Professional Documents
Culture Documents
PROPERTY &
CONSTRUCTION
Handbook
18’
19’
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Middle East Property & Construction Handbook 2018/19
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AECOM
FOREWORD
Welcome to the twelfth In our articles section we
edition of the Middle East explore three emerging trends
Property & Construction in the construction market. We
Handbook. We hope that you review the adoption of digital
will find our assessment of construction tools and examine
the trends shaping the global how modern construction
and regional construction techniques are incorporating
industry of interest and this 3D printing and robotics
year’s selection of articles into their work flows. We
and cost data of value. look at project management
challenges, and the role of value
This year, we start off by and risk management. Lastly
reviewing the global macro- we share our thoughts on the
economic factors that ecology of a city, demonstrating
categorized 2017 as a better how it is possible to design
year than 2016 for the world cities that complement their
economy; a trend set to ecological environments.
continue in the near term. Better
than expected performance If you are new to the Middle
of key markets in Europe and East construction industry,
the US supported an uptick section three will provide you
in global economic output in with insights into procurement
2017 and early 2018. Increased routes, forms of contract in
manufacturing output in Asia the Middle East and building
also played a part. Section regulation and compliance. If
one contains a detailed review you are a veteran in the Middle
of these markets as well as East industry, section three will
our anticipated trends for the provide you with a reminder of
remainder of 2018 and into 2019. key contract and regulatory
information, a good reference
to keep.
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Middle East Property & Construction Handbook 2018/19
Lusail Expressway
Aerial view of 5/6 arches at 5/6 Interchange ICD Brookfield Place
Image courtesy of Ashghal Image courtesy of ICD Brookfield
Sarat Village
Image courtesy of Diyar Al Muharraq
Il Primo
Image courtesy of Emaar
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Contents
01 Economic round up
08 15 22
Global economic Global construction MENA economic
review projects review
02 Articles
40 47 61
Digital construction Project value and risk Ecology of a city
management trends
in the GCC
03 Reference articles
74 78 83
Procurement routes Middle East forms Building regulations
of contract and compliance
04 Reference data
92 100
International building Regional building
102
Basis of
104
Mechanical and
cost comparison cost comparison construction costs electrical cost
comparison
05 Directory of offices
115
Directory of offices
06 Future of Infrastructure
119
Future of
Infrastructure survey
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Middle East Property & Construction Handbook 2018/19
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01
ECONOMIC
ROUND UP
IN BRIEF
08 15 22
Global economic Global construction MENA economic
review projects review
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Middle East Property & Construction Handbook 2018/19
GLOBAL
ECONOMIC
REVIEW
Better than expected performance
of key markets in Europe and
the US supported an uptick in
global economic output in 2017
and early 2018. The favorable
market conditions are likely to
continue in the near-medium
term, however downside risks
continue to outweigh upside risks
in the near-medium term outlook.
Protectionism, vulnerability of
financial markets and global
tensions are considered the most
significant downside risks within
the outlook.
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6.0% 4.8%
5.0% 4.3%
% change y-o-y
4.0%
3.0%
2.0%
0.0%
Fig.
Fig. XX Growth in volume of XX Growth
exports
2015
in2016
volume
of goods of exports
and services
2017e
of goods and services
2018f 2019f 2020f
6
% change y-o-y
6 4.2%
5
5
% change y-o-y
5
4
4
3 4
3
2 3
2
1 2
1
0 1
2014 2015 2016 2017e 2018f 2019f 2020f
0 0
2014
World 2015 2014 Economies
Advanced 2015
2016 2016
2017e
EMDEs 2017e
2018f 2018f
2019f 2019f 2020f 2020f
56
55
54
53
52
51
50
49
48
47
Jan 12
May 12
Sep 12
Jan 13
May 13
Sep 13
Jan 14
May 14
Sep 14
Jan 15
May 15
Sep 15
Jan 16
May 16
Sep 16
Jan 17
May 17
Sep 17
Jan 18
May 18
Source: JP Morgan
Source: JP Morgan
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COMMODITIES
Commodity prices strengthened in 2017 with improving trade levels, increased investments and positive
Fig. XXfinancial
Growth conditions. The
in commodity uptick in prices is expected to continue in the near-medium term, albeit at a
prices
slower rate than that recorded in 2017. Prices will remain susceptible to changes in global demand, policy,
distribution channels, technological advances and geopolitical conditions.
Fig. XX Growth in commodity prices
30%
40%
20%
30%
% change y-o-y
20%
10%
% change y-o-y
10%
00%
00% 2015 2016 2017e 2018f 2019f 2020f
2015 2016 2017e 2018f 2019f 2020f
-10%
-10%
-20%
-20%
-30%
-30%
-40%
-40%
-50%
-60%
-50% Source: World Bank Economic Prospects, Jun 2018
-60%
Source: World Bank Economic Prospects, Jun 2018
Oil Price Non-energy commodity price index
140160
Index, 2005 = 100
140
120
100120
80100
60 80
40 60
20 40
0 20
2014 2015 2016 2017 2018 2019 2020 2021 2022
0
2014 2015 2016 2017 2018 2019 2020 2021 2022
Commodity Price Index includes both Fuel and Non-Fuel Price Indices
Commodity Price Index includes both Fuel and Non-Fuel Price Indices
Commodity fuel (includes crude oil, natural gas, and coal)
Industrial Inputs (includes
Commodity agricultural
fuel (includes rawnatural
crude oil, materials
gas,and
andmetals)
coal)
Metals (includes
Industrial Copper,
Inputs Aluminum,
(includes Iron Ore,
agricultural rawTin, Nickel, and
materials Zinc,metals)
Lead, and Uranium)
Metals (includes Copper, Aluminum, Iron Ore, Tin, Nickel, Zinc, Lead, and Uranium)
Source: IMF: World Economic Outlook. April 2018 Source: IMF, World Economic Outlook, Apr 2018
Oil prices
The continued co-operation of participating countries. Increased economies). This balancing act
OPEC countries and the non- production of shale oil in the US of supply and demand across
OPEC oil producers in 2017 led is expected to be partially off-set the global markets supports
to a significant improvement in by reductions in oil extraction in stabilization of oil prices in the
oil prices. OPEC leadership and other regions around the world, medium term.
non-OPEC members, including including Canada and the North
Russia, have signed a roadmap Sea. Additionally, increased
e XX. Changes in oil demand growth
for cooperation that extends the demand for oil in developing
existing framework
e XX. Changes post 2018,
in oil demand growth countries is expected to counter
without necessarily limiting reduced demand from OECD
the production levels of the countries (mainly advanced
15%
10%
y-o-yy-o-y
10%
5%
% change
5%
0%
% change
0%
-5%
-5%
-10%
Figure XX. Changes in oil demand growth
2014 2015 2016 2017e 2018f 2019f 2020f
-10%
2014 2015 2016
Figure XX. Changes in oil2017e
demand growth 2018f 2019f 2020f
Middle East Europe Africa Latin America US & Canada Asia-Pacific Russia & Caspian
2.0 2.0
1.5 1.5
1.0
mb/d
1.0
mb/d
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in Metal Prices
40%
Changes in metal prices
30%
40%
20%
% change y-o-y
30%
10%
20%
00%
% change y-o-y
-60% -40%
Source: IMF, World Economic Outlook, Apr 2018
-50%
-60%
Copper, grade A cathode, LME spot price, CIF EuropeanSource:
ports IMF, World Economic Outlook, Apr 2018
Metals
Metal prices improved in 2017 The near-medium term forecasts
on the back of increased however are modest due to
productivity and trade across expected implementation of
many countries. Prices international trade barriers. US
remained largely stable in the tariffs on steel and aluminum
first quarter of 2018, despite in the first quarter of 2018
rising inventories, due to the helped the US domestic market;
anticipated growth in demand. however, its full impact on metal
Growths in the manufacturing prices at a global level is yet to be
and industrial sectors across Asia seen, particularly as the US is a
have helped support prices and global importer. Forecasts for the
avoid any large drop post remainder of 2018 and for 2019
Q1 2018. remain conservative with analysts
hesitant to make forecasts in
such a volatile market where
policy changes can have a
significant impact on prices.
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Middle East Property & Construction Handbook 2018/19
350
350
Increase in political turmoil
300
Increase in p
Global EPU Index
300
UK Brexit US Elections
Global EPU Index
200 200
150 150
100
100
50
50
0
0
11 08
12 08
12 08
Apr 09
Sep 09
13 10
13 10
14 10
14 11
15 11
Mar 12
Aug 12
Jan 13
16 13
16 13
17 14
17 14
Feb 15
Jul 15
Dec 15
May 16
Oct 16
Mar 17
Aug 17
Jan 18
Jun 18
Jan 08
Jun 08
Nov 08
Apr 09
Sep 09
Feb 10
Jul 10
Dec 10
May 11
Jan 13
Jul 15
Dec 15
Jan 18
Jun 18
OctJan
MarJun
AugNov
JunFeb
Nov Jul
AprDec
SepMay
FebOct
MayJun
OctNov
MarApr
AugSep
Source: Economic Policy Uncertainty Global EPU with PPP adjusted GDP weights
GLOBAL
CONSTRUCTION
PROSPECTS
Global construction markets are expected to report an overall
growth over the next five years supported by improving
market sentiments and realizations of the need to bridge the
infrastructure and development gap around the world.
