Saeed Al Abbar on Dubai firm AESG's plans for Saudi Arabia, GCC
EXCLUSIVE: Industry leader explains how contractors must adapt to capitalise on the GCC's growing need for building upgrades
The story of Dubai’s development is a powerful one, and one that home-grown Emirati consultancy AESG knows well. As the emirate has encouraged innovation to drive its position as both a global and regional hub, the eight-year-old firm has grown outwards from its Dubai roots, opening offices in Abu Dhabi, Saudi Arabia, and London.
AESG’s managing director, Saeed Al Abbar, tells Construction Week that he is optimistic about the future, as the group is working on a number of gigaprojects in Saudi Arabia at present. It is crucial for businesses such as AESG to adapt to the rapid, ongoing evolution of the construction market, he adds.
“The biggest challenge – not just for consultants – is a level of uncertainty,” Al Abbar explains, when asked about the headwinds that are encountered by firms operating in the GCC.
We have seen, in the past 12 to 18 months, demand for services around existing assets. For example, this could be looking at an existing building on which construction has stopped due to the economic downturn – a building that is sitting on extremely valuable land but was built 40 years ago and is not in great shape.
“Things are changing very quickly,” he adds. “This is a global phenomenon at every level. Look at the shift of where the economic powers are at the moment, the political changes globally, the current low rates of interest and very high levels of debt globally.
“In the past, it would go through cycles, with major changes happening about every four or five years. Now, that is more like every 18 to 24 months. Those cycles are a lot quicker, and this is one of the major challenges for businesses today.”
With this mind, Al Abbar says firms need teams that are adaptable, adding: “Gone are the days when consultants would have specialists that do one specific thing and are successful.
“Some still do, but for us, it is all about the team being very adaptable – a team that holds a strong core technical capability, but also has a curiosity and a hunger to push what they are doing a bit more and apply their skill sets to lots of different challenges.”
Indeed, this approach seems to be working. In Al Abbar’s words, demand for the company’s services remains “fairly solid across the board”.
The firm offers specialist engineering design capabilities, encompassing services such as fire and life safety, façades, acoustics, and sustainable design. “We have seen, in the past 12 to 18 months, demand for services around existing assets,” he says.
“For example, this could be looking at an existing building on which construction has stopped due to the economic downturn – a building that is sitting on extremely valuable land but was built 40 years ago and is not in great shape.”
He adds: “We have been doing quite a bit of work on this type of asset, and carrying out fairly detailed surveys of them – engineering surveys of the structures or façades, for example – and then putting together cost plans for how some of these half-finished assets can be upgraded or even completed.”
Al Abbar says the demand for “upgrading” existing buildings, or completing those that are only partially finished, is poised to be a major market for firms in the GCC, particularly in the UAE and Saudi Arabia.
“Upgrading could include expanding the floor area; replacing the façades to provide a modern, high-quality design; or improving the mechanical, electrical, and plumbing (MEP) equipment to bring it up to a standard where, [for example], you might be able to attract an international hotel operator,” he says.
“Let’s say you have a locally run hotel that is on a prime site. Without having to build a new building, you can upgrade that to the standard of a five-star hotel. You can then attract international operators. The owner’s asset is then multiplied in value.
“I think we are going to see demand for that in this region increasing now. If you look at a city, we can see buildings on sites that are primed for redevelopment enhancement.”
Despite his optimism regarding growth in the market, Al Abbar is quick to point out that the industry is just “starting on that journey at the moment”. Specific capabilities are required to tackle such projects, he adds. “For a contractor, a different skill set is definitely needed to tackle those types of projects,” he says.
“The risk profile is different – a contractor is taking a half-finished structure and taking on the liability of that unfinished asset, which they did not initially build. You need to have very strong engineering capabilities to be able to understand those risks, and mitigate and manage them.”
Al Abbar says opportunities for contractors in this specific market segment will only be open to those that “seize” them, noting that the “market has changed”. The volume of new construction projects may not be what it has been in previous years, he says. “This is a segment that is going to be growing,” he adds. “Those that develop their skill sets, particularly their engineering skill sets, will benefit.”
We are also working on some projects with the government. These are strategy and advisory projects, particularly around sustainable development, health and wellness, and environmental and waste management.
He continues: “We are working with a number of contractors in Saudi Arabia that have asked us to take on that element of the work and we are surveying the buildings for them. [Through this,] we can identify aspects such as structural issues, the condition of the MEP equipment, or the façades. It is an extensive process.
“In terms of technical risk profile, that is no different to a normal project. You just manage it in a certain way and bring in the right experts.
“A contractor’s decision to take on those projects is still going to be [based on] whether it has value that is of interest to them, and if it is a client that you want to work with. Those are more important criteria, as opposed to the technical scope that you would see from contractors to take these types of things on.”
The region’s engineers are not the only ones in line to benefit from this burgeoning market sector. Investors can also see an advantage in the form of optimised assets, as Al Abbar explains: “We looked at a hotel project in Medina in Saudi Arabia that you might think must charge AED200-300 ($54.45-81.68) a night.
"But it is actually several times that, because of the location. It was built 40 or 50 years ago; the quality was not high. So, there is an opportunity there for the investor to upgrade that asset and they will make their returns tenfold.”
Al Abbar says the kingdom, in addition to the UAE, is a major “growth hub” for AESG, adding that the group is already working on a number of Saudi Arabia’s gigaprojects.
“We have been working on these types of projects for the last 18 to 42 months. This is going very well, and the clients are very receptive to our service offerings there.”
He continues: “Beyond those projects, we are also working on a number of projects with the private sector, looking at some new development projects.
“We are also working on some projects with the government. These are strategy and advisory projects, particularly around sustainable development, health and wellness, and environmental and waste management,” he explains.
There are two key themes that we are seeing being pushed, globally and in the region. One is about getting buildings to a point of net-zero impact; this paradigm of a less damaging model is no longer good enough.
“We are seeing a significant trend towards smart city concepts in Saudi Arabia, and also in India. There are a number of smart cities that have been launched there, and we are working on one of them at the moment. In places that are going to see mass urban migration – India and China, specifically – this is going to be a key necessity,” he adds.
Building cities prepared for the future also aligns closely to Al Abbar’s work as chairman of the Emirates Green Building Council (Emirates GBC) and member of the Global Green Building Council’s board of directors.
“There are two key themes that we are seeing being pushed, globally and in the region. One is about getting buildings to a point of net-zero impact; this paradigm of a less damaging model is no longer good enough,” he says.
“Scientists have told us that you have to actually reverse that trend and reach net-zero impact. What is encouraging is to see how quickly this change has come about.”