HLG, which is also working on Dubai Pearl has completed developments such as Emerald Palace, Saadiyat Link, Madinat Jumeirah and Burj al Arab, will build the new development on the plot of the soon to be demolished Metropolitan Hotel; Dubai’s oldest hotel.

“We have successfully completed a number of projects for the Al Habtoor Group in the past – including the Habtoor Grand Beach Resort and Spa and Metropolitan Palace Hotel – and have always maintained a good working relationship with them,” said CEO and MD Laurie Voyer.

The newly awarded contract for US$515 million is part of the US$1.33 billion Habtoor Palace hotels development in Dubai.

The hotel will comprise a five-level podium, one 36-storey tower and one 25-storey tower within a total GFA of 350,000 square metres.

Design commenced in January and completion is scheduled for H2 2016.

“We look forward to working with them again to create a development that will be a landmark for not only Dubai, but the entire Middle East. Our team has spent the better part of six months working with the team from the Al Habtoor Group to finalise the contract for this prestigious project,” Voyer added.

Voyer also said HLG is “continuing our push into new geographies”, naming Saudi Arabia, Qatar and Kuwait.

L-R: HLG’s Martyn Wilde, Riad T. Sadik, Khalaf Al Habtoor, Yusef Shalabi, Rob Johnstone,

The landmark development will include:

• 1600 hotel rooms, spread between three hotels (lifestyle, luxury and main)
• An iconic Las Vegas-style ‘aqua’ theatre
• A French provincial-inspired garden
• Food and beverage venues

Already producing more than 360,000 refrigeration tonnes for developments across Dubai, the two new towers will increase production capacity by 20%, serving an area covering 5km.

“Stringent selection criteria have been laid down to ensure that the right company gets the job of designing the two plants. We urge local companies to participate in this bid and we assure them that they would be given higher priority vis a vis international companies,” commented Bin Shafar, who added that the aim is to meeting “rapidly growing demand” of all customers.

“The importance of switching to district cooling, that is the alternative to conventional air conditioning, is commendable, as more and more residents and businesses are benefiting from our services. These two plants will further enhance our lead position in the district cooling industry in the MENA region,” Bin Shafar added.

The plants will be launched by 2014.

This year, the group will establish two power plants and three hotels, and invest in water desalination, transmission and distribution plants, as well as oil and gas projects.

The new ventures will create 2000 jobs for Omani nationals.

“Over the past few years, the Sultanate of Oman has taken huge strides in driving its economy forward and generating jobs for its nationals. We are keen to partner with the Oman government and play a constructive role in the country’s development,” commented group MD, Rashid Al Balooshi.

The first power plant, of 140MW capacity, will be set up in Ras Al Khaimah in the UAE to supply electricity exclusively to Musandam and surrounding areas, while another plant, of 120MW capacity, will be set up in central Oman.

Ghantoot will also build a 320-room resort hotel in Musandam, and another two hotels comprising a total of 600 rooms.

“Our investment in Oman reaffirms our ability in identifying suitable opportunities to invest in promising, high-growth regions in the Middle East,” Al Balooshi added.

The US$108.9m project began in 2010 and was construction in partnership with the government-owned Fujairah Investment Establishment and Khansaheb Civil Engineering. To date 2.5 million accident-free hours have been logged.

“We are diligently working with our retail partners, contractors and government officials to ensure a smooth and successful launch,” said Majed Al Fahim, senior mall manager for Fujairah City Centre.

“Construction for the mall is on-schedule and we expect the positive momentum to increase as we move closer towards the immediate opening phase. We’re delighted to confirm the opening date for Fujairah City Centre to the wider community and our valued stakeholders, and we look forward to soon welcoming everyone to the Emirate’s newest lifestyle destination.”

The mall marks a landstone in the Emirate’s growth, which has seen huge investment in tourism, social infrastructure and industrial development. Marking the UAE’s 40th National Day in December 2011, senior municipality heads opened the new Fujairah high-way, cutting travel times between Fujairah and Dubai to under one hour.

Designed by Broadway Malyan for Aldar PJSC, the project will be located on the Emirate’s Yas Island, home to Ferrari World.

“The approval of the masterplan is a major milestone in the creation of this major new residential area, with the success testament to close partnering with the client and the world-class skills, expertise and experience of our diverse team of global masterplanning experts,” said practice director James Rayner.

The project will create a series of communities that will become the Island’s residential hub. Surrounded by open space, each community will be linked by road, light rapid transportation (LRT) and cycle networks, in addition to walkways, described as a “key factor in the design”.

Surrounding community facilities will include schools, health clinics, extensive sports and recreation facilities, as well as convenience retail and commercial components.

The approved masterplan has already won an award for the ‘best urban design and masterplanning project’ at the Abu Dhabi Cityscape Awards 2011.

