Construction Business News
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Construction Business News ME March 2015 1 Over a Barrel Is the GCC’s construction market really dependent on the oil price? MD of Drake & Scull Engineering talks about working through the odds Has the UAE's sustainable measures impacted the building sector? Is there enough demand in the industry to keep contractors engaged? THE DEFINITIVE GUIDE TO THE REGION'S CONSTRUCTION PROFESSIONALS | MARCH 2015
Construction Business News ME March 2015 2 OHSAS 18001 certified ISO 9001, 14001 and 130+years of project experience LEED Platinum, LEED Gold and LEED Silver Capability End to End Integrated Solutions Pioneering Engineering Construction since 1881 www.drakescull.com 700+ Projects Delivered For over 130 years, Drake & Scull International PJSC has been shaping skylines and transforming the lifestyle of communities around the world. Drake & Scull is an industry leader, with a proven history of delivering more than 700 projects through its General Contracting, Engineering, Rail, Oil & Gas, Water and Wastewater Treatment and Infrastructure development business streamlines across the region.
Construction Business News ME March 2015 3 20 over the barrel IS THE GCC’S CONSTRUCTION MARKET REALLY DEPENDENT ON THE OIL PRICE? 38 in the field AZIZI DEVELOPMENTS BUILD LUXURY AND AFFORDABLE HOUSING IN AL FURJAN UAE MIDDLE EAST WORLD in person MD OF DRAKE AND SCULL TALKS ABOUT STAYING AHEAD OF THE GAME IN A COMPETITIVE MARKET analysis IS THERE ENOUGH DEMAND TO KEEP THE CONTRACT AWARDS COMING? architecture DR VARKKI PALLATHUCHERIL DISCUSSES THE CHANGING ROLE OF ARCHITECTS sustainability CBNME OBSERVES THE GREEN MOVEMENT IN THE CONSTRUCTION SECTOR "WE THINK IT IS UNLIKELY THAT THE CONSTRUCTION INDUSTRY WILL BE INFLUENCED BY THE OIL PRICE IN QATAR IN THE SHORT TERM" – NICK SMITH CONTENTS 8 12 14 16 26 32 34 cover story NEWS 34 50
Construction Business News ME March 2015 4 S U B S C R I B E C O N T R I B U T O R S subscriptions@bncpublishing.net Managing Director Walid Zok walid@bncpublishing.net Director Rabih Najm rabih@bncpublishing.net Director Wissam Younane wissam@bncpublishing.net Group Publishing Director Diarmuid O'Malley dom@bncpublishing.net Business Development Director Rabih Naderi rabih.naderi@bncpublishing.net Sales Manager Elly Shirkhan elly@bncpublishing.net Features Editor Lorraine Bangera lorraine@bncpublishing.net Marketing Executive Mark Anthony Monzon PO Box 502511 Dubai, United Arab Emirates P +971 4 4200 506 | F +971 4 4200 196 For all commercial enquiries related to Construction Business News ME contact elly@bncpublishing.net T +971 55 339 5097 All rights reserved © 2015. Opinions expressed are solely those of the contributors. Construction Business News ME and all subsidiary publications in the MENA region are officially licensed exclusively to BNC Publishing in the MENA region by Construction Business News ME. No part of this magazine may be reproduced or transmitted in any form or by any means without written permission of the publisher. Printed by Raidy Emirates Printing Group LLC www.raidy.com Rana Husam Shiblaq Stuart Matthews Marlow McGuinness Ltd forcast REAL ESTATE EXPERTS PREDICT THE POTENTIAL MARKET FOR 2015 latest ITALIAN DELEGATES MAKE THEIR WAY TO THE UAE MARKET comment MOHAMAD ITANI WRITES ABOUT AFFORDABLE HOUSING IN KSA events editor’s pick 50 54 56 58 62 42 PROJECT REVIEW AL HAMRA VILLAGE SHOWCASES EXPANSION PLANS AT ITS OLDEST MALL 46 Q&A CEO OF IHCC DISCUSSES THE PERKS OF HANDLING A SPECIALISED BUSINESS 38 16 CONTENTS
Porto Arabia Towers Doha, Qatar ©2014 Hill International, Inc. Hill International The Global Leader in Managing Construction Risk www.hillintl.com For nearly four decades, owners and developers in the Middle East have turned to Hill International to manage their construction projects and programs throughout the region. Hill is proud to have helped our clients turn their most challenging visions into realities. We have participated in over 10,000 projects with a total construction value in excess of $500 billion, managing all phases of the construction process from concept through completion. Hill is also the leading construction claims firm in the world, having helped resolve problems on some of the most complex projects throughout the Middle East and around the world. To minimize risk and maximize results on your next project, turn to Hill International Dubai Office: 971 4 227 0078 Doha Office: 974 4 435 8381 Corporate HQ: 800 283 4088 If you can imagine it, we can manage it. Qatar National Museum Doha, Qatar Mall of Qatar Doha, Qatar Viva Bahriya Towers Doha, Qatar
Construction Business News ME March 2015 6 DIARMUID O’MALLEY Group Publishing Director EXTENSIVE INDUSTRY INSIGHTS FROM THIS ISSUE ONWARD On behalf of our team at BNC Publish- ing, this introductory note presents the in- augural issue of Construction Business News ME (CBNME). As a B2B title, CBNME addresses industry experts and specialists directly, and aims to put forward sector- relevant interviews and information to both foster knowledge and mark landmark growth in the Middle East. After the financial crisis in 2007/2008, the construction industry has finally started moving on an upward trajectory from 2014. The progress since then is phenomenal- countless upcoming projects have been an- nounced for the near future. Additionally, the UAE winning bid for Expo 2020 and Qatar winning the bid for the FIFA World Cup 2022 has further bolstered the already- strong sector even further. At the 2015 Government Summit, HE Hussain Nasser Lootah, Director General of Dubai Municipality, talked about mak- ing Dubai a smart city with integrated communities. As the government aims to turnaround the spending by focusing on social infrastructure and sustainability, the construction sector will need to make dras- tic changes to keep up with the trends in the market. This month, our cover story looks into the impact of the decline in global oil prices on contractors in the GCC. While the slump in oil revenues will hit some coun- tries harder than others, it does seem that key markets like Saudi Arabia, Qatar and the UAE will be relatively unaffected in the medium term. We also look at the ramifica- tions of “green” regulations in the construc- tion industry as well as what the real estate industry has coming in 2015. WELCOME THE INAUGURAL ISSUE “According to the Dubai Statistics Report, in Dubai alone, the construction sector con- tributes to 7.89% of the GDP. The GCC region, without a doubt, has enormous construc- tion capacity. Construction Business News ME will focus on giving the readers quality insights into the industry with the help of reliable experts across the region. I look forward to work- ing with trusted partners across the construction sector.” UNDER CONSTRUCTION... DRILL DOWN WHAT'S THE CONCEPT? BETTER, LITTLE PLAIN? A LITTLE MORE DEPTH? PERFECT
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Construction Business News ME March 2015 8 DUBAI – Ishraqah for Development’s upcoming project, The Onyx, will be officially launching on March 15. The building will be situated close to Emaar Business Park adjacent to Sheikh Zayed Road. The project is an AED 1.3 billion three-tower development that is in its final completion stages. Comprising of three towers, the project will include a 14-storey commercial tower, a 24-storey mixed-use commercial and office tower, and a four star luxury hotel with 200 rooms and 10 suites. All three towers share a common three floor platform of retail outlets and restaurants. Works on the first two towers are progressing on schedule with the structure work of both towers complete. The hotel tower is expected to be structurally complete by mid-March, with work on its façade to follow. MEP work, block work, paint and finishing are all at an advanced stage, with the development benefiting from a fast-track programme introduced last year. DUBAI - Harbor Real Estate announced that it concluded service contracts and transactions exceeding AED 2.8 billion during their 2014 fiscal year. Harbor’s growing number of institutional clients include National Bonds Corporation, Al Mazaya Holding, Investment Corporation of Dubai, Al Thani Investments, Daman Invest- ment, Tadhamon Islamic Bank, Global Invest- ment & Development, Amlak Finance, and ASGC Investments. Mohanad Alwadiya, Managing Director of Harbor Real Estate, said, “We have an exclusive portfolio that is worth over AED 15 billion cover- ing 6,000 mixed-use properties all over Dubai.” Harbor’s integrated real estate services cover research, valuation and advisory, prop- erty asset management, marketing sales and rental, and CRM, handover and project management services. NEW ONYX PROJECT SET TO LAUNCH MID- MARCH THIS YEAR Harbor’s portfolio advances to AED 15 billion NEWS UAE THE ONYX PROJECT COMING UP SOON IN SHEIKH ZAYED ROAD, DUBAI HARBOR REAL ESTATE’S SKYCOURTS TOWERS IN DUBAILAND
Construction Business News ME March 2015 9 DUBAI - Regional and international bancassurance and insurance experts gathered in Dubai for the Bancassurance MENA Summit from February 23 - 25 to discuss the impact of changing regula- tions, market trends and projections on driving profitability in the Middle East’s bancassurance sector. The GCC insurance industry has almost tripled in value between 2006 and 2013, with insurance premiums increas- ing from US$6.4 billion to $18.4 billion. The UAE and Saudi Arabia are the larg- est insurance markets in the GCC, with nearly 80% of Gross Written Premium (GWP). GWP is the total premium writ- ten and assumed by an insurer before deductions for reinsurance and ceding commissions. The UAE is the biggest and fastest-growing insurance mar- ket, accounting for almost 45% of the region’s GWP and has witnessed strong growth momentum with a 17% CAGR over the past six years. ABU DHABI - Etihad Rail, developer and operator of the UAE national rail- way network, participated at this year’s International Defence Exhibition & Conference (IDEX), which took place from February 22 - 26 at the Abu Dhabi National Exhibition Centre. This was Etihad Rail’s first appearance in the major defence event and accordingly highlighted its partnership with the UAE Armed Forces. As part of the agreement between two entities signed last year, the UAE Armed Forces will provide protection GCC insurance industry value rapidly increases ETIHAD RAIL PARTICIPATES at IDEX 2015 for a number of Etihad Rail's facilities and installations including stations, terminals, yards and depots. Once fully operational, Etihad Rail will extend its relationship with the military as it will provide a link for five key military logistics centres operated by the UAE Armed Forces and the Ministry of Defence. Etihad Rail was represented at IDEX by a delegation of senior executives and industry experts who educated conference visitors on the railway's developments. HH SHEIKH SAIF BIN ZAYED AL NAHYAN WITH ETIHADRAIL CEO FARIS SAIF AL MAZROUEI AT ETIHAD RAIL'S IDEX 2015 STAND
Construction Business News ME March 2015 10 T he fire at The Torch Tower oc- curred in Dubai Marina around 2:00 am on February 21 this year. Evacuation was successful and all fire safety systems functioned effectively leaving no casualties. The safety system also helped restrict fire damage to the exte- rior of the building. Following the fire, Oman Insurance Company (OIC), the insurer of The Torch Tower assessed the damages. The insurance contract is between OIC and the Torch Tower owners and not with the tenants. Management in charge of the building, the Kingfield Owner Association Management Services, arranged for tem- porary shelter and provisions for residents in the adjacent Princess Tower. Out of the 676 apartments units, 101 are still not ac- cessible and the affected owners and ten- ants can avail the alternate accommodation provided. Dubai Civil Defense has deemed that all apartments not directly affected by the fire are habitable. Tim Crowe, Kingfield Owner Association Manager said, “Kingfield appreciates the immediate action taken by Oman Insur- ance to appoint a loss adjuster who was on site within a couple of hours and also to approve our requests for compensation for emergency accommodation for our residents. We have confidence that Oman Insurance will continue to assist us with reasonable settlement of valid claims under the terms of the insurance policy.” The Loss Adjuster and OIC have already begun with the inspection of affected apartments. Most of the damages were concentrated in the balcony areas and the structure of the building has not been majorly affected. The damage was limited to the exterior cladding, and that fire dam- age is far less than expected initially. The building consists of 2 low zone and 2 high zone lifts which are now manually operated, while Kone is on site to bring all lifts back under normal operation. Meetings are ongoing with Dubai Police, Dubai Municipality, Dubai Civil Defense, RTA and Dubai Tram to discuss the removal of loose debris on the building façade af- fected by the fire. A SCORCH MARK AFTER THE TORCH SET ABLAZE, AUTHORITIES HAVE BEEN WORKING AT FULL THROTTLE TO GET THE TOWER UP AND RUNNING AGAIN. CBNME LOOKS INTO THE PROGRESS… NEWS UAE
Construction Business News ME March 2015 11 Main Office: Jeddah: Old Makkah Road Kilo 6, Tel: +966 12 680 4444 Riyadh: Khurais Road Exit 30, Tel: +966 11 233 3555 Dammam: Dammam-Khobar Highway, Tel: +966 13 859 8484 Abha: Khamis Mushayt - King Fahad Road, Tel: +966 17 227 4066 Makkah: Al Haaj Road, Tel: +966 12 542 8484 e-mail: famco@alfuttaim.sa www.al-futtaim.ae www.famcosaudi.com It is, without doubt, one of the harshest environments on earth: the Empty Quarter in the Kingdom of Saudi Arabia – the largest and most barren sand desert in the world, spreading itself over four Arab nations and covering 650,000 km2 which is comparable in size to France. Temperatures range from 50° to -1°C in the course of a single day and the sand and dust are relentless. The nearest city is 1000 kilometres away. So the construction of a 256 kilometre road cutting through this wildnerness, linking Saudi Arabia to the Sultanate of Oman, called for an extraordinary solution. The response: a eet of 95 Volvo machines was assembled. Together, they shifted over 130 million m3 of sand just to build the bridge of the road – an extraordinary feat in such harsh conditions, yet the quality and power of Volvo engineering was up to the challenge. The difculties created by the remote isolation of the worksite were answered with excellent customer support from FAMCO, the authorised Volvo dealer in Saudi Arabia, which included the organisation of mobile 247/ service workshops that moved forward with the construction operation. Discover a new way.
