Huge potential for facilities managers in an oversupply market, reveal experts at JLL
There is increased evidence that more sustainable buildings not only reduce operating costs, particularly if these are accounted for across the entire life cycle of the building, but they may also achieve rental and value premiums
Dana Salbak, head of research at JLL, said that there is a great demand for facilities managers in the region during the current oversupply of buildings in Dubai.
“There is a huge potential for good facility management firms. It's become really essential to have the right skillset and knowledge that facility managers and asset managers have. You need to have specialised people to manage your assets. If you want to build the communities, you want those communities to should last. That’s key.” Salbak said.
Salbak spoke to fmME on the sidelines of a JLL event that shared insights on how best to enhance and optimise the performance of real estate assets during periods of uncertainty at its annual outlook event hosted in Dubai.
The event brought together industry leaders across the real estate sector and built on conversations from last year’s session which focused on how to navigate the market during a time of uncertainty, amid new regulations and trends such as digitalisation, alternative real assets, REITs (Real Estate Investment Trusts), among others.
Salbak added that there is now a realisation of “building for a longer term, which includes the retrofitting market”. She said: “People are thinking more long term especially in retrofitting existing buildings and making them more sustainable. The kind of investments where I put money in and expect to make 30% return in two years, is long gone. We need to see a shift in mentality where we need we make things more sustainable for us.”
Giving an alternative view on why retrofitting has not caught on as it should, Thierry Delvaux, CEO, Middle East and Africa, JLL, said: “Retrofitting is an extremely important part of a real-estate market becoming more mature.”
He explained the reasons why retrofitting was not a market in itself.
Delvaux said: “The first one is geographical terrain. If you have a city surrounded by mountains, then you can’t grow the city any further; you start retrofitting your buildings because you don’t have any other choice. However, in places like Dubai, where you can expand the city outwards, you get into a situation where it’s always more interesting, and more financially, rewarding to develop a new building rather than taking care of an existing 15-20-year-old asset.
“The other thing we need more of is regulation. We are spending a lot of time with the government to help them further regulate the real estate market. I’m hopeful that the new Higher Committee for Real Estate will bring some new regulations to limit the amount of supply that comes into the market, which will then automatically push the retrofitting market.
“Furthermore, instead of pushing the geographical boundaries of the Dubai city, there are still a lot of empty pockets within Dubai that are not sufficiently developed. There’s a need to further urbanise the city before we expand it.”
These were a few reasons why although retrofitting is key, there aren’t sufficient incentives for the developers to do so, concluded Delvaux.
The core insights shared by JLL at the event to help entities optimise their real estate assets in 2020 included:
Life-cycle and costing
Experts at JLL recommend estimating ahead of time, at the very start of the project, the funds required to cover the ageing-related costs of buildings, to ensure the property lasts for a long period of time.
Sustainability practices and retrofitting
Finding ways to make buildings – from offices to homes – run more efficiently can make a big difference when it comes to sustainability. From retrofitting, smart windows that minimise energy usage to microgrid-generated renewable power, ever-advancing technology is coming up with innovative solutions.
Buildings today must make use of sensors for real-time energy monitoring to better understand their carbon footprint and how it can be improved, says JLL. There is increased evidence that more sustainable buildings not only reduce operating costs, particularly if these are accounted for across the entire life cycle of the building, but they may also achieve rental and value premiums. JLL recommends developers, occupiers and investors put more importance on the sustainability and environmental impact of their projects in 2020.
Co-working and other changes in the way that occupiers utilise their office space has resulted in rapid growth in the amount of flexible office space being delivered across the Middle East. While the UAE has also experienced rapid growth in the demand for such space, it currently accounts for less than one percent of the total office supply in Dubai (compared to more than 6% in London). 2020 may well prove to be the year when flexible offices come of age in the UAE, according to JLL.