Brave new world

We now know the Middle East is not insulated from world events. The impact of the property downturn has been felt most heavily in Dubai, where reports late last year estimated that certain developments shed up to 40 per cent of their value. Add to that job losses and rumours of major projects being postponed, or even cancelled, and you have an industry lacking confidence.

“These events have to be put in perspective though, and understood in the context of the region’s exponential growth, Dubai in particular,” says Stephen Oehme, regional director, value management and sustainability, Hyder Consulting. “Market intensity has dropped from a gallop to a canter, but that canter is still a gallop in terms of what the West is experiencing economically.”

The images of a comparatively underdeveloped Sheikh Zayed Road in Dubai is a timely reminder of just how far the city state has come in such a short timeframe. Take the Burj Dubai: the world’s tallest tower, it’s a potent symbol of engineering achievement – for example, it has risen from the desert in just four years, and its spire is the size if the Eiffel Tower constructed on the surface area of a tennis court.

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“Indeed, the speed of design and delivery has been staggering and all consuming, and not just that of the Burj tower,” Oehme agrees. “Take the Palm Jermeirah, the largest man made island that, when finished, will house 120,000 residents and workers. And then you’ve got The World, another marine project in Dubai.

Thirty four million tonnes of rock were used to construct the 27 kilometre breakwater which surrounds the 300 man-made islands. Land reclamation required 320 million cubic meters of sand dredged from the sea and the creation of the breakwater that surrounds the nine kilometre wide, seven kilometre long island. And that’s just the start; the next phase involves handing over islands to developers for construction.”

The massive recruitment drive and high salaries were in response to the huge programme of planned and ongoing projects at that time, reasons Oehme. “The present climate is a market correction of a situation that was unsustainable in light of wider economic forces. Not only that, the thirst for completion left little time to implement best practice and regulate. The innovation is there and will continue to be so.
 

“This is a cooling down period in which the industry can take stock and realign after a period of frenetic activity.”

Pivotal role
The economy will play a pivotal role in the drive for sustainability, as the Middle East undergoes a transition from a sellers’ market to a buyers’ market. “A year ago property would sell whatever; there was no need for key performance indicators to differentiate. The market switch equals competition, and in real terms this is the first time the region’s developers and building owners have had to compete in the marketplace,” points out Oehme.

Sustainability is, in part, about saving energy and water. But, for Oehme, sustainability is also about resource management, the recurrent costs of maintenance and capital renewal. “The key points of differentiation will now come in for scrutiny. While quality was previously defined by the grandness of the project, the materials used and the location, additional elements such as running and maintenance costs will now enter the equation. These affect the bottom line, and currently the bottom line is being affected. This wasn’t an issue before.”

Oehme also sees a step change in the perception of risk. “What is changing is that not doing things differently is now a risk. We are seeing expectations change, practices that were previously commonplace are no longer acceptable – the introduction of strata management law; Abu Dhabi’s green initiative, Esitdama; and Dubai’s yet to be announced [as this is written] sustainability standard, are all examples of the realisation that legislation is a tool to regulate and enforce best practice to move the industry forward.”

Moreover, efficiencies in owning and operating a building are now crucial elements in securing financial backing. “Absolutely, smart building management to ensure return on asset will enable owners to leverage capital, which we all know is not the easiest thing to do at the moment. And in order to define these efficiencies and savings measurement, verification and benchmarking tools, which are all available, will have to be more widely used in the Middle East.”

The human factor
As measurement and transparency become required best practice, the increased specialisation of all building design and lifecycle disciplines will lead to renewed demand for a workforce that can meet that criterion.

“For a long time there has been the desire for change,” says Oehme, “but actions have not reflected this – until now. We will start to see very real changes in 2009, and by the second half of the year a workforce motivated by a high level of expectation will be building on what has already been achieved.”