Construction Business News ME March 2015 12 BAHRAIN - Abu Dhabi Fund for Development (ADFD) has announced that the construction of the AED550.95 million Cardiac Centre will commence within six weeks in the Awali area of Bahrain. The project has been financed by a grant offered by the UAE to Bahrain in 2013 as part of the GCC development programme. Man- aged by ADFD on behalf of the UAE Government, the new facility will meet the growing demand for specialised cardiology services in the Kingdom of Bahrain. Taking shape across an area of 44,000 square metres, the new facility will include an outpatient clinic, radiology department, scanning, pharmacy, physiotherapy, and sterilisation, emergency and operation theaters, as welI as an ICU, laboratory and dedicated wards for men, women and children. The centre will feature 150 beds, boosting the capacity of the existing 65-bed cardiac unit. RIYADH - Luxury real estate developer Damac Properties has announced that its Damac Esclusiva and Damac Tower by Paramount projects on King Fahd Road have now reached their final heights at 32 and 35 floors re- spectively. Blockwork on each tower has also reached the top floors. The buildings will be first of its kind in the Kingdom offering the ultimate luxury living experience, with the 100 private serviced- apartments in Damac Esclusiva designed with interiors by Fendi Casa. The unique features of the design will be the mix between the ancient Eastern heritage and the beauty of Italian craftsmanship. The collaboration between Damac Properties and Fendi includes Damac Residenze, another landmark project in Dubai overlooking a waterfront. Damac Esclusiva and Damac Tower by Para- mount are set to be finished next. CARDIAC CENTRE WORK TO BEGIN IN 6 WEEKS Damac sets a new standard in real estate NEWS MIDDLE EAST DAMAC TOWER BY PARAMOUNT, RIYADH
Construction Business News ME March 2015 13 CAIRO- Khalaf Ahmad Al Habtoor, Chairman of the Al Habtoor Group is heading to Egypt in the coming days to study potential business op- portunities in the country. Al Habtoor said he is conduct- ing feasibility studies in the automotive, real estate and hospitality sectors. Al Habtoor said, “It is my hope to build Al Habtoor City in a prime location such as Cairo. This will be of great benefit to the country’s economy, and will also provide thousands of jobs.” He added, “Thousands of families in Egypt would benefit from a project like this, as most of the jobs would be recruited locally.” KUWAIT CITY - Shapoorji Pallonji, have won the contract to build, operate and maintain the colleges at Kuwait University. The space would include college of so- cial science, law and Shariaa & Islamic studies, as well as the prayer areas and a faculty club. They recently announced that the contract between the university and contractors was officially signed in January earlier this year. The project is valued at approximately US$ 525 mil- lion with a contract period of 42 months. Shapoorji Pallonji is has a growing presence in the Kuwaiti market. It recently also won the design-build contract with supply, instal- lation and maintenance of medical procurement for the Al Sabah Hospital. The project is a $635 million as- signment installing a building for 617 beds. It is currently in its design phase and is expected to be completed in 48 months. DOHA - Project Qatar 2015, the 12th edition of the show, has received an unparalleled level of contributions from a wide range of sponsors and numerous supporting bodies, comprising of private and public sector entities alike. The event is scheduled to unfold from May 4 – 7 at the Qatar National Con- vention Centre. This year, notable sponsors include Al Sraiya Group, Qatar Primary Materi- als Company (QPMC), Emirates Steel, Tadmur Holding, Hensel Phelps, QD- SBG Construction and Bitumode Qatar. Serving as the sole integrity sponsor of Project Qatar 2015, Al Sraiya Group has been providing integrated and diversi- fied services to Qatar’s construction industry since 1975. Al Habtoor plans to expand to Egypt Shapoorji Pallonji wins contract for Kuwait University Project Qatar receives robust support
Construction Business News ME March 2015 14 West Chester, USA: On February 23 AK Steel, producers of flat-rolled carbon, stainless and electrical steel products announced that it will build a new world-class Research and Innovation Center in Middletown, Ohio. The 120,000 square foot facility will be constructed on a 15-acre site located in the Cincinnati – Dayton. The estimated project cost is US$36 million. The new Research and Innovation Center will replace the company's existing research facility that is located at another site in Middletown London, UK- Figures released on February 20 revealed that the industrial construction sector in January increased its total value of contracts by over 38% compared to December, with a number of major projects announced across the month. The data shows industrial construction in January 2015 rose above the £500 million barrier compared to £362 million recorded in the January 2014. This is an encouraging sign for a sector that has already performed relatively well over the last 12 months hav- ing had a 26% increase for year on year growth in 2014. Michael Dall, lead economist at Barbour ABI, said, "In the three months to January the total value of contracts for industrial construction was £1.2 billion, almost 18% higher than the previous three months. He added, "The total value of industrial projects reaching the advanced planning stage in 2014 was £6.4 billion, an increase of over 50% on 2013, indicating a bright future for the sector." Long Island, USA - Texture Plus, manufacturer of high-impact textured faux wall panels, introduces a new exclusive Stacked Stone Dry Stack Select Collection. The wall panels have an easy-to-install interlock design. Texture Plus wall panels are widely used in thousands of successful installations for commercial, homeowner, retail, theme parks, hospitality, tradeshow design and other industries in a wide range of climates. AK STEEL TO BUILD NEW RESEARCH CENTRE TP INTRODUCES NEW STONE WALLS Substantial growth recorded in industrial construction NEWS WORLD
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IN PERSON STAYING AHEAD Construction Business News ME March 2015 16
Drake and Scull Engineering (DSE), recognised as an expert in the MEP industry, has constantly evolved and managed to stay ahead of its fierce competitors. This month, Ahmad Al Naser, Managing Director of DSE, speaks with Lorraine Bangera about the pressures of working in the construction industry and what it takes to stay on top A hmad Al Naser is surprised at how quickly time has flown by as it has been 13 years since he first joined Drake and Scull International (DSI). “Every day has been interesting and had its own chal- lenges and achievements. But it has been a very fulfilling and rewarding experience, and I value the friend- ships and relationships I’ve cultivated here,” Naser says as he cherishes the many memories he has with the company. Naser was fresh out of university before the he delved into the tough world of construction. He graduated with a degree in Mechanical Engineering from the University of Jordan and is now a member of the American Society of Heating, Refrigeration & Air conditioning Engineers (ASHRAE) and the Jordon Engineering Association. He started his career as a project manager at DSI, which soon transitioned into the area general manager of Abu Dhabi. In the years to follow Naser led DSE’s expansion into new markets like KSA and India as the regional director, before being promoted to the MD in 2014. Currently he manages all DSE projects across the MENA, South Asia and Europe, which helps him develop strong working relationships with existing and potential business partners. Some of his priorities include ensuring the growth of the business, maintaining the quality of work and reputation while meeting targets and increasing the share value for their shareholders. When asked about his secret to success, he honestly re- plies, “There is no substitute for dedication and hard work. It is important to take pride in what you do and to be driven by passion to be the best in your field.” There have been innumerable challenges in his journey, Construction Business News ME March 2015 17
Construction Business News ME March 2015 18 IN PERSON the biggest being his scope of responsi- bility which he takes up quite seri- ously. Apart from managing all the DSE markets in the region, he also maintains over 15,000 employees who need con- stant motivation to excel. CHALLENGES The industry is vast, complex and rapidly evolving and according to Naser, “competition is improving each day.” To be the top player he says, “We have to be on our toes and ensure that we re- main well ahead of our competitors and continue to be the preferred engineer- ing partner for our clients.” From a contracting perspective, Naser observes that one of the main chal- lenges is the competitive pricing for job tenders as the market is currently very demanding. He says, “The only way for us to meet our targets is to improve our productivity and apply innovative solu- tions which would give us an edge over our competitors.” DSI however, has a great advantage as they offer clients a one stop shop for complete project execution and deliv- ery, from the pre-design stage to post- delivery operations and maintenance. DSI businesses include Drake & Scull Engineering, Drake & Scull Construc- tion, Drake & Scull Oil and Gas, Drake & Scull Rail, Passavant Energy & Envi- ronment and Drake & Scull Develop- ment. All sister companies who operate independently, yet have the flexibility to integrate their services, depending on the needs of the projects. According to Naser, the fact that they are sister com- panies, helps them operate and work in sync, avoiding the hassles that are usually faced when multiple teams from different companies work on projects. He says, “Our wide footprint also gives us the ability to shift our resources (ma- terial, human and financial) and scale our presence, to suit the requirements of a particular project.” DSE is also familiar with the regions local conditions, regulations and cultural sensitivities which in Naser's opinion allows them to deliver high cost ef- ficiency on projects. Another key factor to success Naser says is “transparency and trust”. DSE have certified management models such as ISO 9001:2008, ISO 14001:2005 and OHSAS 18001:2007. The company is professionally run and is publicly listed, which means its practices are transparent and rank high on corporate governance practices. MIDDLE EAST The Middle East has been rising in the last decade and the UAE, KSA and Qatar will continue to be at the fore- front of the real estate development sec- tor. The MD is particularly thrilled about the projects in Qatar and UAE coming up in the next few years. CAYAN (INFINITY) TOWER, DUBAI HABTOOR CITY, DUBAI
