed. “For example, I was talking to a mall operator in Fujairah, and they had brought us in late. We were talking about their engineering and I asked about the design, which had massive roller doors. They said that they have a mall in Bahrain where protestors had moved into, with police following and fights breaking out. They said that they needed to be able to lock down the place. “I had to say, ‘But this is Fujairah. You don’t have social unrest in the UAE. Looking at your demographics, which align to the police statistics, you’re never going to have massive social unrest in Fujairah. You can take the roller doors out.’ But of course, by then it was too late, as they had already bought them.” From a master planning point of view, Velegrinis says the question often asked is: “Do you secure the whole project? Or do you make the security point at the entrance to a building?” “Typically, when you’re working for a master developer,
implement a national strategy The experts suggest that nationwide strategy be implemented and adopted by government-backed developers, where they lead the way in sharing and disclosing information pertinent to the success of projects.
they say, ‘Well, I’m going to sell every one of these buildings. I don’t want to pay for it. Make people put security in the separate building entry points.’ “At other times, we’ve had master developers who have just pushed it down the track, saying, ‘Well, we don’t know
what the building will be. Let’s just make the security point at the building itself.’ “But, particularly from a CPTED point of view, the entry should actually be in the public realm, so that you make that safe and have half your job done. Thankfully, attitudes
greater involvement from master developers Steven Velegrinis says that master developers need to be more involved when it comes to designing security systems for the entirety of their projects, rather than leaving it to individual building or project developers.
seem to be changing. A lot of the work that we’ve done recently for government developers in places like Dubai – they have been starting to talk about it and starting to voluntarily look into the public realm.” All three agree that there needs to be better connection between developers and city planners, if security issues are to be resolved. The current planning model of having mega developments operate as islands within cities is one that needs to be urgently looked at, they stress. “The planning model here is that there are a lot of islands, and no one has looked at the gaps between these projects. That gets done by the planning authority,” Velegrinis says. “The Urban Planning Council in Abu Dhabi has adopted that role so that you don’t get the sort of very harsh clashes between these isolated developments, but there will come a time, and we’re getting close to it in Dubai, where there will be lots of opportunities to improve things.”
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Advertorial
to the Pointe Nakheel reveals how it is transforming waterfront dining and entertainment on Palm Jumeirah
Dubai’s retail landscape is constantly evolving – and new lifestyle and entertainment destinations continue to emerge to meet the ever-growing needs of residents and visitors. One such destination that will be open to visitors by the end of 2018 is The Pointe by Nakheel Malls. Valued at $217.7m, the 130,064sqm dining and entertainment destination will be an iconic, must-see attraction offering remarkable lifestyle experiences for Dubai’s residents and the millions of tourists who visit each year. Inspired by the heritage and culture of the Emirates, The Pointe is set to be one of Dubai’s most eagerly-awaited new attractions and will be a vibrant addition to the city’s dining, retail and entertainment scene. Located at the tip of Palm Jumeirah across the bay from 34 June 2018
Atlantis The Palm, The Pointe will feature unique concepts from around the globe with over 100 shopping and dining outlets on offer. At the centre will be a spectacular fountain, dazzling visitors with stunning shows that can be viewed from The Pointe’s wide range of waterfront dining spots. The Pointe will also be home to a 1.5km promenade – a destination in itself for residents and tourists to unwind with family and friends or click the perfect holiday pictures against a stunning backdrop. The destination will also have a cinema, a children’s play area, beauty salons, a supermarket, gyms, unique gifting concepts and parking for 1,600 vehicles. Creating new lifestyle experiences in Dubai Part of Nakheel Malls’ vision
“Inspired by the heritage and culture of the Emirates, The Pointe is set to be one of Dubai’s most eagerlyawaited new attractions and will be a vibrant addition to the city’s dining, retail and entertainment scene”
is to identify consumers’ demands and design solutions that cater to the evolving needs of residents and visitors. This is why the company is constantly investing in building community retail centres and lifestyle destinations in strategic locations across Dubai. An example of this strategic direction is the Club Vista Mare, a vibrant beachfront dining destination on Palm Jumeirah. Club Vista Mare offers seven upscale beachfront restaurants with a range of cuisines and spectacular views of Palm Jumeirah’s eastern shoreline and Dubai’s world-famous landmarks. Golden Mile Galleria is another exciting destination avenue by Nakheel Malls on Palm Jumeirah. Located adjacent to Al Ittihad Park, beneath the 10-building Golden Mile
Advertorial
residential complex, the mall has 37,161sqm of retail space and offers doorstep convenience for thousands of residents on Palm Jumeirah. Anchor tenants include a Spinneys supermarket and a Fitness First Platinum Club. There are also two nurseries, a medical centre and a host of other retailers, as well as a diverse collection of restaurants and cafés, including Tim Hortons, Shakespeare & Co, Nando’s, Wagamama, Zaroob, Caffé Nero, Burger Fuel and London Dairy. Furthermore, the upcoming Nakheel Mall on Palm Jumeriah – part of Nakheel Malls’ $4.35bn expansion – is set to cover a built-up area of more than 418,063sqm, including five retail levels and three underground parking floors with 4,000 parking bays. Nakheel Mall will contain nearly 350 shops, including a 4,200sqm supermarket and two anchor department stores, a nine-screen cinema and six medical clinics. The mall will also feature an outdoor roof plaza with extensive food and beverage outlets, with additional restaurants and cafés overlooking the spectacular views of the island and the Dubai skyline.