Maintenance contracts for the next 13 years have been awarded to a consortium between Alstom and Cofely Besix FM, a group that operates under an ongoing partnership with Dubai’s Belhasa Contracting.

The contract, valued at around US $157, is for maintenance of rolling stock and fixed installations to be delivered in the first phase of the project.

Phase one includes the supply of 11 Citadis tramsets; 10km of track; 13 stations; and electrification, signalling and ticketing equipment.

Maintenance will cover preventative and corrective works; equipment renewal; technical support; and spare part inventories for the trams sets.

The second phase of the project will add a further 14 tramsets and four kilometres of track.
Upon completion in 2014, the Dubai tramway will make the UAE the first Gulf country to operate a tram system.

The first electric trams were tested in Russia in the late 1800s, as a natural progression from cable cars and steam powered trams.

Part of the Burj Khalifa and Dubai Downtown development, Dubai Mall already covers 12 million sq feet and welcomed more the 54 million visitors last year.

“The record footfall achieved 2011 is a compelling testament on the success achieved by Dubai and the mall in attracting visitors from all over the world,” commented Emaar Properties chairman, Mohamed Alabbar.

“We are further building on this through our new expansion plan. The addition of modern retail, leisure and hospitality choices as part of the 1 million sq ft expansion will take The Dubai Mall and Downtown Dubai into the next era in retailing and lifestyle development.”

The expansion is part of the “continuous evolution in customer expectations and aspirations”, said Emaar.

The additional space will house a number of new hotel rooms, entertainments and lifestyle outlets and attractions.

Currently, the store has more than 1200 stores and 160 f&b outlets.

Eyeing a potential 20 million visitors by 2020, the country’s construction industry has been growing at a rate of 8.7% since 2008 with the active and future projects most recently valued to reach $27 billion by 2014.

The high values are underpinned by cross-industry infrastructure projects – including aviation – and high worth tourism projects.

The key decision makers behind the Duqm projects, announced at last year’s Oman Construciton Summit, met on January 29 to discuss the progress made to date and plans for 2012.

“Oman received some 1.6 million tourists in 2010 and Oman’s Ministry of Tourism aims to increase this figure to an ambitious 12 million per annum by 2020. Such aspirations clearly show the country’s goal to develop as a major tourist and business destination,” said Mark Walsh, group exhibition director for Reed Travel Exhibitions, which is currently hosting the Arabian Travel Market exhibition.

Already the largest law firm in the MENA region, new offices in India and Africa, are only the first step of this programme.

“I am keen to develop some new solutions to help host governments, developers and lenders to social infrastructure PPPs. In particular, affordable housing is a huge issue within that,” comments Creed.

“I don’t think governments can just build housing and give it to locals anymore, there need to be long term plans and new delivery models,” he continues, further elaborating that Bahrain is leading the way, following the recent close of the region’s first affordable housing PPP.

“In my view, this will be the first of many and this project is likely to be a pathfinder project for the region,” he adds.
The issue, according to Creed is uncertainty in the political and social landscape of the region; an anchor for the success of any PPP project.

He says that while there are a number of Gulf states with “significant” financial resources at their disposal, others have to prioritise their projects in line with both public needs and the continued development of the country.

With a “dramatic” population growth and increasing demand for key infrastructure and services, governments are finding themselves hindered in their attempts to keep pace with the burden on the public purse, meaning they are “not equipped to concurrently manage and run the large number of projects being undertaken across a range of business sectors,” Creed says.

“Historically, governments around the region have typically funded infrastructure out of the public purse but in recent years most MENA governments have been looking for alternative procurement strategies.
“One of the trends of the last few years has been to utilise project finance techniques and to engage in wider PPP initiatives to help address this problem,” he adds.

The private sector role

The key is to look to the successful models employed elsewhere, such as the UK where 20 years of PPP projects have not only set a standard, but allowed legal, construction and finance professionals to hone the skill sets now demanded in the MENA region.

“These new projects are normally structured on a concession basis. A private developer might, for example, design, build and then operate a hospital over a 20 year concession period and in return the government would pay a unitary tariff over the lifetime of the project. This unitary payment would be linked to the private sector’s performance and would be structured in such a way as to provide incentives and penalties for good and bad performance, respectively,” he advises.

Despite the widespread use the PPP model being under-utilised in general, the most successful projects have included Saudi Arabia’s Madinah Airport, and water infrastructure, power generation, port and airport projects in a number of GCC countries.

However other projects have failed, such as Abu Dhabi’s Mafraq–Gweihat rail line and the Saudi Arabian land bridge project.

“In order for a PPP style project to proceed, there needs to be a strong and sustainable payment profile over the term of the project.  In addition to the payment profile risk, host governments, developers and lenders will also need to be satisfied that other risks are also properly mitigated, so that the project will be sustainable over a long period of time.