Construction Business News ME March 2015 19 He says, “It is no secret that the industry underwent a very tough time in the last few years and has just recently started to recover from a lukewarm environment. “The World Cup 2022 win for Qatar and the 2020 Expo win for Dubai was a shot in the arm for the construction industry that has reinvigorated the regional real estate market.” Qatar has an ambitious vision, and draws a comprehensive plan to imple- ment this vision. He says, “We feel the city has a fairly good chance of rival- ing Dubai’s famed skyline over the next decade. “With one of the world’s biggest sov- ereign funds acting as a buffer, Qatar is not expected to witness any slowdown on the booming infrastructure develop- ment oriented toward the 2022 World Cup preparations.” Qatar is also expected to move ahead on crucial long term investments like the Doha Metro and the GCC rail which deliver a substantial boost to the Qatari economy. Naser also notes gradual signs of big project announcements and infrastruc- ture development that was put on the backburner in the last few years. He carefully admits, “The recent oil price dip has given us enough reason to be cautious in our outlook, though regional governments have largely com- mitted to continue their investment in core infrastructure.” For example, Qatar, despite its per- ception as an “oil price sensitive mar- ket,” has made significant progress in developing the non-oil sector. He points out that according to a Kamco Research titled ‘GCC Economic Outlook 2015’, Qatar is expected to spend around US$140 billion in the next five years, for the World Cup. “Of course, inflation and the vaga- ries of the oil price fluctuations pose as the biggest threat to Qatar’s devel- opment programmes.” But he adds according to the report titled ‘International Construction Cost Report 2014’ published by Arcadis, Qatar’s construction costs are on par with developed markets like USA and Italy. Naser says that the government and the industry will have to figure out ways to restrict the rising costs to manageable levels. It would be a challenge to lay the groundwork and expand to accom- modate the upcoming boom in the industry, specifically as the preparations for the Expo and the World Cup get underway. Naser says there will be a lot more competition as more firms move to the region to reap the benefits of the rapid growth in projects, which will also put pressure on the overall costs, as well as demand for human capital. In addition to Qatar and the UAE, Naser says that markets like Kuwait, Jordan, Oman, Egypt and Algeria will continue to also remain relevant and important for DSE, as they diligently ensure to retain their capacity to deliver large scale in these markets. LOOKING AHEAD After a successful 2014, DSI stepped into this year on a positive note with DSE’s recent AED 198 mil- lion MEP win for a prestigious hotel development in Dubai as well as the AED 180 million Reef Real Estate contracting project for sister company Drake & Scull Construction in Dubai. Delighted about his sister company’s achievement, Naser says, “We are confident the Reef Residence Tower project will become a prominent landmark of the emirate’s skyline.” “Our backlog is at an all-time high and we have a decent portfolio of ongoing projects and our workforce is rapidly expanding. So I remain opti- mistic about our prospects for the near future,” says Naser. He adds that even though the com- plexity of dealing with multiple mar- kets presents interesting and unique challenges, their overall aim remains the same. He says, “We have to continue to expand our backlog and to ensure reasonable profits on our projects. This will be very crucial for DSE to continue positioning itself as the Prime Contractor in the region by delivering projects on time within budgets and to DSE quality standards.” FACTS AND FIGURES: 130 years of experience Delivery of more than 700 projects in the last 5 decades, across MENA, Europe and Asia. DSI's current backlog: AED 14.4 BILLION FACTS AND FIGURES: Some of DSI’s major ongoing projects include: KSA: Jabal Omar development in Mecca and King Fahad Medical City QATAR: The Mall of Qatar and Doha- land UAE: Louvre Museum and Habtoor City (Below) KUWAIT: College of Arts and business OMAN: the New Muscat Airport
Over a Barrel A sharp decline in the oil price has given the construction industry pause for thought about the future. Orlando Crowcroft writes Construction Business News ME March 2015 20 COVER STORY
Construction Business News ME March 2015 21 Low margins and competition have been a challenge in the Gulf for as long as in- ternational contractors have flocked to its petro-states to cash in on a decades-long development boom. But the oil crash that hit global markets last summer and now sees crude worth just half of its value in June 2014 has industry experts talking of a slow-down in development pipeline that could possibly see life made even harder for construction firms in the GCC. “I’m not seeing this yet and it’s too early to form a better view (but), if prolonged, contractors with gaps in their order books could increase tender competition and lower margins,” said Andrew Jeffery, Di- rector of Infrastructure and Capital Projects at Deloitte. What is clear is that decreased oil revenues will hit some GCC states harder than others. Saudi Arabia may be the world’s largest oil producer but it also has massive foreign currency reserves, worth some US$740 billion or 98% of GDP. New king Salman bin Abdul-Aziz’s recent $30 billion splurge on payouts for state workers demonstrates that Saudi rulers are willing to dip into this rainy day fund to make up any slack from falling oil revenues – it is not a stretch to suppose those reserves will also be available for essential infrastructure projects. Equally Saudi Arabia has nowhere near the development pipeline, comparatively, that Dubai and Abu Dhabi currently have as the UAE ramps up for the Expo 2020 Dubai and caters for increasing tourism numbers. For the latter, far more reliant on oil prices than its diversified neighbour, things could be far more difficult. “We expect public expenditure, particu- larly on projects, to decline in line with falling oil prices. But while this means the outlook for construction in Abu Dhabi “We think it is unlikely that construction activity will be influenced by the oil price in Qatar in the short term.” Nick Smith is potentially weak, the same may not necessarily be true of Dubai,” said Farouk Soussa, Chief Economist for the Middle East at Citi. He pointed out that funding for public projects in Dubai is not reliant on oil reve- nues, but on the performance of the wider economy, so the outlook for both public and private construction will depend on Dubai’s economic performance this year. In January, the IMF revised that down to 4.5% – but was positive about growth in the emirate’s non-oil sector. “To be sure, there are challenges, with weaker regional growth likely to create headwinds for Dubai’s economy. But the global economic and trade backdrop re- mains broadly supportive of Dubai’s core industries, trade, logistics and tourism,” he said, adding that the potential deal with Iran and the international commu- nity presented a huge opportunity for the emirate’s economy. And economists point out that as a single country, the UAE is in pretty good shape. It has substantial reserves of its own and multiple industries outside of oil and gas that much of the new develop- ment scheduled for 2015 is targeting. Tourism numbers certainly took a hit during the last quarter of 2014, but this was mainly due to a drop off in visitors to Russia rather than Dubai-specific issues. “The key point we’ve made is that the UAE should be able to withstand a period of lower oil prices relatively well. Its economy is by far the most diversi- fied in the Gulf and the government’s large savings mean that it is well placed to sustain spending,” said Jason Tuvey, Middle East Economist at Capital Eco- nomics in London. Indeed, if there is a drop off in development and a subsequent impact on the construction industry, it may not necessarily be a bad thing. A trimming of the fat ahead of what is undoubt- edly a new boom in Dubai may help to assuage the fears of those looking at huge growth at the beginning of last year and talking of a bubble. Over in Qatar there are also fears amongst contractors that the effect of the oil price drop will impact their bottom lines in the year ahead, even if so far there has been little hard evidence that this will come to pass. Nick Smith, Partner and Construction Consultant at EC Harris, said this was particularly true for those on state- funded work. “Currently we are witnessing increased levels of concern from some clients particularly within the public sector where funding is tuned to oil and gas revenues,” Smith said. “We think it is unlikely that construction
Construction Business News ME March 2015 22 activity will be influenced by the oil price in Qatar in the short term, however, if this trend continues viability of projects may be reviewed which could have an impact on construction activity.” In terms of direct impact, Smith said “Contractors with gaps in their order books could increase tender competition and lower margins.” Andrew Jeffery “The key point we’ve made is that the UAE should be able to withstand a period of lower oil prices relatively well.” Jason Tuvey COVER STORY that the drop in oil prices had lowered transportation costs for contractors sub- stantially, but this was obviously being felt across the whole economy. And he said that while it was early days, there was potential that there could be an adverse affect on contractors long term. “If the oil price reduction leads to the cancellation or suspension of pipe- line projects … then this could lead to increased competition – because of less projects for contractors to bid for – and pressure on margins,” he said. At the same time, preparations for the World Cup 2020 will give contractors involved in those projects some respite. With its immovable and approaching deadline, Qatar has little choice of wheth- er or not to build stadiums, infrastructure and hotels. But experts feel that, as in Dubai and Abu Dhabi, a forced re-think of some areas of the development market may not be a bad thing. If projects are falling by the wayside because of the oil price slide, they were probably not good proposi- tions anyway. Deloitte’s Jeffery said that across the GCC only the more specula- tive development end of the market would be dampened as values soften. For more critical infrastructure and government-funded development including health and education, it is likely projects will be prioritised to reflect the pressure on budgets. “This is a smart move and should ensure only the best projects continue to receive funding - a good indicator of a maturing market in some of the Middle East countries,” he said.