While the Asia-Pacific market remains the largest global construction market, the Middle
East and African construction markets are expected to grow the fastest between 2018
and 2022.
North
America
$1,779bn Europe
$2,564bn Asia -
4.4% Pacific
$5,125bn
5%
6.3%
9%
6.3%
$635bn
Middle East
$486bn & Africa
South & Central
America Key
<5% | >5% - 6% | >6%
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Middle East Property & Construction Handbook 2018/19
North America
5%
United States
4%
CAGR 2018 - 2022
Canada
3%
2%
1%
0%
0 5,000 10,000 15,000 20,000 25,000
GDP PPP in USD bn
Size of bubble, construction output 2017e
Source: Timetric – Construction Intelligence Centre, CIA Factbook 2017
Source: Timetric – Construction Intelligence Center, CIA Factbook 2017
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Latin America
0%
0 500 1,000 1,500 2,000 2,500 3,000 3,500 4,000
GDP PPP in USD bn
Size of bubble, construction output 2017e
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Middle East Property & Construction Handbook 2018/19
Europe
16%
Note:
Euro Area, 14%
19 countries: Ukraine
Austria, Belgium, Cyprus, 12%
Estonia, Finland, France, Estonia Romania
CAGR 2018 - 2022
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Africa
15% Ethiopia
15%Ghana Ethiopia
Tanzania
10%Ghana Tanzania Nigeria
- 2022
Kenya
South Africa
5% Zambia Kenya
2018
5% Zambia
2018
CAGR
0%
CAGR
-10%
-10%
GDP PPP in USD bn
Size of bubble, GDP PPP construction
in USD bnoutput 2017e
Size Source:
of bubble, construction output 2017e
Source: Timetric – Construction Intelligence Center, CIA Factbook 2017
Timetric – Construction Intelligence Centre, CIA Factbook 2017
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Middle East Property & Construction Handbook 2018/19
Asia
16%
14%
Cambodia
12% Kazakhstan
Malaysia
CAGR 2018 - 2022
10%
Indonesia
8%
China
6% India
South Korea
4%
Japan
2%
0%
0 5,000 10,000 15,000 20,000 25,000 30,000
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Australasia
8%
7%
CAGR 2018 - 2022
6%
5% New Zealand
4% Australia
3%
2%
1%
0%
0 200 400 600 800 1,000 1,200 1,400 1,600
GDP PPP in USD bn
Size of bubble, construction output 2017e
Source: Timetric – Construction Intelligence Centre, CIA Factbook 2017
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Middle East Property & Construction Handbook 2018/19
MENA
ECONOMIC
REVIEW
Improvements in global trade levels and commodity
prices, particularly oil, have supported economic
growth in MENA, however regional conflicts,
political unrest and high defense sector spending
burden countries’ public budgets and impact
investor sentiments.
Governments have a difficult balance to maintain
between expanding their public expenditure to meet
growing demographic demands and controlling their
budget deficit to attract investors.
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construction
prospects 8.0
7.0
2.2%
According to recent IMF 6.0
% change y-o-y
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Middle East Property & Construction Handbook 2018/19
0% 10%
5%
-5%
% change y-o-y
0%
-10%
-5%
-15% -10%
-15%
-20%
2016 -20% 2017 2018
2018
-25% 2016 2017
-25%
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0%
-2% Fig. XX Budget balance for selected MENA countries
Budget balance for selected MENA countries
-4%
4%
-6%
2%
-8% 0%
-2%
10%
-4%
% of GDP
12% -6%
14% -8%
-10%
16%
-12% 2016 2017 2018 2018 2018
18% -14%
-16%
2016 2017 2018 2018 2018
-18%
Qatar UAE Morocco Egypt Algeria KSA Source: Haver Analytics, Emirates NBAD Research
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Middle East Property & Construction Handbook 2018/19
PRO-BUSINESS STANCE
To broaden their revenue streams, Kuwait serves as a good example for these reforms,
many governments across the MENA where the launch of the New Kuwait 2035 Initiative
region have moved ahead with the in early 2017 has helped simplify the business
implementation of pro-business setup process and upgrade the rating of the
and investment reforms. Measures Kuwait Stock Market to ‘emerging’ by the FTSE.
implemented include streamlining the This upgrade in rating is expected to increase
business registration process, providing investments by up to USD 822 million as reported
e-services to reduce operating times, by World Finance. A more comprehensive list of the
strengthening minority investor rights reforms implemented is provided in the adjacent
and increasing credit transparency. table, published by the World Bank Group as part of
their Ease of Doing Business Report for 2018.
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Morocco (69) Made starting a business easier by combining the stamp duty payment with the
application for business incorporation.
Made paying taxes easier by improving the online system for filing and paying taxes.
Oman (71) Made exporting and importing easier by enhancing its online single window system for
exports and imports, reducing the time required for documentary compliance.
Qatar (83) Improved access to credit information by starting to provide consumer credit scores to
banks, financial institutions and borrowers.
Made exporting and importing easier by inaugurating the new Hamad Port.
Saudi Arabia (92) Made starting a business easier through the use of an online system that merges the
name reservation and submission of the articles of association into one procedure. Saudi
Arabia also improved the online payment system, removing the need to pay fees
in person.
Improved the efficiency of its land administration system by implementing an online
platform to check for ownership and encumbrances, and by streamlining the property
registration process. Additionally, Saudi Arabia made registering property easier by
improving the land administration system’s dispute resolution mechanisms.
Strengthened minority investor protections by increasing shareholder rights and
role in major decisions, clarifying ownership and control structures, requiring
greater corporate transparency and regulating the disclosure of transactions
with interested parties.
Made paying taxes easier by improving its online platforms used by taxpayers for filing
and paying taxes.
Reduced the time for documentary compliance for exports and imports by reducing the
number of documents required for customs clearance.
Made enforcing contracts easier by introducing an electronic case management system
for the use of judges and lawyers.
Kuwait (96) Made starting a business easier by establishing a one-stop shop and improving
online registration.
Made registering property easier by lowering the number of days necessary to register
property and by improving the transparency of the land administration system.
Egypt (128) Strengthened minority investor protections by increasing shareholder rights and role in
major corporate decisions.
Iraq (168) Made starting a business easier by combining multiple registration procedures and
reducing the time to register a company.
Improved access to credit information by launching a new credit registry.
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Middle East Property & Construction Handbook 2018/19
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Middle East Property & Construction Handbook 2018/19
40%
30%
20%
% change y-o-y
10%
00%
2015 2016 2017e 2018f 2019f 2020f 2021f 2022f
-10%
-20%
-30%
-40%
MENA Bahrain Egypt Oman Qatar Saudi Arabia UAE
Source: Timetric – Construction Intelligence Center Source: Timetric Construction Intelligence Centre
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MENA construction markets, largest and fastest-growing markets MEED reports on anticipated
Total construction output 2017e = USD 394bn construction sector activity in the
region further support this revival
trend, noting that as of April 2018
35%
there were construction and
30% Egypt transportation projects worth
USD 715 billion at the design,
25%
construction or tendering with
CAGR 2018 - 2022
Qatar
20% projects worth USD 322 billion
in the pre-execution phase
15%
Oman in the GCC. A combination of
Kuwait
10%
Bahrain
UAE
Iran
improved oil revenues, stronger
Saudi Arabia
Algeria performance of the non-oil
5%
sector and sovereign wealth
Iraq
0% fund allocations are expected
0 500 1,000 1,500 2,000 2,500
GDP PPP in USD bn
to drive this growth. In the case
Size of bubble, construction output 2017e of Bahrain, funds from the Gulf
Source: Timetric
Source: Timetric – Construction Intelligence Center, CIA Factbook 2017
Construction Intelligence Centre, CIA Factbook 2017
Development Fund further
facilitate the expenditure into the
of construction sector spending in GCC construction sector.
In terms of construction
Breakdown of construction sector spending in the GCC sector spending, recent
Infrastructure project estimates by Venture
17%
Onsite note that construction
contract awards for 2018
will be dominated by building
projects, followed by energy
and infrastructure projects.
Building projects awards are
anticipated to be worth USD 79.1
billion, 53 percent of the overall
construction awards in 2018 and
10 percent higher than awards
in 2017. It is further noted that
Power &
Energy
the UAE will lead the building
construction contract awards in
30% 2018 with USD 37.3 billion.