A place to unwind The Pointe will feature a 1.5km promenade that will allow visitors to unwind with family and friends, all against a stunning backdrop.
Expanding the retail footprint across Dubai Nakheel Malls’ portfolio continues to expand and currently comprises 1.62 million sqm of leasable space across 19 projects, including large-scale malls, souks and neighbourhood retail centres. More than 418,063sqm is already operational through Ibn Battuta Mall, Dragon Mart, Golden Mile Galleria and five neighbourhood Pavilions, with another 1.20m sqm under development.
In addition to The Pointe, upcoming projects include Deira Mall, Deira Islands Night Souk, Warsan Souk, Al Khail Avenue, The Circle Mall and Nad Al Sheba Mall, as well as major extensions to Dragon Mart and Ibn Battuta Mall. Nakheel Malls’ community retail centres – branded Nakheel Pavilions – are also part of the company’s commitment to enhance its existing developments with
Unique concepts The Pointe will feature unique concepts from around the globe, with more than 100 shopping and dining outlets on offer.
local facilities. The Pavilions are integral to the company’s fast-expanding portfolio of retail projects. Nakheel Pavilions are currently in operation at Al Furjan, Discovery Gardens, International City, Jumeirah Islands and Jumeirah Park, with more on the way at Al Furjan West and Badrah. One of the large-scale projects in Nakheel Malls’ growing retail portfolio is Deira Mall, which is set to become the Middle East’s biggest shopping, dining and entertainment destination in terms of retail space at Deira Islands. With a total built-up area of 95,6901sqm including 418,063sqm of retail space and a 353,031sqm multistorey car park with 8,400 spaces, Deira Mall will feature over a thousand shops, cafés, restaurants and entertainment outlets across three floors. Looking ahead, Nakheel Malls will remain focused on delivering the most diverse range of retail, leisure and entertainment experiences in Dubai, while upholding and enhancing the emirate’s position as the most important global shopping destination in the world. June 2017 35
Urban Transport
Made for the Middle east
Big Project ME speaks to Didier Pfleger, senior vice president, Middle East and Africa, Alstom, about the mobility giant’s plans for the MENA region, during a visit to facilities in La Rochelle, France
Production hub The La Rochelle facility has produced trams for Dubai’s tramway and is producing trams for networks in Morocco, along with other projects in the region.
36 June 2018
Urban Transport
Earlier this year, Big Project ME was invited to visit Alstom’s facilities in La Rochelle, France, showcasing the work that the French giant is doing with regard to providing transport solutions for projects across the world. Best known for having designed all 722 of the world’s very highspeed trains, Alstom’s site in La Rochelle is the starting point for a number of high-profile projects in the MENA region, with the facility currently manufacturing 50 trams for Casablanca in Morocco, 28 trams for Lusail and 22 trams for Rabat. This is in addition to 12 RGV trains for ONCF in Morocco. Furthermore, the site currently designs and assembles Euroduplex trains, which are high-speed transport solutions used on railway projects across Europe. During the trip, Big Project ME caught up with Didier Pfleger, senior vice president of Middle East and Africa for Alstom, to find out how the company uses its facilities in France to meet the needs of MENA clients. How is Alstom positioning its services to target the Middle East market? Alstom is a leader in the Middle East market, with several big projects in the MEA region. In just the GCC, we have already delivered the Dubai Tramway, and we are executing four other projects – the maintenance of the Dubai Tramway, Dubai’s Route 2020 Metro (which is currently under construction), three lines of the Riyadh Metro and, finally, the tramway for Lusail. In MEA, we position ourselves as a mobility maker, providing innovation in the public transportation world. From a classic train manufacturer to digital mobility, Alstom
is to help people move. Cities are evolving, and the Middle East is no exception. Our role as a key player of shared mobility is to make it more fluid (i.e. seamless integration between all transport modes), more efficient for operators and more attractive for passengers, as compared to individual transport modes.