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ANALYSIS Is there enough demand to keep the contract awards coming? Stuart Matthews writes BUILD PIPE Construction Business News ME March 2015 26
D THE LINE I t’s the end of February and de- velopers are packing their bags and heading to the UK. It’s not a great market exodus, but a chance to build what one off-handedly describes as ‘a development pipeline’. Some 36 of the UAE’s developers are off to London for the Dubai Property Show and after three days of wheel- ing and dealing, hope to come back with a fist full of dollars invested in their planned and proceeding projects. A few years ago, such wishes would have been a pipe dream, but thanks to improved market liquidity and a re- newed desire to build projects people might actually want, there’s more than a whiff of hope pervading airports’ business-class lounges. Like any business, developers need demand to keep growing. Importing some from the UK, Europe, India or Africa may be the answer needed to sustain an active development market beyond what local sales can support. “The development market in the UAE is currently the most active it has been since before the financial crises in 2007/2008, with many of the projects delayed since that time now moving belatedly ahead,” says Craig Plumb, head of research MENA for JLL, a pro- fessional services company. “The market is most active in Dubai, Construction Business News ME March 2015 27
Construction Business News ME March 2015 28 ANALYSIS “Many of those that do proceed are likely to do so on a staged basis. We expect relatively few new master planned projects to be announced, with most of the construction activity being further stages of existing master-planned projects.” Plumb predicts a ‘marginal softening’ for the residential and hospitality markets over the next one to two years, after the slightly tumultu- ous period of very strong price escala- tion experienced in 2014. He, like many others, see the ensuing period of stability - in terms of rents and prices - as a good thing for the overall market and something that could contribute positively to the competitive- ness of Dubai over the long term. The impact of these shifts is being felt by those who turn developer’s promises into an end-users reality. Some believe the result is a move to- ward greater quality, as Janus Rostock, design director, architecture and urban design for Atkins explains. “There’s been a fairly healthy levelling out in Dubai’s property market during the last couple of months and it feels like it’s at a sensible level,” he says. “What that means is that people are asking the right sorts of questions about whether projects are feasible or not, and it means devel- opers are being careful about how they phase developments to meet market needs. That’s positive because it means that if there’s doubt about a project’s validity it is unlikely to proceed, and it supports a flight-to-quality development because anything that’s not at the right standard will fail.” With the advent of Dubai Expo 2020 where we estimate around 25,000 ad- ditional residential units will complete in 2015, along with 1.2m2 of office space, 267,000 m2 of retail malls and a further 4,700 hotel rooms.” There’s a clear slant in interest toward residential projects, or those aimed at the hospitality and entertainment sec- tors. Investor confidence remains says Plumb, who notes that projects are being launched on a regular, almost weekly, basis. At the same time the list of stalled and cancelled projects, many a legacy of the financial crisis, are gradually being ti- died away. Dubai Courts lists eleven proj- ects being liquidated, for which claimants have until the end of March 2015 to file an interest. The result is a more positive outlook than for many years previously, based, for the most part, on sensible projects combined with steady develop- ment timetables. “Not all of the projects that have been announced will proceed to the construc- tion stage over the next two years, as there is probably not sufficient invest- ment appetite to fund all these proposed developments” says Plumb. WORK CONTINUES IN THE DOWNTOWN AREA OF DUBAI ACCORDING TO VENTURES ME, CONSTRUCTION PRO- JECTS ACROSS ALL BUILD- ING SECTORS WORTH $67.6 BILLION WERE COMPLETED IN THE GCC IN 2014. SOME $85 BILLION WORTH OF PROJECTS WERE AWARDED
Construction Business News ME March 2015 29 the development market is expecting to see further opportunities emerge soon. Importantly, they will be opportunities with a very visible and fixed deadline. “Expo 2020 Dubai is a strategically important event with a critical deadline,” says Rostock. “We’d expect to see invest- ment in three and four-star hospitality, for which there’s a growing need, and high quality mixed-use development, which enjoys strong links to the public transport network. “Transport-oriented development is going to play a key role as Dubai’s property market continues to mature and develop, because it supports the city’s aspirations to enable sustainable, healthy living and strong communities. We also expect to see a continued di- versification of Dubai’s offering, in terms of cultural and entertainment related development which attracts visitors and generates income.” These kinds of opportunities are reflected in Atkins’ current project portfolio, with the firm working on large scale development projects with major developers, including Emaar and Al Habtoor. “[The projects] all reflect these prin- ciples, either by offering something new and different or by reaching new heights of quality,” says Rostock. “Dubai Opera is a clear example of a stunning project which will add to Dubai’s offer- ing as part of a highly successful existing neighbourhood. Al Habtoor Residences will be exceptional quality in their own right, as well as being located directly next to the Dubai Canal, which will be a new destination for the city. “The level of planning which has gone into these projects is exceptional and will ensure they are very much a part of the places in which they sit, add- ing to their community and supporting sustainable growth.” Notably, these projects are well under way. The more stable market conditions, combined with - and in some cases caused by - a tightening of the regula- tory environment, has helped to prompt the project launches that have been announced over the last 12 months and also got the building process started. “Over the next year the property CRAIG PLUMB NIALL MCLOUGHLIN JANUS ROSTOCK PROGRESS NEAR THE WORLDS TALLEST ACCORDING TO VENTURES ME, $72 BILLION IN PROJECTS WILL BE COMPLETED IN THE GCC IN 2015, UP 6.5% ON 2014. A FURTHER $103 BILLION MAY BE AWARDED, UP 21.2%
Construction Business News ME March 2015 30 ANALYSIS market across the emirate will be go- ing through a big ‘build’ phase,” says Niall McLoughlin, senior vice president, DAMAC Properties. “Recently many de- velopers, including ourselves, launched large scale luxury developments which are taking three to five years to com- plete. As these developments work their way through the construction phase, you are going to see the first real completions and handover of units coming up in 2016.” McLoughlin’s view of the opportuni- ties in the market chime with those of others when it comes to the impact of population growth and targets the UAE has set itself for tourism. He is also bull- ish about future demand. “Dubai has been one of the best per- forming real estate markets in the world over the past year,” he says. “Demand is set to continue outstripping supply and there remains a strong desire from international investors to own a second home in the UAE. “Having said that it is imperative that the right products, at the right price, and – critically – in the right locations are presented. Buyers have a wide selection of property in Dubai and it is only those that offer the high- est quality product and service that will do well. Experience, delivery and trust are key elements.” McLoughlin says Damac Properties has carved a niche out of delivering high-quality, luxury living experiences in the best locations. It may sound like hyperbole, but the com- pany has caught plenty of headlines with the launch of its Akoya by Damac and Akoya Oxygen master develop- ments and sub- sequent contract awards. So far this year awarded work form the developer has reached a value of $326m across five major construction contracts, award- ed to a variety of contractors, including Ghantoot and Seidco. “Akoya by Damac will hit a number of key milestones in the coming year,” says McLoughlin. “The first residents will move into their luxury villas and the Trump international Golf Club, Dubai will be completed. This is a really exciting time for Damac Properties and our owners as we welcome the first resi- dents to our first master development.” The company is also progressing with its tower project in the Burj Area of Dubai, Damac Towers by Para- mount, which the company says will be completed next year. McLoughlin says contractors can look forward to further awards. “The majority of our tenders will be around the construction of Akoya by Damac, and Akoya Oxygen,” he says. “The awarding of further contracts across our portfolio defines the timeline of deliveries and ensures consistent progress throughout the construction pipeline.” It is progress that both the industry and the ultimate end users want to see. Still wary of the crash, there is a much greater emphasis on delivery across the market than in the early boom days. “There has been a shift away from off plan sales over the past few years with more developers seeking to fund projects through either borrowing or raising their own equity,” explains JLL’s Craig Plumb. Plumb sees funding as one of the two key challenges facing the construction industry over the next few years. With the possible oversupply in certain market sectors being the second. “While the ap- petite of the local banks for real estate lending is on the rise again, most are applying a healthy degree of caution and are being selective in terms of which proj- ects they will finance,” he says. “It is also probable that the cost of bank debt will increase as interest rates begin to rise over the next 18 months.” Some developers have found the solution in equity raising in the UAE market - Plumb points to Emaar Malls as a prime example - but this too is fraught with issues, “The ability of developers to raise money from IPO’s or other capital rais- ings has however been constrained by recent falls in equity markets and many of the proposed offerings are currently on hold until [financial] market condi- tions improve.” Regardless of the challenges though, developers in the UAE will continue to seek ways to push ahead with projects designed to attract people and provide a profit. Contractors and consumers alike will be hoping they can build on recent successes. “It is imperative that the right products, at the right price, and – critically – in the right locations are presented. Buyers have a wide selection of property in Dubai and it is only those that offer the highest quality product and service that will do well.” Niall McLoughlin ACCORDING TO VENTURES ME, OF THE PROJECTS COM- PLETED ACROSS THE GCC IN 2014 RESIDENTIAL MADE UP TO 41.5%, COMMERCIAL 16.97% AND EDUCATION 10.6%
Construction Business News ME March 2015 31 THE NEW GATEWAY TO THE GULF seabury report
Construction Business News ME March 2015 32 ARCHITECTURE AN ARCHITECT’S PREROGATIVE Today, with the help of technology an architect can turn any vivid design into a reality. Dr Varkki George Pallathucheril, Interim Dean of the College of Architecture in American University of Sharjah (AUS), speaks with Lorraine Bangera about if this period is the best time to be an architect H ow has advances in tech- nology affected architec- ture in the last decade? It is true that advances in building systems, materials and construction methods have taken away many of the constraints that used to be placed on designing and constructing a structure in a particular place and time. In my view, however, this has not neces- sarily liberated the designer as much as we might think. Rather, it has made the designer all the more responsible for be- ing smart and recognizing the necessary limits on design decisions. Just because we can do something does not mean that we should. There are unexpected and unintended consequences, which a casual design decision may not consider, that designers must not take casually. Could you tell us about some major setbacks an architect working in the Middle East would face today? It may be true of designing in other contexts as well, but I believe there are barriers to achieving quality design in our context. On the one hand, some projects have high profiles and large budgets that demand product differen- tiation. They end up being different for the sake of being different, which need not be a good thing. On the other hand, a vast majority of projects have such tight budgets and timelines that it is diffi- cult for the designer to deviate from the norm. We get a regression to the typical that again may not be a good thing. Do you find some urban spaces today soulless compared to historic struc- tures that were more in touch with nature? I don't believe a missing link to nature or the environment is necessarily the only issue. When AUS alumna Shaima al Harmoudi and I took a preliminary look at how places have evolved over the past five decades, we found that the issue was about social and cultural “The region is at the present time very much on the radar of global practices.”