Buildings
53%
Source: Venture Onsite
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Middle East Property & Construction Handbook 2018/19
Mixed-use developments that Megacity projects and In the UAE, 2018 has been
drive commercial and industrial developments continue to be named as the Year of Zayed, with
growth are on the rise. As of early a trend in the region, including many projects in multiple sectors
2018, MEED has forecasted new economic zones aimed at underway to commemorate
about USD 23.1 billion worth of diversifying countries’ revenue the achievements, vision and
construction projects in Oman streams and attracting foreign legacy of the father of the UAE.
alone that are yet to be awarded investments to meet growing Within the construction industry,
or are still in the design and demographic demands. What federal government projects that
study phases. The majority of sets megacity projects apart boost connectivity and require
the projects are noted to be from mixed-use developments multi-Emirate cooperation have
mixed-use developments and is the scale and complexity of received greater support in 2018.
industrial zone type projects the projects. While mixed-use Etihad Rail Stage 2 and Stage
including the USD 10 billion developments do attract foreign 3 tenders have been issued
Northern and Central Industrial investment at times, megacity and plans are moving ahead to
Zone project planned in Duqm. projects, given their scale, tend boost cargo and trade across
Hessa Al Mubaraka Development to look at foreign investments the Emirates. Also, the UAE’s two
City in Kuwait City, Liwan from large corporations or even largest real estate developers,
Development project in Bahrain, governments to help fund and Emaar (Dubai) and Aldar (Abu
Jeddah Waterfront and Madina deliver the project. In early 2018, Dhabi) have also signed joint
Development in Saudi Arabia are Saudi Arabia and Egypt signed ventures for project schemes in
additional examples of upcoming a joint venture to develop a Abu Dhabi and Dubai. An increase
mixed-use development projects USD 10 billion megacity in the in cross-Emirate projects will
in the region. The diverse southern Sinai Peninsula. Saudi likely provide an advantage to
portfolio of revenue streams Arabia has also announced plans contractors and consultants that
within these developments to build NEOM, a 25,000 square have multi-Emirate experience
make them an attractive kilometer business and industrial and capabilities.
investment opportunity. city that links Saudi Arabia with
Jordan and Egypt, and which
is to run 100% on renewable
energy. Another of the Kingdom’s
megacity projects includes
the Red Sea Project, where
200 kilometers of the Red Sea
coastline will be developed into
luxury resorts featuring hotels,
residences and transport hubs.
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Market pricing
Industry and anecdotal reports continue Improving construction sector activity supported by
to describe the MENA construction market stronger economic performance across the region
as highly competitive and price conscious. raises hope of an upward shift in market pricing.
Many consultants and contractors have However, continued challenges in obtaining funding
reported some level of downsizing within and payments make it difficult to identify a clear
their businesses, and in some extreme trend in market prices within the region.
cases, have chosen to cease operations In reviewing market fundamentals in the near-
across the region. medium term, three broad-based scenarios are
considered possible.
Significant increases in project Priority projects are awarded Project market remains
pipeline with realization of and stimulate marginal growth in largely muted with little year-
projects announced. construction supply chain. on-year improvement.
+ 2 to 3% + 1 to 2% + 0 to 1%
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Middle East Property & Construction Handbook 2018/19
Financing remains a key challenge within the In a recent AECOM infrastructure project delivery
MENA construction market. More developers survey it was noted that with the rise of project
are exploring alternative funding schemes and complexity, traditional change management
the number of contractors bidding with financing procedures are consistently proving to be
packages is on the rise. The increase in projects inadequate. Despite significant investment in project
requiring contractor financing poses a number of controls, delivering projects on time and on budget
risks for the sector and requires careful evaluation. remains a challenge within the industry. Large
Financing entities, including banks, seldom look numbers of stakeholders, unclear decision-making
at a contractor’s performance on one project, but hierarchies and changing project requirements and
typically evaluate the contractor’s current project scope are frequently cited as major contributors to
portfolio as a whole. Additionally, the revenue stream this trend.
of the ‘pay master,’ i.e. the developing body, is also
examined to better understand the economics of Inadequate change management procedures
the future project and risks associated with it. All of further give rise to delays in payment. Securing
these elements contribute to a higher borrowing timely payment for works completed is a challenge
premium for contractors and need to be evaluated for contractors and consultants in the Middle
against other funding schemes. East, particularly on projects where designs are
revised or procurement and construction changes
Alternative financing schemes such as public- are required. In the absence of a robust change
private partnerships (PPPs) continue to management process, these project changes
gain popularity within the industry, but their translate into delays in approving works completed,
implementation remains a challenge due to various variation orders and extension of time claims.
factors, such as the maturity of financial institutions
to the stakeholder’s organizational framework. Change management procedures need to be
Success of PPPs greatly depends on trust within adapted and upgraded as needed to match the
the stakeholder framework and requires a degree requirements of the new project environment.
of network governance, rather than being solely Facilitating a more inclusive project delivery
restricted to the special purpose/project vehicle or a environment is needed to allow stakeholders to
specific government entity. work together in delivering their projects rather
than working in silos to achieve specific objectives.
Undertaking comprehensive risk and value
management sessions early on in the project helps
align stakeholders’ various objectives and creates a
more unified project delivery structure.
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Talent acquisition
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Middle East Property & Construction Handbook 2018/19
Corinthia Hotel
and Residences
Meydan Beach is a luxury 5 star
property currently under construction,
located on the JBR Walk in Marsa Dubai,
UAE. The development consists of a
10-storey podium with an east and west
wing in addition to a 55 storey tower
accessible from within the podium. The
hotel comprises standard and superior
rooms, themed suites and serviced
apartments for a total of 360 keys.
Amenities include a variety of dining
facilities with a beach restaurant, F&B
and retail spaces, spa, gym, beach,
business center and kids club.
Bahrain Egypt Iraq Jordan Kuwait Lebanon Oman Qatar KSA UAE
Land area, ‘000 km2 (1) 0.8 995.5 437.1 88.8 17.8 10.2 309.5 11.6 2,150 83.6
Capital city Manama Cairo Baghdad Amman Kuwait Beirut Muscat Doha Riyadh Abu Dhabi
Population, million (2) 1.3 92.2 38.9 7.1 4.3 4.5 4.1 2.8 32.3 10.1
Population growth, CAGR 2017-2022 (CAGR %) 2.0% 2.3% 2.6% 2.2% 2.8% 1.0% 3.2% 0.6% 2.0% 3.0%
GDP, USD, billion, current (2) 33.9 332.3* 192.7 40.5 118.3 52.7 71.9 166.3 678.5 378.7
Real GDP growth, % (2) 2.5% 4.1% -0.4% 2.3% -2.1% 1.5% -0.02% 2.5% 0.1% 1.3%
Real GDP growth, 2017-2022 pa forecast (2) 2.1 % 5.3% 2.2% 2.7% 2.6% 2.4% 2.6% 2.9% 1.7% 2.9%
GDP/ capita (PPP), USD (2) 51,846 12,994 17,004 12,487 69,669 19,486 45,464 124,927 55,263 68,245
Construction output, share in GDP (%) (3) 8.10% 5.70% 11.60% 5.70% 2.40% N/A 2.0%* 11.9%* 4.60% 10.3%*
Value of construction output, USD, billion (4) 7.7 25.3 26.3 N/A 12.6 N/A 15.2 46.4 109 87.7
Consumer price inflation, % (2) 0.92% 23.54% 2% 3.33% 2.50% 3.07% 3.20% 0.86% -0.16% 2.07%
5.0%
4 %
2%
Oman
4.0%
5%
Arabia
21
2.0%
%
1.0% Iraq
0.0%
8 %
Egypt
Qatar
Bahrain
Jordan
Lebanon
UAE
KSA
Oman
Iraq
Kuwait
-1.0%
Qatar
-2.0%
14 %
-3.0% UAE
2017 growth rate Average GDP growth p.a (2017-2022)
Source: IMF
26%
Source: IMF Source: Timetric – Construction Intelligence Center
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Middle East Property & Construction Handbook 2018/19
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02
ARTICLES
IN BRIEF
40 47 61
Digital construction Project value and risk Ecology of a city
management trends
in the GCC
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Middle East Property & Construction Handbook 2018/19
DIGITAL
CONSTRUCTION
With the volume of construction output set to
grow by 85 percent to $15.5 trillion by 20301 the
engineering and construction (E&C) industry is
pivotal to the world economy.