“Cities are evolving, and the Middle East is no exception. Our role as a key player of shared mobility is to make it more fluid, more efficient for operators and more attractive for passengers, as compared to individual transport modes” has a clear strategy for 2020 – deploying a global footprint to better serve our customers locally, and growing the weight of our signalling, system and service branches – and we’re delivering it with some success. Our mission
What is your view of the Middle East market? How do authorities view urban transportation projects? The Middle East market is driven by full turnkey for urban projects – tram and metro. Alstom is the ultimate provider of fully integrated metro and tramway solutions. Given the complexity of urban rail projects, cities and public transport authorities are increasingly taking an interest in the turnkey approach, allowing them to completely delegate all the technical phases of a project, from studies to entry into service, and sometimes beyond. Furthermore, it also streamlines securing financing for the project, cost optimisation, and the rest of schedules are guaranteed for the cities and operators alike. In the 20152017 period, 35% of all urban rail projects came in the form of integrated mobility systems, according to UNIFE. This is particularly marked in emerging markets. The regions with the most integrated urban rail projects are the Middle East and Africa regions, which represent 80% of the total, and Latin America, with 50%. How is the La Rochelle facility being used to meet demand in the Middle East? Concerning the Middle East and Africa market, Alstom’s site in La Rochelle has produced trams for the cities of Dubai and
June 2018 37
Urban Transport
Lusail, as well as Casablanca and Rabat in Morocco. The site is also responsible for manufacturing Africa’s first high-speed train, which is also destined for Morocco. What unique technologies and systems are being developed for the Middle East, and how is the La Rochelle facility preparing carriages and trams for the distinctive environmental challenges in the region? Take for example the Dubai Tramway, which was the first catenary-free tramway in the Middle East. Between sandstorms, temperatures of 50 degrees Celsius and humidity at 90%, the tram has been put to the test since its inauguration in 2014. It boasts a tropicalised design that allows it to face such conditions. This includes things such as boosted UV resistance in the paint and the cabling and electronics components, and reinforced ventilation and filtering systems to cope with the dust. Passenger comfort is maintained via bolstered air conditioning and
specially designed systems Keeping in mind the distinctive environmental challenges in the MENA region, Alstom’s engineers carry out several tests and processes to ensure that the systems work properly in harsh conditions.
windows with special UV filters. It is also the first such vehicle to have ground-based power supply all along its course, and furthermore, it is the first tramway equipped with an Automatic Train Protection system, which is based on Urbalis 400. How will these carriages and trams use the smart mobility systems that Alstom is working on? Smart mobility solutions will
increased interest in turnkey solutions Due to the increased complexity of urban rail projects, cities and public transport authorities are showing interest in the turnkey approach, where they delegate all the technical phases of a project to one company, such as Alstom.
