Memon Investments managing director Ahmed Shaikhani discusses the progress and the sustainability of the Middle East construction industry.
What plans do you have for green building?
The government is pushing companies to follow green building programmes and we want to follow these by reducing electricity and air conditioning use and waste. We have partnered with the Middle East Centre of Sustainable Development to implement green technologies in all our big developments such as insulation blocks to decrease the amount of air conditioning buildings use. We will also use human-senses lighting to reduce electricity. This is favourable for the environment, favourable for the customers and favourable for us. The cost is higher, but we will save on energy and power. We are also using recycling containers to recycle the waste from construction.
Can the construction industry in the Middle East sustain itself?
I think that Middle East construction will definitely sustain itself. Building material costs are 30% to 35% reduced now and I am very comfortable with these prices. The cost of importation is also going down, along with the currency exchange rate, which makes it cheaper to import materials and resources. Big developers have the comfort that they can build buildings at a reasonable price now.
Even the air conditioning and electricity is at a very good price. The financial crisis hasn’t affected us in a major way. When we were handing over contracts we were delayed by about two to three months, due to the changing value of contracts and we had to re-calculate everything and re-negotiate with the contractors, but we haven’t cancelled any projects. By helping to ease up the tight liquidity in the Dubai market, the construction industry will be given a new lease of life and delayed or cancelled developments will start up again.
How does the UAE market compare to other Middle Eastern countries?
There is no comparison between the UAE and other GCC countries. I have traveled to cities like Riyadh and Damman in Saudi Arabia and the level of development is not close to Dubai. There are two things that make the UAE unique; its tourism and its exportation. Saudi is not promoting tourists to go there, but the UAE has the opportunity to make tourism happen. Dubai also has the majority of the free zones. Around 16 freezones are here, but there are a maximum of three free zones in every other country.
Yes, but isn’t the tourism side being affected by job losses?
Expatriates are going home but there is still tourism. In the UK and America millions and millions of people have been made redundant, but in Dubai this figure is much less. Thirty to forty thousand visas have been cancelled in the last six months but despite that another 60,000 residence visas have been issued to more expatriates, so this percentage is higher. It isn’t as bad as people make out. The fact that rent prices are dropping is also supporting expatriates. Before people were sharing, but now they can get their own apartment. Now some expatriates can purchase the properties when they couldn’t before. The market has bounced back.
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