The Middle East and North The lack of digitization and compliance to existing regulation)
African construction market uptake of technology in for fear that this investment
is expected to be worth $336 construction is not a problem will soon be out of date. Even
when systems or solutions are
billion by 2020, up from $235 that is unique to the Middle East.
procured, they often aren’t they
billion in 2016, a net growth of Almost every other industry has
are often not with existing due
43 percent. seen a significant improvement to a lack of harmonisation and
in productivity, with agriculture standardisation. Underpinning
Deloitte’s ‘GCC Powers of the only industry to fare worse. all of this is the human element,
Construction’ 2017 notes that What is common amongst the encouraging and retaining the
there are more than $2 trillion low productivity gains is the right talent is notoriously difficult
worth of projects currently in lack of digitization and digital with temptations of big paydays
the planning stages in the Gulf spending see (Figure 1). and seemingly more relaxed
Corporation Council (GCC) working environments offered in
countries, with construction Other factors that have limited newer industries.
accounting for more than half the digital transformation
the value of the pipeline. To in construction are the fact The industry‘s chronic and
efficiently deliver these projects, that construction is a heavily previously mentioned lack
regulated industry and of productivity growth has
technology will have to play
compliance to these regulations itself proved to be a catalyst
a much bigger part than it
takes time, effort and money. for change, combined with
currently does. The relative instability in the irrepressible tide of digital
technological evolution can often transformation in adjacent
put off investing in one solution sectors and in society as a whole
(including the cost of ensuring
1 https://www.ice.org.uk/ICEDevelopmentWebPortal/media/Documents/News/ICE%20News/
Global-Construction-press-release.pdf
2 http://tradearabia.com/news/CONS_337767.html
3 https://www2.deloitte.com/ae/en/pages/real-estate/articles/gcc-powers-of-construction-2017.html
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4 https://www.mckinsey.com/industries/capital-projects-and-infrastructure/our-insights/the-construction-productivity-imperative
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DIGITAL ENGINEERING
AT AECOM MIDDLE EAST
AECOM has been engaged on Existing guidelines and data VR walkthroughs eliminate both
two major projects in the region structures such as COBie of these, by providing an intuitive
where BIM has been used at are a good reference point. way to interact with the models
all stages of the construction However, they rarely cope with (you can literally walk around
life cycle; from design through the individuality inherent in the them) and by giving a true human
to operations. This unique ‘real world’ projects we deliver. scale perspective. VR also adds
perspective has allowed us to Determining what is maintainable benefit to clients during the
develop best practice guidance and therefore requires data to be construction phase, by allowing
at each stage in order to transferred to computer-aided them to view virtual mock ups
efficiently and effectively achieve facilities management software of critical spaces, saving time in
the goals in the next stage. and having the software tools to creating multiple versions in the
Of particular interest to clients enable the data to be transferred physical world.
is our knowledge of the process reliably is key.
of transferring construction data Finally in terms of training during
to operations. The advancement of virtual construction and for operational
reality (VR) and augmented reality activities, VR is proving to be
in the gaming industry is having an invaluable tool. For example,
unintended consequences in it allows people to experience
construction. With the unsafe conditions in a completely
cost of virtual reality safe and controlled environment.
headsets declining Likewise, studies have shown
and their capability that people understand complex
increasing, combined information 25 percent faster
with the proliferation when using VR compared to
of BIM, we are seeing traditional training environments.
a shift in the way that
we review designs
at all stages of the
project. A common
complaint from
engineers when
asked to review 3D
models is a lack of
understanding of
the controls in the
software and the lack
of scale perspective.
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AECOM
3D printing concept
Grande
Image courtesy of Emaar
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AECOM
PROJECT,
VALUE AND RISK
MANAGEMENT
TRENDS IN THE GCC
The construction industry in the GCC
continues to face challenges when it
comes to delivering successful projects.
It is not uncommon that many of its
mega projects are being run without the
appointment of a full-time, designated
project manager and without clearly
established processes and procedures
to manage multi-million dollar contracts.
Millions of dollars and significant time periods are being spent on abortive
work and redesign. A fraction of these wasted funds could have secured
dedicated professional teams to ensure that the projects were effectively
structured to succeed.
While the first section of this article will look at project management challenges
in general, the other sections will focus on value and risk management —
considered to be two quite under used project management tools in the GCC.
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PROJECT PERFORMANCE
IN 2018
According to PWC’s 2018 Percentage of projects that experienced delays in the past 12
Middle East Capital Projects months. Base = 91
and Infrastructure Survey, “the 2018
main reason for delays and cost 8% 2016
2014
overruns remains a constant
< 1 Month
6% 2014
challenge with capital projects
9%
across the region: changes to
the scope of projects already 20%
started”. Respondents to the
2018 survey claimed that
38%
38 percent of their projects
1-6 Months
20
10
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AECOM
Respondents to PWC’s 2018 Middle East Capital 1. There is a lack of full comprehension with
Projects and Infrastructure Survey also claimed regards to the process and what these two
that the biggest areas for improvement are project tools can bring to the table in terms of
planning, governance and risk management. tangible benefits.
The reality is that there are a number of tools and 2. Perceived added cost to project fees if such
processes to help achieve such improvements, services are introduced.
two of which are value management and risk
management. But these are typically overlooked for
two main reasons:
Act I Act II
Image courtesy of Emaar
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PROJECT MANAGEMENT
CHALLENGES
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AECOM
Effective resource
allocation
Projects are usually under-
resourced, and this often
goes back to insufficient
collective planning efforts
and also to the lack of senior
management sponsorship. If
required resources are allocated,
they are often not assigned
clear or reasonable roles and
responsibilities. Resource plans
and RACI matrices are nice-
to-have tools prepared on
an ad-hoc basis and as per
client requests, but are not
actively used in the
management of projects.
Implementation of
technical tools
There are a number of tools
available to prevent common
project management failure
causes such as scope
creeps and variation/change
management. These tools can
be as simple as maintaining and
actively managing a register or
a tracker to ensure that all the
required information is available in
one location is always up to date
and clearly communicated.
Forte
Image courtesy of Emaar
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RISK MANAGEMENT
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AECOM
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VALUE MANAGEMENT
Act I Act II
Image courtesy of Emaar
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AECOM
Value
Management
What, Why
Function Function
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VM/VE benefits
Value
Capital
management
Cost
= / = Benefits
Functions
Lifeycle Value
Cost engineering
VM / VE Benefits
Project
achieved early in development understanding /
Information Workshop
review and logistics and
during the conceptual stages. At information
analysis preparation
gathering
this point, the basic information
and objective of the project is
established, but major design
and other resources have not
Study stage
yet been committed. It is during Project Function Idea Idea ranking Proposal
the early stages of the project objectives analysis generation and selection development
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Some important definitions to Once this value profile has been serve as a tick in the box when
note when discussing VM/VE established, it will enable the VE it comes to their contractual
are as follows: study team to link the impact of obligations, it does not follow
increasing/reducing the cost of a the VE process or job plan.
Value drivers design element to the function it In order to undertake proper
performs as well as the impact on VM/VE, the study team should
Value drivers are elements that achieving the desired objective of link the impact of increasing/
must be achieved in full the project. reducing the cost of a design
through the design in order to element to the function it
achieve the project objectives. In all cases, the cost cutting performs as well as the impact
In VM, value drivers are referred exercises being undertaken and on achieving the desired
to as “functions”, and they referred to as “value engineering” objective of the project.
provide means to develop do not comply with the above – All concerned stakeholders
measures of performance process and therefore does not should be represented as part
based on outcomes. generate the same benefits. In of the study team, and their
most instances when VM/VE functional requirements should
‘Functions’ explain what things expert facilitators are brought be made clear and accounted
must do in terms of contributing on board — often too late in the for in the design.
to the utility, exchange and project life cycle and when the
– The selection of proposed
esteem of a project rather than cost has skyrocketed — they find
ideas should be done against
what things are. Generally, items that there is no clear definition of
set criteria and with all
do not have value unless they the project in terms of objectives,
stakeholders present.
satisfy a need or a function. Value constraints and value drivers. In
drivers or functions are often most cases it is too late to go – It is important to consider
referred to interchangeably. back to establishing these basics operational, maintenance and
and at best, their contribution life cycle costs of selected
is limited to structuring VE design elements.
Function analysis
activities that are usually little – The design team should have
Function analysis is a technique more than cost cutting initiatives. visibility over the costs and the
used in order to develop the Furthermore, these cost cutting budgets if they are to design to
project’s value profile. The initiatives are often administered a specific budget.
primary tool used is the Function by cost consultants and not
Analysis System Technique by VM/VE specialists who can
(FAST) diagram or what is provide structure to how different
commonly referred to as a “value design solutions are generated,
tree” or “function tree”. shortlisted, further developed
and selected.
When developing a FAST
diagram, the study team is Lessons learnt
forced to make a clear definition
of the project by answering the AECOM has learnt a number
following questions: of lessons from engaging with
clients and delivering VM/VE
– What are we trying to achieve? services in the GCC region:
– What must we get right if we
are to achieve it? – Value management should be
undertaken from the outset
– What consideration do we
of a project and should be
need to bear in mind while
supported and driven by higher
designing it?
management, which currently,
– How do various design often is not the case.
solutions contribute
– Cost cutting activities should
towards achieving the
not be labelled as “value
desired outcome?
engineering”. While this might
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AECOM
Risk
– Value management can reduce risks and
risk management provides opportunities
for value improvement
– Value management helps to identify the
best way to meet the business need,
and risk management manages the risks
associated with the solution Value
Both processes are considered industry best They are not, and should not be considered, a tick-
practice for effective project management and, if in-the box service and are certainly worth the effort
applied correctly, can result in drastic improvements and investment. The biggest challenge remains
in all aspects of project delivery. of how to change mindsets, in particular those of
clients and project managers, and to demonstrate
the added benefits to these best practice
management tools.