38 June 2018
increasingly apply to all of Alstom’s urban solutions offered around the world, including those for the Middle East, as we move forwards. Some of the general areas that Alstom is working on for its future Citadis and Metropolis products and projects include smart solutions for passenger experience, multimodality, connectivity, driver assistance or autonomy, catenary-free solutions (such as
“Given the complexity of urban rail projects, cities and public transport authorities are increasingly taking an interest in the turnkey approach, allowing them to completely delegate all the technical phases of a project, from studies to entry into service, and sometimes beyond”
Urban Transport
APS for tramways), energy savings and total cost of ownership. Some notable examples of our smart mobility innovations for passenger experience include Optimet OrbanMap, an intelligent metro map, a real-time dynamic information system for metro networks. Within stations, Optimet OrbanMap gives a dynamic vision of the entire metro network, its activity, train position travel times, service interruptions and the level of comfort aboard the trains. Then there is Optimet real-time train occupancy, a platform-based solution that allows waiting passengers to choose optimum placement on the platform in function of the distribution of passengers within the arriving train. For operators, Alstom has developed Mastria, a multimodal supervision solution which
CuRREnt MEnA PRojECts At LA RoCHELLE: Casablanca, Morocco: 50 trams Lusail, Qatar: 28 trams Rabat, Morocco: 22 trams onCF, Morocco: 12 RGV trains
optimises transportation on a city-wide level. It uses planned, predictive and automated data analysis to generate quick and reliable reports, allowing operators to rapidly offer alternative mobility solutions to commuters. Mastria optimises traffic fluidity for all means of transportation (buses, trams, metros, taxis‌). Alstom has also invested in EasyMile, an innovative start-up which manufactures an electric autonomous shuttle – the EZ10 – that offers automated first and last mile transportation. And there is Aptis, co-developed with NTL. Aptis is an electric bus whose design is inspired by the tram. It incorporates low-floor accessibility and 360-degree views. With batteries and power systems located on the top and the wheels situated at both ends with no overhangs,
Aptis offers passengers a never-seen-before full low floor and is able to save road space compared to a traditional bus. Finally, how will these smart mobility solutions work in the Middle East? Are you working with local authorities to implement them? As you can see, our innovations in smart mobility are very diversified. We are currently promoting them through technical events, presentations to our customers and exhibitions of all kinds. We have presented all our innovations at the Middle East Rail and UITP MENA conference and exhibition. We are confident that the levels of comfort and benefits we are bringing to the passengers with these innovations will be well received by the market in the coming months.
smart solutions on offer Alstom has been developing and testing smart mobility solutions for its products and will be rolling them out on a few MENA urban transporation projects.
June 2018 39
Tenders
Top tenders Al FAw Oil ReFineRy PROject Budget $3,000,000,000 Project number WPR3259-IQ territory Iraq client name Ministry of Oil (Iraq) Address Baghdad, Port Saaed Street, Oil Complex Building (HQ), Zayouna Post Office city Baghdad Postal/Zip code 19244 country Iraq Phone (+964-1) 817 7000/727 0748/727 0710/816355/72706 Fax (+964-1) 747 0341 / 817 7113 email ministryofoil@oil.gov.iq website https://oil.gov.iq Description Construction of a refinery with capacity to process 300,000 barrels of oil a day Period 2020
Status Current Project main contractor The Power Construction Corporation of China (Powerchina) main contractor (2) Norinco International Cooperation Company Ltd (China) tender categories Gas Processing & Distribution, Oilfields & Refineries tender Products Refinery/ Offsites & Utilities
Address Plot No. S41004, Street No. S1102, Jebel Ali Free Zone (South) city Dubai Postal/Zip code 17512 country United Arab Emirates Phone (+971-4) 880 7801 Fax (+971-4) 880 7802 email ops@jts.ae; gmjts@jts.ae website http://jts.ae Description Construction of a facility dedicated to cleaning, storage, repairs and support services for ISO tanks Period 2020 Status New Tender tender categories Oilfields & Refineries, Gas Processing & Distribution tender Products Storage
jOint tAnk SeRviceS FAcility PROject – SOHAR FReeZOne
PAlAceS PROject – neOm ecOnOmic ZOne
Budget $200,000,000 Project number WPR3273-O territory Oman client name Joint Tank Services (JTS) (Dubai)
Budget $135,000,000 Project number WPR2963-SA territory Saudi Arabia client name Public Investment Fund (Saudi Arabia)