Construction Business News ME March 2015 33 changes. The increased extent to which automobiles are privileged in our urban places plays a role, as does the incred- ibly high rate of social and cultural change the region is experiencing. How important is sustainable architec- ture today? To me, sustainability is more than a moral imperative. It may be as much an existential imperative. We may be look- ing at long-term and dramatic changes to the natural systems that support our existence. These changes would in turn force unwelcome changes to our way of life and our children's way of life. Why not make changes to our built, social, and economic systems, ones that we can live with, and hopefully deflect the dramatic changes that are coming our way? At AUS, we do teach sustainability to our students and the institution aims to be sustainable in its practices as well. We can always do more and are looking at courses and practices that move us in that direction. Is incorporating environmentalism and design together an architect’s biggest challenge? I think the challenge is more multi- dimensional. We most certainly have to reduce our impact on the environ- ment but we are dealing with complex systems that also have social, cultural, political and economic components. The designer of a particular structure or building may not initiate a system- wide change but the aggregate of such individual actions can have systemic impacts. What do you think about the current construction industry in the Middle East? The region is at the present time very much on the radar of global practices. The question is whether there is a critical mass centered in the region. I think that is a longer-term outcome. The professionals that we graduate at AUS will contribute to that outcome. Do you have a favourite building in the region? The building that I think is notable, my former colleague, Mona al Mousfy, designed exhibition spaces in the Heart of Sharjah project. I am struck by how she successfully and elegantly navigated some of the aforementioned challenges. “To me, sustainability is more than a moral imperative. It may be as much an existential imperative.” HEART OF SHARJAH BIRD VIEW OF THE HEART OF SHARJAH HEART OF SHARJAH
SUSTAINABILITY SUSTAINABLE SURGE The UAE government have taken innumerable measures in the last five years towards making the country more sustainable. Lorraine Bangera analyses the role of the construction industry in this transition towards a smarter and greener state Construction Business News ME March 2015 34
Construction Business News ME March 2015 35 T wo cities in the UAE ranked top in the region by Arcadis’ inaugural Sustainable Cities Index. The index, conducted by the Center for Economics and Business Research (Cebr) in UK, ranked 50 leading cities in the world. Dubai tops the ranking in the Middle East with the 33rd place, immediately followed by Abu Dhabi. Today, Dubai is moving towards the smart city concept, which was emphasised in this year’s Government Summit 2015 held in early February. HE Saeed Mohammed Al Tayer, MD and CEO of Dubai Electricity and Water Authority (DEWA) addressed the summit with specific pointers on how to evolve organically towards sustain- ability and smart living. Discussing his plans for developing Dubai as the city of the future, he says, “We intend to make Dubai the smartest city in the world within 3 years. The city of the future is smart, integrated, connected and uses its resources sustainably. He explains that one of the key elements of smart cities is the close cooperation of all stakeholders, includ- ing urban developers, water, electric- ity, communications, transportation, educational, and healthcare service providers, and other government and private organisations. He says, "We shouldn’t focus solely on the infra- structure as the main element in the urban planning process.” Professor Kent L. Larson, Director of City Science at Massachusetts Institute of Technology (MIT), says that cities of the future will be compact, diverse and walkable communities much like the compact neighbourhood concepts of the medieval period. The professor, an expert on new urban housing and vehicles, spoke at the Government Summit as well and emphasised that the past holds the secret to the future, and urged governments to design cit- ies for people, and not for machines. Larson identified density, proxim- ity and diversity as three key factors to create an innovative society that enjoys a good quality of life. He says that new urban spaces based on this concept will pave the way for innova- tion and create cities that are smart, green and sustainable. Construction industry: A key player Construction plays a major role in the transition towards smart cities and sustainable living. According to Shivram Mukherjee, Consultant at First Climate, “Sustainable construction is the efficient use of raw materials, such as using eco- friendly materials for construction.” He elaborates saying that using eco- friendly raw materials directly reduces the waste of raw materials which eventually drops carbon footprint. This he says has a “direct impact in overall sustainability of the country.” The construction industry is not just re- stricted to using sustainable raw materials, but could contribute in various ways such as incorporating green measures in design, construction or operations of a building. Amol Kotwal, Director of Energy & Environment Practice at Frost & Sul- livan, says, “Contribution to sustain- ability could start from urban planning and include initiatives and efforts such as water treatment, environment and waste management, thermal insulation, energy conservation.” In the UAE, he says, an efficient air-condition system, the use of LED light- ing, and the use of solar water heating systems are some areas that construction companies are working on for develop- ing sustainable buildings. Government initiatives The UAE government have taken numerous measures to join the green movement. Stephen Smith, Sustainability Manager at Brookfield Multiplex Middle East, says, “Government initiatives such as Dubai Plan 2021 and Abu Dhabi Vision 2030 are founded on themes which address key issues surrounding sustainability, particularly sustainable development of the built environment, the establishment of regulations aligned with international best practices and the promotion of sustainable consumption of natural resources.” According to Kotwal, “the Green Building Standards in Dubai and Estidama’s Pearl Rating System (PRS) in Abu Dhabi have made an effective TOP 10 SUSTAINABLE CITIES INDEX: Frankfurt GERMANY London UNITED KINGDOM Copenhagen DENMARK Amsterdam NETHERLANDS Rotterdam NETHERLANDS Berlin GERMANY Seoul SOUTH KOREA Hong Kong PEOPLE'S REPUBLIC OF CHINA Madrid SPAIN Singapore UAE'S SUS- TAINABLE INITIATIVES • UAE Green Economy Initiative • UAE Vision 2021 • Dubai Inte- grated Energy Strategy 2030 • Dubai Plan 2021 • Abu Dhabi Vision 2030
Construction Business News ME March 2015 36 SUSTAINABILITY change in UAE’s construction industry.” Smith agrees with Kotwal about the positive impact of the regulations. He says, “Such legislative mandates are rapidly changing the shape of the built environment throughout the UAE.” He explicates that these rating systems and regulations are not only improving the standards of sustainable design and construction practices throughout the in- dustry; they are also acting as a platform for the delivery of higher-quality real es- tate assets for developers and end-users. The regulations, according to Smith, raises the “profile of sustainability” in the construction industry and successfully “grabs the attention” of developers, de- signers, contractors and facility managers. In contrast Ulysses Papadopoulos, Founder & Managing Partner at Green Emirates Consultants, thinks there is still a long way to go for the UAE government. He says, “I think they haven’t reached as far as the government was hoping they would when they set the standards up." He thinks it is more important for the private sector to take an action towards sustainability. He says, “The private sec- tor in the UAE should not be waiting for the government to launch green build- ing standards.” He adds, “If they take sustainability seriously, they could make remarkable changes themselves. “In fact some of the green building councils in the region have actually cre- ated their own standard called the Net 0 buildings.” Cost effectiveness Simple steps taken by the construction industry could leave a huge impact in sus- tainability, but most companies working in the sector often assume going ‘green’ would be costly. “’Switching to green is expensive’ is a myth,”Papadopoulos says. “Most construc- tion companies are used to a safe method. “They need to be educated about sustainability. Using certified green products is not more expensive or com- plicated to explore. Most people also think green suppliers are hard to find, but if you look at our directory there are over a 100 suppliers.” “Awareness is key,” he says.
Construction Business News ME March 2015 37 Smith says that even though the initial upfront design and construction costs for green buildings are typically more than a standard building, when you take into consideration the operational costs across the lifecycle of a building asset, tangible benefits are often quickly realised. A number of diverse factors such as a building’s location, materials, design, size, function, technologies and opera- tional practices often influence the overall building’s costs and performance. He says, “It is therefore imperative that when developers are conducting feasibility assessments, they take into consideration the benefits of green building across its entire lifecycle.” With the lack of awareness and the myth of unreasonable expenses, the industry seemed to be blanketed with ignorance. Ivano Iannelli, CEO of Dubai Carbon, says he understands where the ignorance comes from. He says, “Most often we tend to do what is easy as opposed to what is ef- ficient. We are humans, applying change is difficult when we are comfort." Sustainability is not convenient; he says it is “the challenge of achieving more by doing less.” HIGHLIGHTS OF ENERGY EFFICIENCY MEASURES IN THE UAE: • Masdar City demonstrates eco- friendly building practices by utilis- ing clean energy • Al-Fahidi souq, an eco-friendly marketplace built using green build- ing materials • Approximately 500 million square feet of new build- ing area to be con- structed for Dubai Expo 2020 •Use of solar energy for water heating at various hotels and residen- tial properties
Construction Business News ME March 2015 38 IN THE FIELD Azizi Developments believes in creating affordable quality real estate. The business has a vast portfolio that is constantly driven to grow with minimum possibility of running into financial risks. This month, CBNME looks in to the company’s property development in an up and coming area of Al Furjan BACK IN ACTION
Construction Business News ME March 2015 39 W hat gives us a competi- tive edge is the afford- able pricing, yet elegant lifestyle,” says Mohsen Kamel, CEO of Azizi Developments. “We specialise in luxurious apartments designed to meet customer needs, and which attract investors from all around the world.” He says that the demand for luxury homes is growing significantly as Dubai has become a city where most investors and high-profile individuals visit and work. Azizi has consciously focussed on creating modern projects to match market expectations. He adds, “Most of the clients, especial- ly Europeans, are keen on buying prop- erties that contain exclusive features. Our tailor-made projects are the right fit for them as they provide a sophisticated lifestyle experience.” The company’s latest investment in Al Furjan has been an estimated AED 4.5 billion driven by robust local demand for affordable luxury and value homes. The company launched five large- scale residential projects in 2014 – including the sold-out Azizi Iris. As for the rest namely Azizi Liatris, the Azizi Orchid, the Azizi Yasamine and the Azizi Feirouz, have been sold out by 70%. Construction works for all five properties commenced in May last year. According to the CEO, Azizi Develop- ments focuses on projects that set them apart from others in terms of choosing the location of Al Furjan. He says, “The area was chosen mainly due to its strategic location that at the same time offers affordable living to our clients.” The area is lo- cated next to some of the city’s main attractions. “For instance, Dubai Marina and JBR are only a few minutes’ drive away, while Ibn Battuta Mall and the Dubai Metro network are even closer,” says Kamel. He adds, “It’s a short distance from the World Expo 2020 site and the Al Maktoum Airport. Additionally for sport lovers, it’s an ideal location for golf and many other activities.” The area will soon be an integrated society accommodating schools, offices and residential buildings, says Kamel. “As the projects near completion, the location will steadily become a hub for business as well as a place that will al- low people to live luxuriously” As for challenges faced during the development, Kamel says, “We didn’t face many challenges while building in Al Furjan, as we have had great support from the master developer, Nakheel, and all the other government agencies.” “The only part that was particularly challenging was the dewatering, as it took longer than anticipated.” Sustainability will be integrated in the AZIZI IRIS PROJECT UPDATE • Waterproofing works for the ground water tank (Tank Capacity is 220 m3). • Steel fixing, shuttering and concrete pouring of foundation and walls of ground water tank. •Scaffolding and shuttering of first flab (Area of slab is about 3500 m2). • Steel fixing of first slab. AZIZI ORCHID PROJECT UPDATE • Waterproofing works for the ground water tank (Tank Capacity is 220 m3). • Steel fixing, shuttering and concrete pouring of foundation and walls of ground water tank. • Scaffolding and shuttering of first flab (Area of slab is about 3500 m2). •Steel fixing of first slab.
Construction Business News ME March 2015 40 IN THE FIELD future as well. Kamel says, “We have applied the energy efficient aspect for these five buildings. This means that all activities relating to structural, thermal, mechanical and electrical parts do com- ply with these rules.” “All our projects are LEED certified, and we also try to go the extra mile as much as possible in order to imple- ment further energy efficiency such as the usage of LED lights throughout our buildings and for instance high qual- ity electrical cables that prevent them from heating up and causing hazards, providing long and sustainable future of our projects.” During the financial crises of 2008, Azizi Developments cancelled its previ- ous projects in order to help clients that were facing financial difficulties failing to continue the payments of the already invested projects. The top manage- ment then decided to hold off sales and construction, meet all clients and fully refund their payments. Cancelling the previous projects proved to be the right strategy at the time, and the company’s efforts to refund clients only brought more trust. Kamel says, “This has worked in our and the clients' favour as we gained more trust and repeat clientele.” Dubai’s property sector has recovered and experienced steady growth since then due to more strategic management. During the last quarter of 2014, nearly all segments of the local property mar- ket witnessed subdued growth levels.
Construction Business News ME March 2015 41 According to Jones Lang LaSalle1, the average prices and rentals in the resi- dential sector appear to have stabilised over recent months, with some locations registering marginal declines. Azizi Developments has made prog- ress in maintaining an upward trajec- tory. Kamel says, “We worked hard and strategically rescheduled our projects based on market demands to cover various customer needs. This allowed us to increase our sales to become one of the major competitive real estate de- velopers in the UAE. Basically, we got the four main P’s right: product, price, place and promotion.” Kamel says,“2014 was a great year for our company as we experienced a substantial sales increase, key depart- ment expansions, and a strong market- ing push." One of the significant growth drivers is the market’s robust appetite for upscale property projects as high net-worth individuals continuously view Dubai as a secure place for their investments. "Other key elements for our growth are the high standard of quality and craftsmanship that we ad- here to as well as our strong business ethics that have fostered long-standing relationships with our clients.” He adds, “For 2015, we expect to sustain our growth momentum from 2014. Current and upcoming projects will help generate high sales and increase profit. We are expecting this year to be very successful after our return from recession." AZIZI LIATRIS PROJECT UPDATE • Waterproofing works for the ground water tank (Tank Capacity is 250 m3). • Steel fixing, shuttering and concrete pouring of foundation and walls of ground water tank. • Scaffolding and shuttering of first flab (Area of slab is about 3800 m2). • Steel fixing of first slab. • Post-tensioning works of first slab. • Mechanical, electrical and plumb- ing works of fist slab. AZIZI YASAMINE PROJECT UPDATE • Steel Reinforcement and shuttering of first floor columns and shear walls. • Concrete pouring of first floor columns and shear walls. • Scaffolding and shuttering of second slab (Area of slab is about 3800 m2). • Steel fixing of first slab. • Post-tensioning works of first slab. • Mechanical, electrical and plumb- ing works of fist slab. • Scaffolding and shuttering of swim- ming pool body at second floor. • Steel fixing of swimming pool body at second floor. AZIZI FEIROUZ PROJECT UPDATE • Waterproofing works for the ground water tank (Tank Capacity is 220 m3). • Steel fixing, shuttering and concrete pouring of foundation and walls of ground water tank. • Steel fixing, shuttering and concrete pouring of parking ramp (slab of ground water tank). • Scaffolding and shuttering of first slab (Area of slab is about 3500 m2). • Steel fixing of first slab. • Post-tensioning works of first slab. • Mechanical, electrical and plumbing works of fist slab. • Concrete pouring of first pour of first slab.
