Business | Construction

P&T charts new growth architecture

Rebalances portfolio with accent on infrastructure, health care and education projects

  • By Manoj Nair, Associate Editor
  • Published: 00:00 August 26, 2011
  • Gulf News

Plain logic
  • Image Credit: Zarina Fernandes/Gulf News
  • Stephan Frantzen, P&T executive director, and James Abbott, group director, at the P&T Group office in Dubai. They are optimistic that the worst of the downturn has passed and there are enough reasons to put faith in an incremental turnaround for the construction sector.

Dubai: They just aren't there. At least in numbers that would have the construction industry and its many stakeholders emerge out of a funk. Despite the occasional tender getting floated, new project activity in the Gulf still presents a desolate landscape.

Even when there are fresh sightings of new contracts, the realisation soon hits that these by themselves will not be able to place the entire industry back on its collective feet.

So, how does an architectural practice cope in these trying circumstances? Is there a sense of dread that the promised turnaround will take even more time to materialise? On the contrary, going by the words of two top officials at the regional operations of P&T, the Hong Kong headquartered architectural design and project consultancy.

On their part, James Abbott, group director, and Stephan Frantzen, executive director, draw up a scenario where the worst of the downturn has been seen through and there are enough reasons to put faith in an incremental turnaround. But provided these are based on more solid foundations than existed up to 2008. 

Is it an absolute standstill when it comes to new projects? What's your firm's experience in the last few months?

James Abbott: We had quite a lot of enquiries from Saudi Arabia which can be seen as a positive. We had one enquiry for a substantial job in Qatar.

One of our strengths is in health care and we work closely in partnership with an Australian company which is a specialist in this field. And it stands to reason we will actively seek work in this sector. 

Has it do with the fact that whatever new contracts out there are coming from the public sector?

I think money is going into infrastructure projects. If the government is going to spend money, they are not going to put that into real estate; they will look at long-term objectives in the education and health care sectors. The same applies to private developers as well where they see opportunities beyond real estate. 

Is your portfolio weighed predominantly in favour of government projects?

Stephan Frantzen: It is led by both. But in this market it's a bit of a blur as many of the private companies are government entities in one form or the other.

I am confident given the amount of things we have got in the pipeline in Saudi Arabia, something will happen there. It's not confined to health care; the jobs are a mixture of hospitality, residential, education and healthcare.

In fact, we have had more enquiries for apartments — which is a new product as far as Saudi Arabia is concerned — from Riyadh. 

Doesn't that old truism apply of higher oil revenues translating into more projects?

James Abbott: Oil revenues are one thing and it's good that there's more cash coming into the region. But whether that filters through into construction, I don't know. It will only go into property if that's a better place to put money as opposed to placing it elsewhere.

Long-term, you can still be optimistic about the Middle East because there's huge growth potential. No one can deny that.

Yes, there's been instability in some of the countries in the last few months, but considering the state of affairs of the Western world, I think the fundamentals in the region are much stronger.

Most of our clients are still here and there must be a reason for that. That in itself is a positive and we have been fortunate in that regard. Some of the same clients are bringing us into projects overseas. Up until 2008, all of our work in Dubai was real-estate-related of some kind or the other. When it dried up, we were forced to switch our attention elsewhere. We have been aggressively pursuing more opportunities coming in health care and education.

There is a reasonably steady stream of projects; for instance, the Abu Dhabi Education Council has been active with a new school building programme. 

Why should school buildings interest a leading architectural firm? Don't these buildings all look the same?

Stephan Frantzen: Not anymore. Some schools may still be built like that, but many new ones are not.

The buildings are actually getting to be quite complex briefs. I don't think they are any way similar to what we remember from our school days. 

But given that most of the new projects are from the public sector, aren't budgets kind of tight?

James Abbott: The fair answer to that is yes, the money may be tighter when it is publicly accountable. Schools in particular have to be built on very tight budgets.

That in a way is a nice challenge. In some ways it's better to work within a tight budget because you are more goal-driven. You also tend to talk about more important issues such as being environmentally responsible, ensuring a longer lifespan for the buildings, etc.

You certainly won't need to spend hours talking about what kind of marble you need to put in!

The projects we are bidding for are a lot smaller, in Saudi Arabia for instance. We were bidding for projects of Dh500 million and well over that in 2007 and 2008, but those are not there now. Typically, these days projects of Dh100 million are good enough. 

Is sustainable development such a big deal among developers unless it is mandated by the authorities?

Stephan Frantzen: That's probably a fair statement. We are not getting many enquiries where people say they want to go for a platinum rating. But we have bid for a project in Qatar where the top rating was an objective. They follow the LEED ratings.

But the environmental question has really come into focus much more seriously than it used to. Earlier everything was for the short term — you announce a tower, sell the apartments, which would within a week find themselves in the secondary market. No one had time to think about sustainability. 

Does sustainable development involve a cost factor?

James Abbott: I suspect it will have some impact, but it depends on what your budget is in the first place. If you want to start with a reasonably highly specified building that will stand the test of time, the cost of compliance may not be that much more.

Even in Saudi Arabia which does not have any such regulations yet, some clients are starting to push for it.

Everyone is looking for a unique aspect that makes them better than the others. So in a way doing sustainable development is one way of adding some genuine value. But the market will need to push on with this.

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