Address AlRaidah Digital City, Al-Nakheel city Riyadh 11452 Postal/Zip code 6847 country Saudi Arabia Phone (+966-11) 405 0000 Fax (+966-11) 405 2006 email Info@pif.gov.sa website http://pif.gov.sa Description Construction of 5 palaces Period 2021 Status Current Project main consultant Saudi Diyar Consultants (Riyadh) main contractor Saudi Binladin Group (Saudi Arabia) main contractor (2) El Seif Engineering Contracting Establishment (Saudi Arabia) tender categories Construction & Contracting, Leisure & Entertainment, Marine Engineering Works & Seaports tender Products Marina Development, Residential Buildings
mAnDARin ORientAl HOtel – jeDDAH nORtH cORnicHe Budget $85,000,000 Project number WPR3258-SA territory Saudi Arabia client name Olayan Saudi Investment Company (OSICO) – Saudi Arabia city Riyadh, 11492 Postal/Zip code 8772 country Saudi Arabia Phone (+966-11) 474 9000 Fax (+966-11) 474 9108 website www.olayan.com Description Construction of a hotel Period 2021 Status New Tender main consultant Arabtech Jardaneh (Saudi Arabia) tender categories Hotels, Prestige Buildings tender Products Hotel Construction
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40 June 2018
PROJECT INTELLIGENCE, TENDERS & SUPPLY CONTRaCTS IN ThE MIDDLE EaST
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Tenders
Middle East tenders UAE tHe PyRAmiD PROject – FAlcOn city OF wOnDeRS Budget $50,000,000 Project number WPR3285-U territory Dubai client name Falcon City of Wonders (Dubai) city Dubai Postal/Zip code 120660 country United Arab Emirates Phone (+971-4) 335 5539 Fax (+971-4) 335 6703 email info@falconcity.com website www.falconcity.com Description Construction of 3 mixed-use buildings Period 2020 Status New Tender main consultant Adnan Saffarini Engineering Consultants (Dubai) meP consultant Adnan Saffarini Engineering Consultants (Dubai) Design consultant Adnan Saffarini Engineering Consultants (Dubai) Foundations/enabling/ Piling contractor Middle East Foundations Group LLC (Dubai) tender categories Construction & Contracting, Hotels tender Products Commercial Buildings, Hotel Construction, Mixed-use Developments, Residential Buildings
DuBAi metRO ReD line extenSiOn PROject – RASHiDiyA tO miRDiF city centRe
Project number WPR3131-U territory Dubai client name Roads & Transport Authority (RTA) – Dubai Address Marrakech Road city Dubai Postal/Zip code 118899 country United Arab Emirates Phone (+971-4) 284 4444 / 290 3220 / 208 0787 / 208 0771 Fax (+971-4) 290 3380/ 206 5555 website www.rta.ae Description Carrying out extension of an existing Metro line over 3.5km comprising only one station Status New Tender tender categories Public Transportation Projects tender Products Metro
Al GHARBiA mAll PROject – weSteRn ReGiOn Budget $10,000,000 Project number WPR3284-U territory Abu Dhabi client name LuLu Group International (Abu Dhabi) Address Y-Tower Building, Al Nahyan Camp city Abu Dhabi Postal/Zip code 4048 country United Arab Emirates Phone (+971-2) 418 2000 / 443 9111 Fax (+971-2) 642 1716 email headoffice@ae.lulumea.com website www. lulugroupinternational.com Description Construction of a
shopping mall comprising a ground floor and two upper floors Period 2019 Status Current Project main contractor JAZAL Engineering & Contracting LLC (Abu Dhabi) meP contractor JAZAL Engineering & Contracting LLC (Abu Dhabi) tender categories Construction & Contracting, Leisure & Entertainment tender Products Retail Developments
Al QuSAiS HeAltH clinic PROject Budget $10,000,000 Project number WPR3104-U
INTEGRATED ESTIMATING, PROJECT CONTROL AND ERP SOLUTION FOR CONTRACTORS www.ccsgulf.com | Tel: +971 4 346 6456 | info@ccsgulf.com
42 June 2018
Tenders
territory Dubai client name Dubai Health Authority (DHA) city Dubai Postal/Zip code 7272 country United Arab Emirates Phone (+971-4) 800 342 / 219 7000 Fax (+971-4) 311 3113 email care@dha.gov.ae website www.dha.gov.ae Description Construction of a 2-storey clinic building comprising a basement level, a ground level and an additional floor Period 2019 Status Current Project meP consultant Green Concept Engineering Consultants (Dubai) Design consultant HDP (Overseas) Ltd – Abu Dhabi main contractor Ghantoot Transport & General Contracting Establishment (Abu Dhabi) meP contractor Jamaheer Constructions LLC (Dubai) meP contractor (2) Alex & Coldwell (Dubai) tender categories Construction & Contracting, Medical & Healthcare tender Products Hospital Construction
country Oman Phone (+968-2) 469 3333 / 1318 / 460 1276 Fax (+968-2) 469 9185 email dept.infopr@housing.gov.om website www.housing.gov.om Description Construction of 45 housing units Period 2020 Status New Tender Design consultant Ministry of Housing (Oman) tender categories Construction & Contracting tender Products Residential Buildings