Construction Business News ME March 2015 42 PROJECT REVIEW Manar Mall, one of Ras Al Khaimah’s oldest malls, situated in Al Hamra Village has announced to expand to double its size due to excessive demand. Lorraine Bangera analyses the growth of Al Hamra Village as an integrated community and the reason behind its excessive popularity SUSTAINABLE A l Hamra Village in Ras Al Khaimah recently announced expansion plans for its oldest retail outlet, Manar Mall. The expansion will add many new international stores, an enlarged entertain- ment area, along with a complete overhaul of existing facilities. Barry Ebrahimy, Head of Commercial at Al Hamra Real Estate Development, says, “Manar Mall was the first interna- tional style shopping mall that opened in Ras Al Khaimah 15 years ago. It has become one the most popular malls in the Northern Emirates.” The mall already consists of major international chains, including Carrefour, Marks & Spencer, H&M, Paris Gallery, Novo Cinemas, and Funcity. The expansion will see major in- ternational fashion brands enter the market in Ras Al Khaimah. Popular restaurant brands that have expressed strong interest to take prime locations within the new extension. Ebrahimy says, “The mall is very popular and busy at the moment. There are many retailers who have been looking for space. Hence we have decided to expand the mall, adding another 20,000 square metre to the gross leasable space which will almost double the mall. It will expand from 30,000 to 58,000 sqaure metre. The existing area is about 30,000 square metre and about 300,000 square feet will be the gross leasable area.” He says, “We plan to expand the mall in a single level, DESIGN PLANS FOR UPCOMING EXPANSION
Construction Business News ME March 2015 43 EXPANSION which would be ideal. The expansion will be done towards the water over- looking the mangroves. There will soon be a lot of anchor restaurants that will have a splendid view of the water.” Ebrahimy emphasises how top retail- ers have formally expressed an interest in renting space. According to him, most retailers choose Ras Al Khaimah while considering expansion in the Northern Emirates. He adds, “Because of Manar Mall’s history, footfall and recent retail activities, retailers choose this space.” To deal with the increasing traffic to- wards the mall Ebrahimy says, they have included an added multiplex parking space to expansion plans. Cadiz International, experts in shop- ping mall design, have been the archi- tects in the project. While Shankland Cox Ltd., who previously worked on Yas Island, Zayed University, and the Al Ain Convention Centre, are appointed as lead consultants. Sun Engineering & Contractors won the construction contract worth AED 230 million. The contractors have previously been appointed for the Signature Tower and Burjside Boulevard Tower in Down- town Dubai, as well as the Sahara Mall expansion in Sharjah. Ebrahimy says, “Based on our tender- ing process we chose Sun Engineering & Contractors. The criteria is based on qualification, good track record, and the ability to deliver the project as requested and within the given timelines. Sun En- gineering met all those criteria and after careful consideration we selected them for completion of the project.” Ebrahimy says, “The actual work on ground is scheduled to start on March 16 this year, and the expected date will be completed on September 16, 2016.” Other notable assets of Al Hamra Real Estate Development include Al Hamra Mall and five luxury hotels, includ- ing the flagship Waldorf Astoria Ras Al Khaimah. Al Hamra Real Estate is also developer of Al Hamra Village, a gated FACTS & FIGURES Al Hamra Village covers 77 million square feet with 1.5 kilometres of pristine beach, over 1,000 villas and town houses, 2,500 residential apartments, and 5 hotels Manar Mall is scheduled to grow to 58,000 square metres by 2016 Al Hamra Village consists of 1,000 villas and nearly 2,500 apartments
Construction Business News ME March 2015 44 PROJECT REVIEW waterfront community with 1,000 villas and nearly 2,500 apartments. Ebrahimy says, “We are already one of the luxurious properties in the region. Al Hamra Village is home to 3500 proper- ties. It is a serene beachfront community with a majestic golf course.” Al Hamra Village is a luxurious com- munity offering an oceanfront living approximately 45 minutes from Dubai. Al Hamra Village offers investors a unique opportunity to purchase freehold property in the emirate. Al Hamra Village have two upcom- ing projects in the pipeline, one is Bayti which is a collection of 162 villas which ranges from three bedroom to four bedroom houses. “Even though construction on the project just started in June 2014, majority of the project has been sold out,” says Ebrahimy. “Construction is going very well and we expect a handover by December 2015.” The other project that is upcoming is Falcon Island, a natural island located in the Hamra lagoon. It is centrally located in Al Hamra Village and is around two million square feet. The project is a US$272 million project with villas and mansions, which will range from AED 5 to 25 million. The island will be the first platinum LEED certified project in the region to have the most sustainable design and construction. Ebrahimy says, “The island will be powered by solar energy, and will include a hybrid district cooling plant which will provide majority of the cooling from solar. It will also include water desalination and sewage treatment plant.” He adds, “Falcon Island is an exclu- sive project in the UAE. It is going to be an ultra-luxurious residential area, with the smallest mansion of about 5 bed- rooms starting from 5000 square feet. “The 150 villas on the island will be furnished by Fendi Casa and Bentley Home among others, some of the big- gest names in home furnishing and Italian design.” In December last year, Al Hamra an- nounced that two of its developments have been named in an exclusive list of winners for the International Property AL HAMRA VILLAGE GOLF COURSE, RAS AL KHAIMAH BIRD VIEW OF AL HAMRA VILLAGE
Construction Business News ME March 2015 45 Awards that recognise excellence in the global property industry. It landed awards in the ‘Residential Develop- ment’ category after Al Hamra Village and Falcon Island were both selected as winners. Al Hamra General Manager Benoy Kurien says the fact that Falcon Island has won one of the biggest accolades in the industry so early on bears testa- ment to its world-leading sustainability credentials. He says, “The homes will be smart too, able to monitor the usage of solar energy and allow residents to monitor consumption. The project will also have a solar bridge, providing 100% of solar needs and all water will be processed and used for irrigation.” One of the main attractions towards the island, the GM explains is the tran- quil, low-key setting that is enjoyed by residents living in Ras al Khaimah. He says, “Our close proximity to business centres in Dubai and Abu Dhabi, and connections to Dubai International Air- port were also part of the appeal.” “We have been completely astonished by just how popular our properties proved among audiences. Interest was especially high in the 11 man- sions on Falcon Island,” adds Kurien. Al Hamra Village has been doing well according to Ebrahimy. He says, “Last year was an excellent year for us, both in terms of residential, retail and hospitality. Sales is robust and demand is very strong.” He explains how Al Hamra is go- ing to be an integrated community with an international school and an upcoming clinic in the surrounding area. He says, “Our aim is to provide everything and bring a community together.” When asked about further expansions in Al Hamra Ebrahimy responded, “We do things in a very sustainable manner and we won’t keep building beyond the market needs. “Of course we have decided to expand Al Hamra Mall which is an- other mall located in the Village about a year ago and now we are expanding Manar mall. But that is only because of the extensive demand for expansion.” AL HAMRA VILLAGE, RAS AL KHAIMAH
Construction Business News ME March 2015 46 Q&A IHCC is a turnkey solutions provider, taking projects from inception to completion starting with the concept design to construction and equipping. Their portfolio is based on healthcare, education and mixed use projects, which includes hospitals, medical tow- ers, medical clinics, speciality centres, speciality hospitals, universities, col- leges, and schools. IHCC is a buiding specialist, usually dealing with the latest trend of project management and hygienic safety. Sultan Sobhi Batterjee gives us an insight into what it is like to run his business. What makes IHCC unique? We really believe that our leadership in the industry comes from being a specialised business. We started off as HOSPITAL ENDEAVOURS Sultan Sobhi Batterjee, CEO of IHCC, sits down with Lorraine Bangera to give us a few insights into what it takes to run a specialised construction business the International Hospital Construction Company specialising in hospitals that grew into healthcare facilities which is a lot broader than just hospitals. Even though our experience majorly consists of healthcare, which we are very proud of, we decided to grow our speciality in the educational facilities as well and shortening our name to IHCC. Eventually healthcare and education have transformed into mixed-use prod- ucts. This was logical as hospitals now were not just hospitals anymore, they have been attached to educational, retail and residential facilities as well. For example, Saudi German Hospital in Dubai, was initially a US$140 million project that consisted of a 300 bed gen- eral hospital. We then signed a contract to further develop seven residential towers. And now we have just signed a contract with them for six more centres of excellence that consists of commercial space which will include a miniature mall, educational facility, an elderly home, specialty centre for orthopedic, trauma centre and a long stay hospital. So therefore you see the transforma- tion of our speciality from hospitals, to healthcare, education and mixed use, which includes residential and retail. How has being a specialised busi- ness been an advantage? We still stick to our speciality which is healthcare because we believe that a specialised company would be more recognised and caters specific clients. SAUDI GERMAN HOSPITAL, DUBAI
Construction Business News ME March 2015 47 In addition the learning cycle improves our knowledge and makes us better. By being too diversified such as deal- ing with construction projects such as dams and malls, airports and factories, we would be spreading ourselves too thin and wouldn’t stand out for a specific industry. Being specialised has added to our portfolio which makes clients approach us on a daily basis. We have a good track record of more than a couple of billion Emirati dirhams of projects completed in the MENA region in Saudi Arabia, UAE, Egypt, Yemen, and now we are plan- ning to expand more. What are the some of your new projects? Now we have discussions going on for more projects in different emir- ates in the UAE. A month ago we just signed a project in Ajman for a miniature medical city with a hospital which is going to handle 50 to 200 bed hospital, with centres of excellence and accommodation buildings. In Egypt we are currently working on a project in Cairo, which is a 300 bed hospital handled by Saudi Ger- man hospital which we are planning to hand over in seven months. We are also working on an educational project, a teaching hospital in Jeddah that is a mix between a non-for-profit teaching hospital and a teaching hospital. There are a couple of residential complexes in Saudi Arabia and a medi- cal tower project in the South of Saudi Arabia taken a month ago. We have also completed a number of projects in Saudi Arabia which includes mixed use IHCC HEAD OFFICE, JEDDAH
Construction Business News ME March 2015 48 Q&A and residential projects including apart- ments, condominiums for real estate development companies and more. All of these things keeps us en- gaged and adds to our knowledge, credibility and speciality, creating a unique standard. How is building or renovating a hospital more challenging than any other residential or commercial building? Building hospitals is not a common business; they are not like any other construction projects. If you think about a hotel project, what are the clients or the people in the hotel going to complain about? There would be complaints about the food, or smok- ing rooms. The complaints are not that major but when you deal with a hospi- tal, each patient is unique. They have different needs, injuries which require Do you plan for expansion while working on a building project? Hospitals expand on a frequent basis, you have hospitals that have 50 beds and then they grow to a 100 beds. If the number of patients grow, the hospital needs to expand. A project must be planned in such a way that expansion can be pos- sible and it does not get stuck in the future. It is the responsibility of the turnkey company to put themselves in the client’s shoes and not just think about the current building project and getting done with it. You have to put yourself in the clients place and think about the future. What are his needs? What is he going to face? What he might need in the future? In case of expansion there are several things to be kept in mind during construc- tion such as if you want to expand vertically and have only two elevators, how are all these people going to get to the top floors? So you have to plan for other shafts and other elevators, so that if the expansion does go vertical you could add to these shafts without breaking any slabs or anything in the building and causing major damage to the building. On the other hand if you are going to expand horizontally, is there enough land in the surround- ing area? It is a complicated experience that needs thought, experience, connectiv- ity, and communication. dissimilar surgeries. When you decide on a project you have to be very careful in the planning stage. You have to be very sound and safety cau- tious, with extra precautions against germs and infections. Safety and qual- ity is extremely important. Planning is key. Especially in cases of renovation, hospitals cannot just shut down. If a hotel is being reno- vated you could just shut it down but a hospital cannot. There are patients that are being treated, and it depends on their lives. Healthcare is not a luxury it is a necessity. People use hospitals to get treated, it is done for their survival. You have to plan your renovation and construction properly in phases so that the work- flow of the renovation does not inter- rupt the patients or the traffic flow of the hospital. SAUDI GERMAN HOSPITAL LOBBY, DUBAI MEDICAL CITY, JEDDAH
Construction Business News ME March 2015 49 HAMRIYAH FREE ZONE AUTHORITY, SHARJAH, UAE sales@hfza.ae - www.hfza.ae UNPARALLELED INDUSTRIAL LANDSCAPE Hamriyah Free Zone houses more than 6,000 businesses from 155 countries engaged in over 500 activities; from large-scale steel fabrication through maritime and rig maintenance to food packaging production. With its own deep-water port, strategic location, modern facilities and quick setup Hamriyah Free Zone offers unparalleled advantages.