“But trying to foresee what the landscape will be like in 20 years time is a challenge in this region,” Creed continues.

New agendas

With Creed confirming the most difficult sector in which to initiate PPP is social infrastructure, he says the event of the Arab Spring have pushed this sector to the top of domestic political agendas.

He observes that there are two primary challenges to delivering successful PPPs in social infrastructure: the perception that such duty should be provided by the state; and the generally insufficient revenues generated by projects such as low cost housing, where the cost of designing, building, financing and subsequently running a new facility, requires government subsidy.

“I think there is a philosophical and commercial challenge to core principles in some of these areas and this challenge needs to be addressed in order  to get these new initiatives in the social infrastructure space moving in the same way as the successful developments that have taken place in the utility and transport sectors,” he asserts.

Region wide, currently PPP legislation is patchy, with some countries boasting a comprehensive – or at the least, general – PPP law, and other jurisdictions taking a sector-specific legislator approach, such as Abu Dhabi, which allows private companies to take part in power and water projects.

“Regional governments will have to look hard at building a competent regulatory sector in which everybody has confidence, because if you are going to develop these new long-term project delivery mechanisms, the market will need to be confident about the rules of the game.

“In particular, they need to know that their project is not going to be adversely impacted  as a result of a  future change in sector regulations,” Creed concludes.

Across the Middle East region sustainability is rising up the corporate agenda driven not only by a desire to be more environmentally friendly but also by more pragmatic, economic influences.

With some commentators now stating that we’re in the midst of a double-dip recession, CFO’s across the Gulf are under greater pressure to identify ‘quick wins’ and solutions that limit their business’ overall expenditure.

From a sustainability perspective this is creating new opportunities particularly for those initiatives that deliver operational efficiencies and which delivering a greater economic return.

The business case…

Traditionally, there has been a common view that adopting a sustainable approach costs more than maintaining the status quo, yet whilst this may have been the case in the past, it’s no longer so clear-cut. In cash constrained times the industry needs to act more aggressively to address such misconceptions for unless a re-education process takes place there’s a risk that some worthy initiatives could be overlooked, in spite of the environmental and economic benefits they could help to deliver.

In reality carbon is becoming an increasingly important differentiator when it comes to assessing a property’s value particularly in such a competitive real estate market as the Middle East.

If a sustainable approach is embedded in the construction phase it can help property assets stand out when they come on to the market as occupiers can see the inherent value of low carbon, energy efficient buildings where lower water and energy use will equates to significant cost savings throughout the duration of their tenancy agreement.

From a property owner perspective these types of assets can also keep maintenance costs to a minimum and insulate them against future regulatory changes that they may see them obliged to comply with environmental mandates.

Furthermore, with some analysts suggesting that energy costs could rise by 100% over the next 10 years, the case for owning energy-efficient buildings becomes ever more compelling. In such an environment there is a pressing need to focus on the business case that underpins sustainable initiatives as this will help to secure buy-in at board level.

Financial metrics need to be aligned to carbon reduction savings so that the full return on investment from sustainable solutions are recognised. For example, research carried out by academics at the University of Western Sydney (Australia) and Maastricht University (Europe) has shown that more sustainable buildings attain higher rents, occupancy rates, and overall value. What CFO or CEO would not be attracted by those types of results?

Measuring success…

A greater emphasis also needs to be placed on the broader ‘value’ of sustainability as opposed to just the associated cost of adopting a greener approach. The reality is that the benefits of acting in a more sustainable manner extend well beyond the bottom line and so by measuring success in purely monetary terms there is a danger of selling short the impact that greener initiatives can have.

As an example, recent research from the UK’s Westminster Sustainable Business Forum revealed that adopting a sustainable approach led to improved corporate reputation, increased employee retention and higher productivity levels.

The study estimated that when combined, these factors had the potential to deliver over $12bn in additional business return.

The cost-return ratio…

With liquidity still a major issue across the Middle East, developers continue to struggle to access both capital and debt funding to build new schemes, so the emphasis is often on the need to generate more from both existing budgets and the assets they already own and operate.

Where investment set aside for sustainability initiatives is reduced, it is still possible to drive significant cost savings via a more targeted approach. In 2010 the Better Buildings Partnership found that by adopting cost efficient retrofit measures across their global asset portfolio, they were able to cut overall energy use by 10% ultimately saving over 32,000 tonnes of CO2.

Paul Foster,head of property, EC Harris

The next twelve months…

As ever, the initiatives that deliver the greatest value to investors are those that are cascaded down through a business from the highest level. Sustainability has evolved into a discipline that often can deliver ROI in just a few days rather than many weeks or months and which successfully meets both the ‘green agendas’ – environmental and economic.

As we enter the New Year the key lesson for the industry is that it should not be shy in addressing the C-suite and promoting the role that sustainability can play in helping their firms to weather an increasingly testing financial environment.