Sarat Village
Image courtesy of Diyar Al Muharraq
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60
AECOM
AN ECOLOGY
OF THE CITY
RESILIENCE, RISK MANAGEMENT
AND PARAMETRIC DESIGN AS
DRIVERS OF ‘SMART CITIES’
AECOM operates within a
world that is transforming
at an unprecedented pace.
Put simply we are dealing
with the types of challenges
that the world has never
seen before, at a pace that
remains unique in the history
of humanity.
As one of the world’s largest multi-disciplinary design
and infrastructure organizations we face a daily
challenge of having to balance a disciplinary structure
for 87,000 people and the reality of having to answer
the world’s most complex interdisciplinary design and
engineering questions.
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SO HOW SHOULD WE
CONCEIVE OF THE CITY?
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AECOM
The undeniable truth of This is closely aligned to the Inspired by a strong desire to
global climate change is that increasing importance of the reconnect cities with the dynamic
urbanization, amongst other concept of ‘urban resilience’. landscape and ecological
things, has had a fundamental processes that once drove their
impact on planetary ecology. As In some respects this idea establishment, these ideological
suggested by Read, it is no longer has evolved from conceptual approaches aim to recast the
tenable to consider a duality of expressions variously described landscape and its attendant
nature/city. Cities as the main as landscape urbanism, processes as formative to
protagonists of consumption metabolic urbanization and cities. This necessarily leads
and infrastructure therefore must ecological urbanism and now to a demand for a truly multi-
accept their responsibility to act includes anthropocentric disciplinary seamless practice
as agents of positive ecological challenges such as security, if one is to engage in to the
change. This is implicit in the cyber-security and socio- practice of urbanism in the
need for urban resilience in the economic drivers. 21st century.
infrastructure and ecological
systems of our biome. Only
when we start designing cities
as functioning ecologies can we
claim they are ‘smart’.
3 IPCC, 2014: Climate Change 2014: Synthesis Report. Contribution of Working Groups I, II and III to the Fifth Assessment
Report of the Intergovernmental Panel on Climate Change [Core Writing Team, R.K. Pachauri and L.A. Meyer (eds.)]. IPCC,
Geneva, Switzerland, page 369.
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URBAN RESILIENCE AS
A PARADIGM SHIFT
4
AECOM, “The Future of Infratstructure”,
published on-line at https://infrastructure.
aecom.com/hubfs/report/AECOM_FOI_
Report_2018.pdf?utm_campaign=Future%2
Of%20Infrastructure%20Campaign&utm
source=Direct_download&utm_
medium=FOI_Website , Last accessed
12/08/2018.
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AECOM
As a global company, AECOM coastal creeks and its hill towns. this represents an emerging
seeks to understand whether the That urban morphology still new paradigm that must be
changes being observed in the exists today despite our considered. Evidence of that
western world are relevant to the contemporary mastery of understanding exists through
developing regions of the world creating artificial climates. examples such as the Abu Dhabi
like the Arabian Gulf. The global Environment Agency’s report on
nature of the emerging climate If the Intergovernmental Panel Climate Change and responses
crises clearly demand that on Climate Change Report 5 is in the UAE5.
the responses are equally to be accepted as the scientific
important in Muscat as they consensus on climate change, Modeling of flood scenarios
are in Manhattan. When we the Middle East’s heavy bias immediately highlights the
consider resilience issues towards coastal development extreme danger posed by sea
such as extreme heat or food is a fundamental existential level rise to the cities of the Gulf,
security, the challenges are crisis and a risk that must the vast majority of which would
every bit as salient in this part be faced immediately. be devastated by the IPCCs
of the world. Put simply they are projected sea level rise. As the
fundamental existential risks Increasingly cities in the Middle illustration below demonstrates
that must be managed. East are being challenged the vast majority of every urban
to consider their continued settlement in the Gulf would be
Throughout history the Gulf existence through the lens devastated if this projection were
has been occupied on its of urban resilience. While to be realized.
most habitable fringes — the not universally understood,
Flood map of Arabian Gulf showing the potential impact of a 7 meter change in sea levels as predicted by the IPCC © 2017
http://flood.firetree.net
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Middle East Property & Construction Handbook 2018/19
5
Dougherty, W. W. etal, “Climate Change: Impacts,
Vulnerabilities and Adaptation”, published on line at https://
www.ead.ae/Documents/RESEARCHERS/Climate%20
change%20impacts%20-%20Eng.pdf , last accessed on
11/08/2018
6
Jeremy S. Pal and Elfatih A. B. Eltahir, “Future temperature
in southwest Asia projected to exceed a threshold for
human adaptability”, Nature Climate Change Journal
Vol 6 (2016): 197-200
7
Lazzarini, M., Marpu, P. R., Ghedira, H., “Temperature-land
cover interactions: the inversion of Urban Heat Island
phenomenon in desert city areas”, Remote Sensing of
Environment, Volume 130, 15 March 2013, Pages 136–152
8
Masterplan led by Steven Velegrinis as part of the JLL
Perkins+Will / Cundall Team
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AECOM
The masterplan
demonstrates how using
parametric tools in the
design of topography,
water flow, recycling of
water, capture of on-site
hydroelectric and solar
energy and on-site food
production can result in
a self-sufficient urban
development that can
feasibly address all of its
biological needs for itself . 8
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AECOM
Slope and buildable land analyses Parametric analyses to determine least intrusive
The Mount Project. Courtesy of Jebel Bausher Heights LLC vehicular routes and hiking routes
The Mount Project. Courtesy of Jebel Bausher Heights LLC
As a consequence of these analyses it was The use of parametric design tools then took
determined that approximately 40 percent of the center stage again using a script to determine
site should not be developed at all and rather would the location of road routes that would result in
form the backbone of an ecological framework for grades of less than 10 degress without having to
the site. This coincided largely with the land that substantially cut parts of the site. This was taken
would most positively act to protect the hydrological further to determine routes that would be suitable
regimes of the site. for pedestrian access and then more challenging
hiking and activity trails that would help to promote
healthy lifestyles in the district.
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These factors overlayed created a site development framework This in turn was enhanced by
and neighborhood structure that grows out of the land and the creation of an environmental
delineates a development of the site that maximizes the greatest framework and an enhanced
assets of the site without requiring their destruction in order to version of the qanat irrigation
achieve it. systems traditionally employed
in the Gulf. By enhancing the
conceptual model with 100
percent onsite water recycling
through reed beds, the creation
of a wadi dam that would control
downstream flooding and create
a hydroelectric power source,
and overlaying of onsite energy
harvesting systems, the scheme
was conceived of as a potentially
off-grid project that required only
the introduction of potable water
from the municipal network.
Neighbourhood Structure Diagram and Water, Energy and Movement Systems Diagram
The Mount Project. Courtesy of Jebel Bausher Heights LLC
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AECOM
Conceptual deployment of qanat model to provide water recycling and food production on site
The Mount Project. Courtesy of Jebel Bausher Heights LLC
These initiatives are by no means In our view, projects like The We at AECOM continue to
a complete solution for the Mount demonstrate the way all explore such ways for cities to
considerable challenges that city design must happen in future. become positive ecological
humanity face but they do map They are part of a continuing forces of change.
a trajectory towards more effort to improve the social
resilient ecological futures. dimension of projects. This
This remains the very focus need not mean that projects are
of AECOM’s efforts. encumbered with unreasonable
commercial burden — to the
contrary this promises to
improve profitability.
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AECOM
03
REFERENCE
ARTICLES
IN BRIEF
74 78 83
Procurement Middle East Building rules
routes terms of contract & compliance
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PROCUREMENT
ROUTES
All clients expect projects to be on time and within
budget with an agreed level of quality and with the
risk rightly managed by their professional and
contracting team.
AECOM has developed Studies conducted with our key Which funding strategy,
strategies for the delivery clients who regularly undertake funding partner, team behaviors,
of projects that we know development work have shown attitudes, communication
work, successfully delivering that projects can be delivered channels, budget and program
hundreds of projects over our for 12-15 percent less cost delivers the best approach
long history. New and existing when procured correctly with and how can we best combine
developers have the opportunity no impact on quality or time. these to lead our clients to
to learn from this knowledge Projects are more likely to ultimate success?
and maximize the value from be on time and meet clients’
their time, cost and quality mix, expectations when procured
whilst adhering to a process correctly. So what is the right
that increases the likelihood of procurement approach for
their projects being successfully your projects?
procured by their team involved.