Construction Business News ME March 2015 50 A fter numerous highs and lows the property sector is finally going to remain stable. Tasweek, real estate development and marketing firm, predicts that despite global challenges the real estate market will remain attractive this year. Accord- ing to the firm, positive microeconomic, regulatory and population factors con- tinue to drive growth across the country. Simon Gray, Managing Director at Chestertons MENA, says that the real estate market has evolved considerably in the UAE. He says this bearing in mind all market participants, particularly the buyers who are more informed and aware now. Christopher Seymour, Partner and REAL EXPECTATIONS After a major dip in the last few years, the real estate sector maintained a sturdy growth in 2014. Lorraine Bangera speaks with industry experts who predict the industry’s potential in the upcoming year keeping possible growth barriers in mind FORECAST Head of Property at EC Harris, says, “The UAE real estate residential market is reaching a high point and we are expecting a cooling off in 2015.” Pointing out Jones Lang LaSalle re- cent report stating a 10% price reduc- tion this year, Seymour says he sees this as a realistic projection. He says, “The rapid price rise and increased supply to the market in 2014 has driven the cool down but this should not be seen as a fundamental problem and more part of a natural cycle of a maturing real estate market.” Gray adds, “The legislative infrastruc- ture has also been enhanced which only allows credible developers to take projects reducing risk of project cancel- lations. In terms of industry cycle the market seems to be entering a stable growth phase.” Seymour says, “As the UAE has de- veloped, where once end users would tolerate poor roads and incomplete utili- ties, they now demand completed, ac- cessible and operational developments. They now have that choice and that is a positive development for the UAE.” For example, he says, even though Abu Dhabi and Dubai are prime areas, resort style developments are seeing a significant increase in emirates such as Fujairah and Ras Al Khaimah. Gray says that even though emirates such as Ajman and Fujairah have seen increased interest, their growth will also depend upon banks’ willingness to extend mortgage.
Construction Business News ME March 2015 51 FACTS AND FIGURES Construction sector con- tributed 7.89% to Dubai's GDP in the Q1 of 2014 - Dubai Statistics Centre Domestic population was 9.9 million by the end of 2014 Population is expected to hit 18.83 million by 2023 However when considering the UAE as a whole, it is certainly doing well. A major factor that helped stabilise the sector is Dubai winning the Expo 2020. According to Gray, Expo 2020 is being perceived as a key event for the country and a stepping stone to other more large scale events in the future. Seymour suggests that the impact so far has been limited. However, he agrees that the Expo 2020 master plan, due to be submitted in Q3 of 2015, will increase development activity in due time. He says, “The Expo 2020 site in isolation will be well within the delivery capabilities of the existing supply chain to handle and the issue is more around the large number of projects which are coming to the delivery stage at the same time both in Dubai, across the UAE and also the wider region.” “Luxury real estate”, he says, “forms one segment of the normal profile of a maturing residential market and country. It could be argued that previously there was an oversupply of high-end resi- dences and a lack of choice in the mid to lower end bracket. The re-balance with more supply in the mid- priced bracket giving more consumer choice is one of the factors that has provided stronger fundamentals to the Dubai mar- ket. There still remains further appetite at the true ‘affordable’ end of the market and we are seeing a number of devel- opers looking at solutions for this.” Gray agrees and says that the luxury real estate has definitely made property attractive to international buyers and therefore has helped to attract foreign investment in the country. “However,” he adds, “a downside of this phenome- non has been lack of affordable housing in the country.” Affordable housing has been a key trend in the market, especially with the country rapidly growing in number. The population of the country reached 9.9 million last year compared to 3.6 million in 2004. Seymour says, that the country’s population is one of the world’s highest population growth rates, increasing at approximately 7.6% per year. He says, “The drastic population increase in 2014, drives further growth across various outputs such as property and infrastructure projects to name a few.” CHRISTOPHER SEYMOUR, PARTNER AND HEAD OF PROP- ERTY AT EC HARRIS
Construction Business News ME March 2015 52 FORECAST Along with population growth, low oil prices is another factor that needs to be considered in the property sector. Gray says, “Low oil prices have added a new dimension to future performance of property market. Lower oil prices could impact the economy and add pressure to the property industry if they persist for the long-term.” Seymour says, “We do not at this stage see any slowing in developments in the property industry. It is very diffi- cult to predict the future trending of the oil price in the region and the impact that any protracted volatility will have on the market.” He adds that if the trend continues it will certainly reduce demand for resources and materials in the region which, will to some degree, suppress the rate of construction cost inflation. Currently investment on social infrastructure, economic diversification investment and event-driven construc- tion are three key trends positively influencing construction spend in the region according to Seymour. He says, “Whilst UAE is the second most expen- sive regionally, it is a relatively small market when compared to others on the rankings a currencies whereby market constraints are driving inflation and price movements.” Gray says that higher construction costs are a key concern for developers in the UAE, particularly for affordable hous- ing projects that have been planned. He says, “High construction makes the economics for affordable housing unviable. This has also been a reason for cancellation of many projects which were rendered unprofitable as construc- tion costs jumped in 2007/2008.” DOWNTOWN DUBAI IS A POPULAR AND EXPENSIVE REAL ESTATE NEIGHBORHOOD SIMON GRAY, MANAGING DIRECTOR AT CHESTERTONS MENA
Construction Business News ME March 2015 53
Construction Business News ME March 2015 54 LATEST T his February, the UAE opened its doors to Ital- ian professionals who entered the country with a trade mission. The Italian Trade Agency in Dubai along with the Embassy of Italy in the UAE and the Italian Contractors Association (ANCE), organised the mission dedicated to the construction & infrastructure industry. The mission included 55 Italian com- panies from the civil and infrastructure construction sector. Most companies on the list were large Italian companies already operating in the UAE such as Anas, Astaldi and Trevi. While others included companies approaching the country’s market for the first time. Major banking groups also took part in the mission along with the Italian Export Credit Agency (SACE). ITALIAN INCLUSION With Milan Expo 2015 coming up later this year, Italian delegation make their way to the UAE to establish a bridge between the two countries and strengthen bonds. Lorraine Bangera reports On February 19th, three delegates from ANCE, Italian Trade Agency and the Embassy of Italy addressed a press conference about furthering the partnership between the UAE and Italy. ANCE is the Italian Contractors’ Associa- tion which represents 20,000 private companies, specialised in public works, housing, commercial and industrial, en- vironmental protection, promotion and building finishing work. During the press conference at the Roads & Transport Authority head office Massimo Rustico, Head of International Business Development at the ANCE, said that Italian construction compa- nies have been involved in some of the world’s most iconic projects such as the Panama Canal by Italian builder Salini Impregilo. He emphasised how Italian construction has been eminent throughout history and attracts tour- ist from all over the world even today. “For example, the Colosseum has been standing for roughly 2000 years and fascinates millions of visitors every year,” said Rustico. Today the Italian construction industry has expanded on a global level and operates across 90 countries. Its presence in the GCC countries has recorded the highest growth in 2013, accounting for more than the 36% of the total new acquisitions in terms of dollar value. In 2014, the value of projects in the GCC amounted to US$85.15 billion, compared to $66 billion in 2013. Saudi Arabia, UAE and Qatar have been the driving forces in the region when it comes to construction and infrastructure. The UAE is particularly doing well after the ground lost due to international ITALIAN DELEGATES ADDRESS THE PRESS HELD AT RTA HEAD OFFICE
Construction Business News ME March 2015 55 FACTS AND FIGURES • 500 Italian companies currently in the UAE • Yearly turnover of Italian construction industry $130 to $150 billion • The construction industry contributes to 10% of the Italian GDP • Italian construction industry operates in almost 90 countries across 5 con- tinents FEBRUARY 17, 2015 FEBRUARY 18, 2015 FEBRUARY 19, 2015 • A general overview was conducted of the market and the industry. This included the regulatory framework and operations in the UAE • Meetings at the Abu Dhabi Chamber of Commerce with leading real estate develop- ers and contractors • The main governmental projects underway for both civil and infrastructure were pre- sented both at the Abu Dhabi Department of Transport and the Tourism Development & Investment Company • The Italian delegation met some of the largest developers in Dubai including Nakheel, Emaar, and Damac • Targeted meetings organized by EXPO Dubai 2020 Commission, the Dubai Road & Transport Authority and the Dubai Municipality to learn about the works planned for EXPO 2020 UMBERTO BERNARDO, DEPUTY HEAD OF MISSION AT THE EMBASSY OF ITALY ITALIAN DELEGATES AT THE PRESS CONFERENCE HELD AT RTA HEAD OFFICE financial crisis. Winning the bid for Expo 2020 was the big push that helped the industry recover in full speed. It is esti- mated that the total costs for Expo-relat- ed works, including infrastructures and transport, will amount to $6.5 billion. Moreover it is estimated that, in 2015, the total turnover of the construction industry will reach an estimated $50 bil- lion, compared to $24 billion in 2012. Umberto Bernardo, Deputy Head of Mission at the Embassy of Italy, said, “We supported the UAE during its bid for Expo 2020. At the moment we are trying to bring the two countries closer through the Milan and Dubai Expo.” Rustico said, “The Milan Expo 2015 starts this May, and there will be a tremendous partnership in order. We can see a lot of drive to bring new Italian companies to the UAE with the cooperation of the Italian government, banking and building companies.” Bernardo adds, “Through Milan Expo 2015, Italy will showcase what we are capable of.” The delegation emphasised how Italy wants to develop its image in terms of what it offers to the world. Rus- tico says, “Italy is the second largest exporter of construction machinery in the European Union after Germany. We are known for our design and fashion but now we want to emphasis on our high-end technology and industrial machinery. “In terms of export, some of the top exports to the UAE include gold, industrial machinery and fashion, in that order.”