Address Moosa Abdulrahman Bldg, 2nd Floor, Al Noor Street, Ruwi city Muscat Postal/Zip code 669 country Oman Phone (+968) 2478 0202/ 20 Fax (+968) 2470 8800 email info@zainoman.com website www.zainoman.co Description Construction of 122 villas Period 2021 Status Current Project main contractor SMC Infra LLC (Oman) tender categories Construction & Contracting, Leisure & Entertainment tender Products Villas Construction
Al munA GARDenS PROject
BAHRAIN:
Project number WPR3253-O territory Oman client name Zain Property Development (Oman)
juFFAiR SQuARe PROject
Bahrain
Budget $15,000,000 Project number WPR3262-B
territory Bahrain client name Private investor (Bahrain) Description Construction of a shopping mall comprising a basement, ground floor, mezzanine floor and 1 floor offering 42 retail units. Period 2019 Status Current Project main consultant HCP Architect & Engineering (Bahrain) Design consultant Strong Force-MGC WLL (Bahrain) Specialist consultant Dheya Towfiq Engineering Bureau – DTEB (Bahrain) main consultant (2) Baker Wilkins & Smith (Bahrain) main contractor Kooheji Contractors WLL (Bahrain) tender categories Construction & Contracting, Leisure & Entertainment tender Products Retail Developments
OMAN:
Oman
ReSiDentiAl cOmPlex PROject – Al-juwAiRA Budget $10,000,000 Project number WPR3274-O territory Oman client name Ministry of Housing (Oman) Address Sarout Street, Al Khuwair Area city Muscat PC 100 Postal/Zip code 173
INTEGRATED ESTIMATING, PROJECT CONTROL AND ERP SOLUTION FOR CONTRACTORS www.ccsgulf.com | Tel: +971 4 346 6456 | info@ccsgulf.com
June 2018 43
Last Word
Alternative funding models require culture change GCC governments are keen to fund social infrastructure via alternative financing models. There’s a substantial skills gap to be filled first, says F+G’s David Clifton All GCC governments have published visions for their people’s futures,
encompassing economic diversification and placing infrastructure at the forefront of development plans. The region has traditionally approached any built environment programmes with few caps on spending, particularly on highprofile projects. Times have changed, however, and a significant infrastructure investment gap has emerged. Many government departments are looking towards private sector involvement as the solution and are now considering alternative financing models for major projects. Sectors such as water, power and aviation already have an established precedent for private sector involvement, but we can expect to see
44 June 2018
transport, education, telecommunications and healthcare move towards alternative financing. The benefits are certainly attractive – the private sector expertise and the opportunity to transfer employment costs to the private sector while building capacity and capability in specialist areas for the economy – though cheaper finance is not necessarily a given. The concept of alternative finance is not unfamiliar in the region: most countries have some experience of implementing (or attempting to implement) projects using the PPP model and principles. The concept of a prescriptive PPP legal framework is relatively new, however, though Dubai and Kuwait already have a legislative process in place and KSA is working towards this.
“Furthering the PPP agenda will require a shift in expectations on the part of many government departments. Part of the learning curve is to achieve a clearer understanding of the risks and how these should best be allocated”
Furthering the PPP agenda will require a shift in expectations on the part of many government departments. Part of the learning curve is to achieve a clearer understanding of the risks and how these should best be allocated. The principle of incentivising contractors and suppliers can seem very alien in the local market. Likewise, the prospect of paying more for materials and equipment, to bring lifecycle cost benefits across 25 years, may run contrary to local practice. Structuring a project to ensure the required revenue mechanism is another area where the region lacks expertise. There are pockets of understanding throughout the region, but the challenge is for this understanding to permeate the supply
chain. Hopefully the year ahead will bring a greater commitment to finding common ground between private and public sector partners. This will enable partnership agreements which incentivise partners to work together to find efficiencies and methods which are beneficial to all stakeholders. Our experience suggests that successful PPP projects have clear objectives from the outset, with a transparent evaluation criteria and process defined at a very early stage. Finance options should be carefully considered, allowing flexibility between capital markets and debt, ensuring that the best model is selected. This process can be expected to take time, possibly a minimum of 12 months – a challenge to the Middle East culture of immediacy.
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