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AECOM
“
The right
procurement
strategy, one
that balances
risk and control
against the
competing
project
objectives of
cost, time and
quality, is key
to a successful
project outcome
“
Management contract
Design by the client’s consultants
generally overlaps with the
construction. A management
contractor is appointed early to
tender and let elements of work
progressively to subcontractors
and specialists in work packages.
The contracts are between
the management contractor
and the trade contractors,
rather than between the client
and sub-contractors. The
management contractor will not
carry out construction work,
but is employed to manage
the process. The management
contractor in theory assumes
responsibility for the financial
(and program) risks for the works,
but in reality this is normally
diluted by the terms of the
contract so their liability is similar
to that of a construction manager.
Design, manage
and construct
Similar to the management
contract, with the contractor
also being responsible for the
production of the detailed design
or for managing the detailed
design process.
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MIDDLE EAST
FORMS OF
CONTRACT
This article considers the different forms of
contract used in construction across the region.
Bahrain
United
Arab
Emirates
Oman
Qatar
Kingdom of
Saudi Arabia
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Bahrain
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Oman
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AECOM
Qatar
These are lump The market has seen Construction contracts in the UAE are
sum contracts, an increase in the predominantly based upon the FIDIC
generally using bills number of FIDIC- forms of contract.
of quantities based contracts
or specifications being implemented The growing number Contracts based on
and drawings. for both private and of large scale the 1999 ‘red book’
key public sector developers and are now starting to
These contracts are clients. In addition, major repeat clients be used in the UAE,
usually more biased in some very long in the region has led but in general the
towards the client, duration contracts, to the development market remains
but are generally the government of bespoke forms of firmly rooted in the
administered in a is beginning contract, tailored to FIDIC 4 form.
reasonable manner to introduce a each individual client.
price adjustment Such contracts Civil works
In the private sector, mechanism to allow generally use the contracts
similar contractual compensation for FIDIC 4 ‘red book’ within the UAE
arrangements are fluctuations in form as a basis, are mostly
adopted. However, market prices. amended to a procured on a
there are now some greater or lesser remeasurable
construction projects Before any degree depending basis, whereas
being let using cost contract is upon the risk profile building works
plus or design and awarded, there of each client. This will generally be
build arrangements. are commonly a also applies to works based on a fixed
This now includes a number of rounds procured by Dubai price lump sum.
number of the 2022 of negotiation, Municipality. Abu
FIFA World Cup during which the Dhabi Municipality, However, there are
stadia which have price and other however, bases exceptions. More
been procured on a contractual terms its contracts on a and more clients are
developed design can be modified modified FIDIC 3 procuring projects
stage and contracted to respond to form, taken from the using a fast track
on a D&B basis. a reduction in 3rd edition of the approach and will
contract price. FIDIC conditions of therefore incorporate
Contract for Works a remeasurable
of Civil Engineering element, reflecting
Construction. those parts of the
design that are
incomplete at
tender stage.
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Opera Grand
Image courtesy of Emaar
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AECOM
BUILDING
REGULATIONS
AND COMPLIANCE
This section outlines the procedures
for obtaining building permission
across the region.
AECOM’s project management team is experienced in the procedures
for obtaining building permits across the region and is able to oversee
this process.
BAHRAIN
Procuring a Municipal Building Permit in Bahrain is done through a three-stage process:
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The following is a general outline of the steps needed to obtain a Building Permit:
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AECOM
OMAN
The following is a general outline of the procedure for obtaining a building permit in the Sultanate of Oman
but there are many further obligations and procedures to be completed within each of the stages. It is
generally the responsibility of the lead consultant to obtain the building permit, although all applications
must be signed off and submitted by locally registered consultants.
Stage 1 Stage 3
Submitting concept design/ Submitting a building permit
masterplan stage application application
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Middle East Property & Construction Handbook 2018/19
QATAR
Compared with many countries, the planning and building approval process in Qatar is relatively clear
and structured.
Land ownership, other than by Qatari nationals and the state, is still extremely limited. The key process in
securing development rights is obtaining a land title or ‘PIN’ number; since without it all other permits and
applications cannot be commenced. Once the land is secured, the project masterplan is submitted for
approval to the Planning Department and local Municipality offices.
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AECOM
UAE
The following is a general outline of the procedure for obtaining a Building Permit in the UAE, but there
are many further obligations and procedures to be completed within each of the stages. Building Permit
application Stage 3, for example, requires no less than 15 different forms, documents and separate
approvals to be submitted as part of the application.
It is the responsibility of the construction contractor or lead consultant to obtain the Building Permit,
although all applications must be signed by locally registered consultants.
Stage 5
Obtaining building
occupancy certificate
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04
REFERENCE
DATA
IN BRIEF
92 100 102 104
International building Regional building Basis of Mechanical and
cost comparison cost comparison construction costs electrical cost
comparison
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INTERNATIONAL
BUILDING COST
COMPARISON
The international cost data
shown is a comparison of local
construction costs converted to
US Dollars to enable comparison.
The building costs for the Costs are subject to
respective asset types are considerable variations
averages based on local due to factors such as:
specifications. The actual cost
of a building will depend on its – Local marked conditions
unique site conditions, design – Complexity of project
attributes and applicable – Commodity price movements
tariffs, among other things.
– Building specifications
In addition, the standard for
each building varies from – Exchange rates
region to region, which may
have a significant impact
on costs.
Thailand, Bangkok
China, Shanghai
China, Beijing
UAE, Dubai
Singapore
UK, London
Australia, Sydney
USD / sqm
San Francisco
Kuala Lumpur
Los Angeles
South Africa
Hong Kong
Singapore
Singapore
Shanghai
New York
Bangkok
Australia
Malaysia
Thailand
Vietnam
London
Sydney
Beijing
Dubai
China
China
China
USA
USA
USA
UAE
UK
Building type
Average standard
4,439 3,200 1,115 1,030 875 2,400 1,092 954 1,750 4,300 4,500 5,000 4,833 824
offices high rise
Prestige offices
5,191 4,000 1,513 1,560 1,338 3,100 1,408 1,134 2,100 4,600 4,800 5,200 5,974 1,250
high rise
Major shopping center
3,730 4,600 1,274 1,500 1,400 3,400 1,075 905 1,679 3,500 3,900 4,000 5,268 850
(CBD)
(As at 1 April 2018) AUD HKD CNY CNY MYR SGD ZAR THB AED USD USD USD GBP VND
US $1 = 1.30 7.85 6.28 6.28 4.00 1.40 11.86 31.00 3.68 1.00 1.00 1.00 0.72 22786
Source AECOM
Note: Prices exclude land, site works, professional fees, tenant fit out and equipment. Rates exclude GST/VAT.
Costs based on 1 July 2018. Exchange rates to USD as at 1 April 2018
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Middle East Property & Construction Handbook 2018/19
Thailand, Bangkok
China, Shanghai
China, Beijing
Singapore
UAE, Dubai
UK, London
Australia, Sydney
San Francisco
Kuala Lumpur
Los Angeles
South Africa
Hong Kong
Singapore
Singapore
Shanghai
New York
Bangkok
Australia
Malaysia
Thailand
Vietnam
London
Sydney
Beijing
Dubai
China
China
China
USA
USA
USA
UAE
UK
Building type
5 Star luxury 736,336 480,000 302,548 298,500 310,000 321,400 337,265 250,000 350,000 465,700 462,600 503,500 618,463 192,777
3 Star budget 362,020 225,000 139,331 NA 166,900 57,100 189,713 65,000 90,000 80,500 81,200 84,600 101,992 NA
Resort style NA NA 421,975 NA 281,300 214,300 NA 300,000 650,000 290,800 289,900 300,100 379,758 231,333
(As at 1 April 2018) AUD HKD CNY CNY MYR SGD ZAR THB AED USD USD USD GBP VND
US $1 = 1.30 7.85 6.28 6.28 4.00 1.40 11.86 31.00 3.68 1.00 1.00 1.00 0.72 22786
Source AECOM
Note: Prices exclude land, site works, professional fees, tenant fit out and equipment. Rates exclude GST/VAT.
Costs based on 1 July 2018. Exchange rates to USD as at 1 April 2018
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AECOM
China, Shanghai
China, Beijing
Thailand, Bangkok
UAE, Dubai
Singapore
Australia, Sydney
UK, London
USD / sqm
San Francisco
Kuala Lumpur
Los Angeles
South Africa
Hong Kong
Singapore
Singapore
Shanghai
New York
Bangkok
Australia
Malaysia
Thailand
Vietnam
London
Sydney
Beijing
Dubai
China
China
China
USA
USA
USA
UAE
UK
Building type
Average multi-unit
3,566 3,300 860 820 544 1,900 978 1,057 1,975 3,900 4,000 4,600 4,322 724
high rise
Luxury unit
4,167 4,600 1,672 1,530 913 3,300 1,442 1,572 2,380 4,900 5,100 5,900 6,059 890
high rise
Individual
4,850 6,300 955 900 788 3,100 1,408 1,649 N/A 4,600 5,200 5,500 6,012 650
prestige houses
(As at 1 April 2018) AUD HKD CNY CNY MYR SGD ZAR THB AED USD USD USD GBP VND
US $1 = 1.30 7.85 6.28 6.28 4.00 1.40 11.86 31.00 3.68 1.00 1.00 1.00 0.72 22786
Source AECOM
Note: Prices exclude land, site works, professional fees, tenant fit out and equipment. Rates exclude GST/VAT.