Construction Business News ME March 2015 56 COMMENT O wnership of affordable residential properties in Saudi Arabia has been the subject of heated discussions among leaders, experts, and the masses in the Kingdom. The main theme of the debates and dialogues is the fact that demand from the low- and middle- class segments of society is quickly outstripping the supply of inexpensive housing units. It is a challenge that requires both short- and long-term so- lutions attainable through continuous collaborative efforts between the pub- lic and private sectors. Their partner- ships are especially crucial given that experts are not expecting a slowdown in demand any time soon. With the housing deficit projected to reach about two million units over the next 10 years, it is a tall order to keep THE PRICE IS RIGHT KSA’s affordable housing deficit: Bridging the gap between supply and demand Written by Mohamad Rabih Itani up with the strong demand. The in- creasing Saudi population, which qua- drupled to around 30 million over the past four decades, is the key growth driver. However, only 30% of citizens are currently homeowners and this can be attributed, among others, to the fairly young Saudi population - a large segment of who are under 30 with low financial capabilities. Couple these fac- tors including a high urbanisation rate and a significant drop in household size results in a degree of demand that continues to steadily ascend. Further compounding the situation is the lack of available land for hous- ing projects. Many of the prime plots are owned by the Kingdom’s wealthi- est families who see their properties as a long-term investment and thus have no plans of developing their lands at a high expense. MOHAMMED RABIH ITANI, CEO OF BEST CHOICE
Construction Business News ME March 2015 57 The Saudi Government has moved to bolster its programmes and initia- tives over the past years to address the housing shortfall. In the first half of 2014, approximately 11,000 residential units were completed, bringing the total existing stock to an estimated 944,000 units. About 74,000 new homes are expected to enter the market by the end of 2016. The country also launched a 700,000-square-metre low-cost hous- ing development in Al Jammom in November of 2014, while two prime areas in Jeddah have been allocated for mega property developments spanning 31 million square metres. Many new projects – both affordable and luxury housing - are expected to be launched in the next five years across the country. Aside from constructing new afford- able stocks, the Ministry of Housing has been allocating pieces of land and unveiling financial schemes for Saudi families living in rented accom- modations as well. On idle, under- developed lands, meanwhile, many owners - upon the urging of the Saudi Government - are now either sell- ing or developing their properties to capitalize on the flourishing real estate sector now valued at more than SAR 1.3 trillion. With increased activities and strong government support to the property segment, Saudi Arabia has been gen- erating significant interest from private investors and developers. Strategic changes in the sector, high demand, demographics, and rapid infrastructure and economic developments are lead- ing to more substantial opportunities. We at Best Choice believe that the Kingdom still has to narrow down the gap between housing demand and supply. In the process of resolving the housing shortage, the local property market will continue to grow further through the government’s strategic measures and policies and continuous collaborations with the private sector. The local industry provides many opportunities not only for developers but also for construction companies as well. It is important for the gov- ernment to continuously inject new energy into the sector in order to sus- tain this growth as well as the private sector’s confidence. Mohamad Rabih Itani, is the Chief Ex- ecutive Officer of Best Choice Real Estate Investment, a Saudi Arabian real estate investment and development firm based in the Gulf.
Construction Business News ME March 2015 58 EVENT PREVIEW BIG 5 KSA CELEBRATES 5 YEARS IN THE INDUSTRY After five successful years, The Big 5 show returns this year bigger and better. With over 7500 innovative products displayed by over 500 visitors, this year’s show is going to be the largest till date K SA’s international building and construction show, will be held from March 9 to 12 at the Jeddah Center for Forums and Events. The event has successfully grown by nearly 90% over the past four years. It brings together thousands of visitors and exhibitors to showcase front-line construction products and innovations from across the globe. Construction being a key sector in KSA, provides a plat- form for local business to develop opportunities in employ- ment and house building. In 2014 alone, it is estimated that US$75 billion construction projects were awarded, and an estimated $200 billion in contracts will be awarded over the next two years. Last year included a two day Seminar Series that were free to attend. This year the event will include a free to at- tend Continued Professional Development (CPD) certified education courses for attendees. This seminar series will give attendees free access to 12 sessions and panel discussions including 5 project showcases. All these educational features will help visitors further their construction careers. Nathan Waugh, Event Director, for The Big 5 KSA, said: “The Saudi construction sector is one of the most significant economic drivers in Saudi Arabia, and has played a major role in the country’s development.” Mr. Ahmed A. A. Al Ansari, Commercial Division Manager, Qatar Steel said, “The Big 5 Saudi provides Qatar Steel with a unique opportunity to demonstrate our capabilities on an international platform, allowing us to directly target potential cus- tomers and interact with global construction industry leaders.”
Construction Business News ME March 2015 59 CHRIS JOHNSON RIBA, ARB-Managing Principal, Gensler HARRY DOWNIE CEO, RMJM International LEONARD CASTRO Senior Vice President, Business Leader - Buildings, Stantec Business Leader - Buildings, Stantec SHAWN BASLER Principal and Executive Director, Perkins Eastman STEVEN CHARLTON Prinicipal Managing Director, Perkins+Will MENA DANIEL HAJJAR DANIEL HAJJAR Senior Vice President and Managing Principal, HOK STEPHAN FRANTZÉN Group Director, P&T Group PEDRAM RAD Managing Director, U+A Architects ELIE GEBRAYEL ELIE GEBRAYEL Chairman/CEO, Erga MOHAMED AL ASSAM Executive Chairman, Dewan Architects STEPHEN JOHNSON President, Cannon Design International IAN APSLEY Main Board Director, Broadway Malyan JAMIL JADALLAH JAMIL JADALLAH MD and Principal, National Engineering Bureau BRIAN JOHNSON Principal and Managing Partner, Godwin Austen Johnson RALF STEINHAUER VP Hospitality MENA, RSP Architects VP Hospitality MENA, RSP Architects SIMON FRASER MD Middle East and Asia, Hopkins Architects PROF. SHAMS ELDIEN NAGA Founder, Director, NAGA Architects, Designers & Planners NASSER ABULHASSAN NASSER ABULHASSAN Principal, AGi architects . SIMON MOON CEO, Atkins Middle East CHARLES DALLUGE President, DLR Group STEPHEN REDFERN President, Kuryłowicz & Associates MICHAEL FOWLER MICHAEL FOWLER Managing Director Middle East, Aedas MUFADHAL ABBAS SHKARA Senior Vice President & Board Member, Zuhair Fayez Partnership SIMON THOMAS Vice President, Middle East and North Africa, HKS Middle East and North Africa, HKS MARK POWELL KYFFIN Head of Architecture, Abu Dhabi Tourism & Culture Authority PHILLIP JONES Principal, Managing Director – Middle East and North Africa, B+H Architects TIM MAKOWER TIM MAKOWER Founder, Makower Architects Leaders in Architecture Events Series International Speakers Leaders in Architecture Events Series Partners 20th-21st April 2015, Dubai
Construction Business News ME March 2015 60 SAVE THE DATE MARK YOUR CALENDAR CBNME’s picks the latest and most sought-after exhibitions, conferences and seminars coming up in the next few months Middle East Coatings Show The show is still the only dedicated coatings event in the Middle East and Gulf Region for raw materials suppliers and equipment manufacturers for the coatings industry. The event provides a unique platform for suppliers to present their products and services and be face-to-face with the most influential decision makers operating within the market in a relaxed and intimate environment. Date: 9 – 11 March 2015 Venue: Dubai World Trade Centre, UAE Cityscape Abu Dhabi This April Cityscape Abu Dhabi will exhibit products and services from various sectors including banking, retail, hotel, leisure, infrastructure and design. The national exhibition will unite real estate professionals from across the region to meet local government authorities, developers, consultants, architects, designers and investors. Date: 21 – 23 April 2015 Venue: Abu Dhabi National Exhibition Centre, UAE Smart Skyscrapers Summit The event will attract over 300 senior architects, engineers, policy-makers, developers, contractors and building manag- ers from across the MENA region. Smart Skyscrapers Summit offers a platform for networking and exchanging information required for building and maintaining world-class skyscrapers in the Middle East. The event will include presentations and case studies from local and international experts. It will also show- case some of the most innovative building technologies, design principles and solutions from across the globe. Date: 11 – 12 May 2015 Venue: Sofitel Dubai the Palm Resort & Spa, UAE Middle East Rail Middle East Rail is the only regional rail conference and exhibition run in partnership with the UAE government. The con- ference focuses on railway development strategy and technol- ogy for government officials, rail operators and contractors. Over 7000 transport, construction and logistics professionals will be brought together to help develop solutions in the infrastructure. The exhibition will provide presentations of how to build, operate and maintain railways and tunnels as well as strategies for rail revenue management. Date: 11 – 12 March 2015 Venue: Dubai International Convention and Exhibition Centre, UAE FM Expo With over 7500 visitors last year, the exhibition will showcase latest products and services to facility managers, civil engineers, maintenance managers and operation managers. It will unite ex- perts to discuss trends, challenges and best practice across the market. The FM Expo will be co-located with Middle East Waste & Recycling and Commercial Cleaning & Hygiene and Elevators & Access Control. Date: 18 – 20 May 2015 Venue: Dubai World Trade Centre, UAE Middle East Stone The Middle East Stone is exclusively dedicated to the stone, marble & ceramics industry. It will showcase latest technologies from over 150 exhibitors. Visitors will have a chance to wit- ness live demonstrations and see the latest technologies from machinery to complex processing equipment. It is the platform to meet with the top global suppliers of construction and decorative products and equipment. Date: 18 – 21 May 2015 Venue: Dubai World Trade Centre, UAE
21 - 23 April 2015 Abu Dhabi National Exhibition Centre, UAE 1,000s EXHIBITORS ATTENDEES 17,000+ 18,000M 2+ OF INVESTMENT OPPORTUNITIES 130+ EXHIBITION SPACE Follow us on: www.cityscapeabudhabi.com +971 4 336 5161 cityscapeabudhabi@informa.com Register now for FREE entry! Te largest and most influential property investment exhibition in Abu Dhabi is back! With hundreds of developments from the UAE and overseas being showcased, Cityscape Abu Dhabi is your prime location for real estate investment. THE PRIME LOCATION FOR REAL ESTATE INVESTMENT Official Business Publication Official Online Partner Regional Broadcasting Partner Platinum Sponsor Organised By Official Architecture Magazine Official VIP Sponsor
Construction Business News ME March 2015 62 DUBAI’S OLDEST MASTERPIECE The heritage of the UAE embraces a vast array of handsome forts and watchtowers that have stood the test of time. This month, CBNME takes a look at the oldest building in the Dubai which has sustained and survived the last 200 years of aggressive development around it EDITOR'S PICK A mid the hustle and bustle of Dubai lies Al Fahidi Fort, a little forgotten but still standing strong. The fort has been the longest stand- ing building in the emirate, and now appropriately houses the Dubai Mu- seum. Rapid construction has been on the rise in the last 20 years and Dubai has constantly topped the list of cities with the most iconic building projects. Built in the late 1790s, Al Fahidi Fort was erected as a fort and built with can- nons and battlements. When it comes to building in the region, the architec- tural concepts revolved around three important factors: the hot and humid climate, the religion and customs of its people, and resources and build- ing materials that was locally available. The buildings were constructed close to one another to reduce heat, with narrow alleys running in the middle and ending at the creek. The fort was constructed to face the Creek, which was decisively done to defend Dubai if there were to be attacks from the sea. It was also used as the residence for the ruler and a shelter for people in case of an outbreak. Major expansions were carried out during the 1850s, under the leader- ship of the Late Sheikh Maktoum Bin Buti. In 1970, the fort was converted into a museum, and is still one of the must-see attractions for tourist to get a glimpse into historic Dubai. The fort is now situated in the heart of the city, a meeting point for the old and the new. It lies in the Al Fahidi His- torical District which is one of the most significant sites in Dubai. The museum has an extensive display of dioramas, archaeological pieces and artifacts. DISPLAY OF HISTORICAL ARTIFACTS INSIDE DUBAI MUSEUM ENTRANCE OF AL FAHIDI FORT
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