Property developers welcome new market norm
The ‘new market reality’ is providing a better property development environment, according to panellists at the Leaders in Construction UAE conference
The ‘new market reality’ is providing a better property development environment, according to panellists at the Leaders in Construction UAE conference.
In a session entitled “Shifting Tides – re-evaluating, revising and reprioritising” speakers spoke positively about current opportunities.
“In the boom years, lots of projects were rushed. Now competition is intense and everyone is putting forward their most innovative ideas,” said Hamed Zaghw, chief executive officer of AECOM Middle East.
He added: “Diversity is serving us well. Don’t focus on one thing at a time. Then if one element goes down, something else will compensate.”
Richard Fenne, principle & studio chair at Woods Bagot said he is seeing better design, and more sensible and viable projects coming to market. “Innovations like pod construction and prefabrication. And removing superfluous elements that don’t yield a return on investment.”
“The mid-market hospitality sector is gaining credibility and it’s cool – it’s what Millennials are looking for,” added Fenne.
Derek Rush, head of development at ARADA: agreed, saying that it is now making more sense for developers to address the midmarket. “Every developer should look at inclusion rather than exclusion. We are being approached by all the big names in retail, hospitality and education because of the inclusive nature [of our schemes].
“We have learned a lot about what people are looking for. The beauty of a mixed-use masterplan is that it is a fully inclusive live/work environment – with accommodation ranging from affordable townhouses to executive penthouses.”
Panel moderator Chris Seymour, regional development director and head of advisory Middle East & South Asia at Mott McDonald identified the prior problem of the value of land in central Dubai, which meant it was hard to make a return from the midmarket. “Luxury properties were the only way you could extract value from the land.”
To which Fenne responded that the key to mixed-use developments with midmarket elements is good transport connectivity, and Zaghw agreed that “transit development has been good business”.
Rush revealed that ARADA has found success with developments in Sharjah, where demand has risen strongly. But he said that the UAE needs a transport and wider master plan to stitch its communities together.
“Then we will see a shift in the UAE’s demographics,” said Fenne.
The developers on the panel said they reserved their right to change the scope of their projects. Trevor Hardwick, chief operating officer of Select Group, said: “We developers constantly change our minds - and that affects designers and contractors and causes problems. But it is important to be flexible and not to be afraid to make changes.”
Fenne conceded that the gestation period of a masterplan can be several years, and the market shifts in that time. “This market is particularly volatile and can shift dramatically,” he noted. “So briefs change.” He sahared the example of D3, which was originally planned as a business park, then a fashion park and finally a design district.
He concluded: “The development mix might change, for example you can dial down the retail and dial up the residential. We use parametric tools which allow optimisation of the masterplan and enable us to adapt the design very quickly.”