Costs based on 1 July 2018. Exchange rates to USD as at 1 April 2018
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China, Shanghai
Thailand, Bangkok
China, Beijing
Singapore
Australia, Sydney
UAE, Dubai
UK, London
USD / sqm
San Francisco
Kuala Lumpur
Los Angeles
South Africa
Hong Kong
Singapore
Singapore
Shanghai
New York
Bangkok
Australia
Malaysia
Thailand
Vietnam
London
Sydney
Beijing
Dubai
China
China
China
USA
USA
USA
UAE
UK
Building type
Light duty factory 792 2,500 570 525 525 700 472 567 822 1,500 1,500 2,800 1,981 360
Heavy duty factory 997 NA NA NA 575 900 531 902 1,454 1,900 2,000 3,600 3,400 463
Multi-storey car park 1,024 1,700 NA NA 345 700 333 593 601 1,300 1,600 1,500 971 360
District hospital 6,386 5,800 NA 1,500 1,025 2,900 2,192 NA 2,700 6,500 6,900 8,400 4,882 N/A
Primary &
2,623 2,800 NA NA 375 NA 613 NA 1,510 4,200 4,100 4,600 3,128 N/A
secondary schools
(As at 1 April 2018) AUD HKD CNY CNY MYR SGD ZAR THB AED USD USD USD GBP VND
US $1 = 1.30 7.85 6.28 6.28 4.00 1.40 11.86 31.00 3.68 1.00 1.00 1.00 0.72 22786
Source AECOM
Note: Prices exclude land, site works, professional fees, tenant fit out and equipment. Rates exclude GST/VAT.
Costs based on 1 July 2018. Exchange rates to USD as at 1 April 2018
96
AECOM UAE TENDER PRICE INFLATION INDEX AND FORECAST
AECOM
20%
0% Euro Area 19
20%
Australia
30% -10%
UAE Singapore
10%
UK USA
-20%
Hong Kong
20%0% Euro Area 19
Australia India
-30%
-10% 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018
Singapore
UAE
10% USA
-20%
Hong Kong UK
India
0%
-30% Euro A
2009 2010 2011 2012 2013 2014 2015 2016 2017 2018
Austra
-10%
Singap
USA
-20%
Hong K
India
-30%
2009 2010 2011 2012 2013 2014 2015 2016 2017 2018
Source: Based on AECOM Indices for UK, UAE; ENR USA Construction Cost Index; Singapore
Building Construction Authority, Hong Kong Building Works Tender Price Index, EuroaArea Eurostat
Construction Output Index, India CIDC Construction Cost Index, AIQS Building Cost Index
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Turkey (TRL)
Brazil (BRL)
Russia (RUB)
India (INR)
Australia (A$)
Japan (JPY)
Canada (CND)
Singapore (SGD)
UK (GBP)
China (CNY)
Euro (EUR)
Malaysia (MYR)
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AECOM
Grande
Image courtesy of Emaar
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REGIONAL BUILDING
COST COMPARISON
Building cost (US$/sqm) UAE KSA Qatar Bahrain Oman
(Dubai) (Riyadh) (Doha) (Manama) (Muscat)
Typology Low High Low High Low High Low High Low High
Residential
Low rise 1,000 1,550 800 1,350 1,300 1,600 800 1,350 850 1,000
Medium rise 1,050 1,550 1,250 1,500 1,600 1,850 1,050 1,600 1,050 1,300
High rise 1,550 2,400 1,650 2,050 1,900 2,150 1,450 2,000 N/A N/A
Commercial
Low-rise office (shell & core) 1,100 1,400 700 1,250 1,300 1,600 1,050 1,450 650 750
Mid-rise office (shell & core) 1,250 1,550 1,250 1,650 1,600 1,950 1,200 1,600 700 1,000
High-rise office (shell & core) 1,400 2,100 1,650 2,200 1,900 2,300 1,450 2,050 N/A N/A
Fit-out — basic 1,000 1,550 700 950 1,300 1,800 650 950 400 500
Fit-out — medium 1,550 1,950 950 1,250 1,700 2,200 950 1,200 650 750
Fit-out — high 1,950 2,500 1,250 1,650 2,000 2,750 1,200 1,600 N/A N/A
Retail
Community 1,300 1,550 700 950 1,200 1,450 1,050 1,350 1,100 1,200
Regional mall 1,350 1,650 1,100 1,500 1,300 1,750 1,200 1,600 N/A N/A
Super regional mall 1,500 1,900 1,250 1,800 1,300 1,900 1,450 1,850 1,100 1,250
Industrial
Light duty factory 750 950 800 1,100 900 1,050 800 1,050 700 950
Heavy duty factory 900 1,100 1,100 1,200 1,050 1,300 950 1,200 900 1,200
Light industrial unit 650 750 700 800 750 900 650 950 N/A N/A
Data center — Tier 3 (based on AED/kW(IT) 19,650 22,450 18,700 21,450 21,150 24,100 N/A N/A N/A N/A
Hotel
Budget 1,800 2,250 1,350 1,650 2,500 2,650 1,550 1,800 N/A N/A
Mid market 2,250 2,800 1,650 2,200 2,700 3,650 1,650 2,250 2,300 2,950
Up market 3,350 3,800 2,600 3,000 3,700 4,400 2,100 2,650 2,650 3,100
Resort 3,200 3,900 3,000 3,550 4,100 4,950 2,500 3,350 N/A N/A
Car parks
Multi storey 550 650 600 750 800 950 450 650 300 300
Basement 800 950 800 950 900 1,050 650 1,000 650 700
Other
Schools - primary, secondary academy 1,350 1,700 800 1,350 1,600 2,200 1,400 1,800 950 1,550
Healthcare - district hospital 2,200 3,200 1,950 2,750 2,350 2,950 2,500 3,050 2,150 2,750
Exchange rate to 1 US$ AED 3.67 SAR 3.75 QAR 3.64 BHD 0.37 OMR 0.38
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BASIS OF
CONSTRUCTION COSTS
General notes General cost inclusions
– The building costs for the – The standard for each building Construction works
respective asset types are varies from region to region.
Main contractor preliminaries
averages based on competitive – General and specific cost and OH&P
tenders analyzed by AECOM. inclusions and exclusions
It must be understood that are listed below.
the actual cost of a building
– Relative costs of construction
will depend on the design and
many other factors and may
are based on typical build General cost inclusions
costs in USD. Influence of
vary from the figures shown. External works and landscaping
foreign exchange fluctuations,
– Due to the volatile nature unique site conditions, design
of the current market, it is Site infrastructure
attributes and applicable tariffs
possible that tenders will be must be considered when Enabling works
received outside these ranges. comparing actual projects.
Professional advice should be Basements podiums
sought for specific projects. and car parks
Contingencies
Undefined provisional sums
Utility connection charges
Statutory fees and charges
Professional fees
Client direct costs
Land acquisition
Finance charges
LEED silver or above
Staff accommodation
Pre-opening expenses
Mock ups
VAT
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Slab to 4.0 - 5.0m 4.0 - 4.5m 4.0 - 4.5m Specification Mid range Mid range
slab height Key design characteristics
Grid spans 7 - 12m 9 - 12m 9 - 12m Building height 10 24
(m)
GIA (m²) 21,000 - 22,000 50,000
Asset type Retail No of lift core 1 4
Typology Community Regional Super regional No of 9 6
Key design characteristics stair core
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MECHANICAL &
ELECTRICAL COST
Building Cost (US$ / sqm) UAE KSA Qatar Bahrain Oman
(Dubai) (Riyadh) (Doha) (Manama) (Muscat)
Typology Low High Low High Low High Low High Low High
Residential
Low rise 280 360 290 480 390 480 230 360 330 390
Medium rise 370 470 430 520 470 570 360 500 390 500
High rise 590 760 650 820 570 710 540 700 N/A N/A
Commercial
Low-rise office (shell & core) 360 430 200 370 390 480 370 510 240 310
Mid-rise office (shell & core) 420 500 370 490 470 570 470 560 280 370
High-rise office (shell & core) 470 580 570 870 570 820 660 900 N/A N/A
Fit-out — basic 370 500 200 290 390 570 240 330 160 160
Fit-out — medium 500 650 290 370 570 730 300 420 240 290
Fit-out — high 650 830 430 570 720 910 390 600 N/A N/A
Retail
Community 360 430 240 340 410 480 360 450 480 530
Regional mall 430 560 380 520 460 610 410 500 N/A N/A
Super regional mall 450 590 490 700 460 760 450 590 450 520
Industrial
Light duty factory 260 310 250 330 260 310 540 740 300 380
Heavy duty factory 350 430 250 330 300 390 670 940 400 520
Light industrial unit 160 200 200 250 220 260 330 470 N/A N/A
Data center — Tier 3 (based on AED/kW(IT) 14,430 16,490 13,610 15,780 15,860 18,340 N/A N/A N/A N/A
Hotel
Budget 450 560 540 650 860 1,050 470 560 N/A N/A
Mid market 560 700 650 870 1,040 1,460 510 680 770 1,070
Up market 840 950 1,030 1,190 1,450 1,600 680 860 1,020 1,190
Resort 800 980 1,190 1,420 1,450 1,600 750 1,090 N/A N/A
Car parks
Multi storey 120 150 200 250 240 290 80 130 50 50
Basement 200 230 250 290 350 410 180 280 200 220
Other
Schools - primary, secondary academy 540 670 290 480 640 880 370 490 340 430
Healthcare - district hospital 910 1,420 770 1,220 750 1,310 1,160 1,410 N/A N/A
Exchange rate to 1 US$ AED 3.67 SAR 3.75 QAR 3.64 BHD 0.37 OMR 0.38
MAJOR MEASURED
UNIT RATES
Item Unit Description UAE KSA Qatar Bahrain Oman
(Unit rates in US$) (Dubai) (Riyadh) (Doha) (Manama) (Muscat)
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MAJOR
MATERIAL PRICES
Item Description Unit UAE KSA Qatar Bahrain Oman
(Dubai) (Riyadh) (Doha) (Manama) (Muscat)
USD USD USD USD USD
Cement Ordinary Portland Cement Tonne 85 81 83 85 85
Grade 20 (OPC) m³ 65 63 97 90 56
Reinforcing steel High tensile Tonne 735 543 999 688 556
Structural steelwork Mild steel grade 50 Tonne 1,035 1,601 2,495 1,058 1,247
to BS 4360
Timber Hardwood m³ 792 800 1,206 934 2,997
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AECOM
LABOUR COSTS
Description Unit UAE KSA Qatar Bahrain Oman
(Dubai) (Riyadh) (Doha) (Manama) (Muscat)
USD USD USD USD USD
Skilled operatives
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160
150
140
130
Index: Q4 2009 = 100
120
110
100
90
80
70
Q1 2009
Q1 2010
Q1 2011
Q1 2012
Q1 2013
Q1 2014
Q1 2015
Q1 2016
Q1 2017
Q1 2018
Q1 2019
Q1 2020
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AECOM
2008 East
Middle 2009
Relative 2010 2011 2012
Cost of Construction 2013 2014 2015 2016 2017 H1 2017f 2018f
-17.1 2.4 -3.5 -5.3 1.1 2.7 2.1 1 1.9 2.7 -0.5 - 2 1-3
Qatar (Doha)
UAE (Dubai)
Bahrain (Manama)
KSA (Riyadh)
Oman (Muscat)
Note: Relative costs of construction are based on typical build costs in USD. High and low cost factors for each building type have been
calculated relative to the UAE (Dubai), where average costs equal 100. The relative cost bars plotted in the chart represent the average
high and low cost factor for each country, based on the costs of the buildings included in the sample (excluding commercial fit-outs).
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TYPICAL BUILDING
SERVICES STANDARDS
FOR OFFICES
Subject BCO (UK) specification Bahrain UAE Qatar Oman
2014 specification specification specification specification
Occupancy 1:8 - 1:13/m² 1:10 - 1:14/m² 1:10 - 1:15/m² 1:10 - 1:14/m² 1:10 - 1:15/m²
standards — typical
Occupancy Single sex 1 person to Single sex Single sex Single sex Single sex
standards — toilets 10m² using 60/60 male/ 1 person to 1 person to 1 person to 1 person to
female ratio based on 12m² using 12m² using 12m² using 12m² using
120% ratio. 50/50 male/ 50/50 male/ 50/50 male/ 50/50 male/
female female female female
ratio based ratio based ratio based ratio based
on 100% on 100% on 100% on 100%
population. population. population. population.
Heating and "24oC, +/- 2oC (Summer) 24oC, +/- 2oC 24oC, +/- 2oC 24oC, +/- 2oC 24oC, +/- 2oC
air conditioning 20oC, +/- 2oC (Winter)"
internal criteria
Fresh air supplies 12 - 15 L/s per person 8.5 - 10 L/s 8.5 - 10 L/s 8.5 - 10 L/s 8.5 - 10 L/s
per person per person per person per person
Acoustics — NR 35 NR 35 NR 35 NR 35 NR 35
cellular offices
Lighting - 300 - 500 lux 400 - 500 lux 400 - 500 lux 400 - 500 lux 400 - 500 lux
VDU use
Passenger lifts — < 25 seconds < 30 seconds < 30 seconds < 30 seconds < 30 seconds
waiting time
(up-peak)
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AECOM
EXCHANGE RATES
Euro UK India China Japan UAE KSA Qatar Oman Bahrain Kuwait Egypt Lebanon Jordan
zone
1 USD = EUR GBP INR RMB JPY AED SAR QAR OMR BHD KWD EGP LBP JOD
H1 2012 0.77 0.63 52.1 6.3 79.7 3.67 3.75 3.64 0.38 0.376 0.278 6.0 1,490 0.707
H2 2012 0.79 0.63 54.6 6.3 79.8 3.67 3.75 3.64 0.38 0.376 0.281 6.1 1,483 0.707
H1 2013 0.76 0.65 55.0 6.2 95.5 3.67 3.75 3.64 0.38 0.376 0.284 6.9 1,486 0.707
H2 2013 0.75 0.63 62.0 6.1 99.6 3.67 3.75 3.64 0.38 0.376 0.283 6.9 1,489 0.707
H1 2014 0.73 0.60 60.8 6.2 102.4 3.67 3.75 3.64 0.38 0.376 0.282 7.0 1,489 0.707
H2 2014 0.78 0.62 61.2 6.2 109.2 3.67 3.75 3.64 0.38 0.376 0.287 7.2 1,492 0.707
H1 2015 0.90 0.66 62.8 6.2 120.3 3.67 3.75 3.64 0.38 0.376 0.299 7.5 1,491 0.707
H2 2015 0.91 0.65 65.4 6.3 121.8 3.67 3.75 3.64 0.38 0.376 0.302 7.8 1,488 0.707
H1 2016 0.90 0.70 67.2 6.5 112.8 3.67 3.75 3.64 0.38 0.376 0.302 8.4 1,508 0.709
H2 2016 0.91 0.78 67.2 6.7 105.9 3.67 3.75 3.64 0.38 0.376 0.303 11.6 1,508 0.709
H1 2017 0.92 0.79 65.7 6.9 112.4 3.67 3.75 3.64 0.38 0.376 0.305 18.0 1,508 0.709
H2 2017 0.85 0.76 64.5 6.6 111.9 3.67 3.75 3.64 0.38 0.376 0.302 17.8 1,508 0.709
H1 2018 0.83 0.73 65.7 6.4 108.7 3.67 3.75 3.64 0.38 0.376 0.301 17.7 1,508 0.709
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Forte
Image courtesy of Emaar
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114
AECOM
05
DIRECTORY
OF OFFICES
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DIRECTORY
OF OFFICES
United Arab Emirates Kingdom of Saudi Arabia Kingdom of Bahrain
116
AECOM
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118
AECOM
06
FUTURE OF
INFRASTRUCTURE
Resilient and sustainable infrastructure is critical to economic growth
and social progress.
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FUTURE OF
INFRASTRUCTURE
SURVEY
AECOM surveyed more than 500
senior industry decision makers,
all of whom work on infrastructure
projects valued at more than
US$100 million. We also conducted
detailed interviews with more than
a dozen key figures in our industry.
The aim was to better understand
the problems, priorities and potential
in delivering major infrastructure
projects. A snapshot of the survey
results is provided overleaf.
120
AECOM
34%
Funding shortages (public and private)
27%
Increased capital costs
25%
Public opposition
24%
Government bodies to pick
the right projects
23%
Overly restrictive regulations
19%
Outdated/overly complex
procurement approaches
18%
Land issues
17%
Talent shortages
0 5 10 15 20 25 30 35 40
% of respondants
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Middle East Property & Construction Handbook 2018/19
55% 37% 6% 3%
Structuring contracts to reward
for time and cost savings
0 20 40 60 80 100
122
AECOM
Discover more
infastructure.aecom.com/
benchmarking
123
Disclaimer
About AECOM
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