Dubai: Facility management

With greater emphasis being placed on quality rather than quantity, the real estate sector is witnessing increasing competition in the facilities management sphere, presenting opportunities to experienced companies looking to maintain both commercial and residential buildings.

The role of facility manager can be a very broad one and generally refers to a firm taking on the task of developing and maintaining services for a property or development, ensuring the effective operation of the residential or commercial environment. Previously, the preference was for owners to directly manage their properties; however, this is now shifting in Dubai, with higher levels of outsourcing becoming prevalent.

In recent years, good facility management has been adding value to the real estate industry. According to Jamal Lootah, the CEO of Imdaad, a local facility management firm, the quality of management services have become a significant selling point for developers.

“There has been an increase in demand for quality facility management, as developers need to demonstrate to potential investors that they are maintaining their properties at the highest level,” Lootah told OBG.

However, while demand for quality has been steadily increasing, the supply of those services has become somewhat stretched, Lootah said. “Currently, the UAE facilities management industry is valued at $1.5bn, with 60% of the business being done in-house or managed by small, inexperienced contractors.”

Increasingly, however, developers and owners are seeking to outsource or upgrade their facility management service provider, and there is greater potential for expansion into the market.

This is a view apparently shared by some overseas service providers, who see strong market potential in the Gulf region. One such provider is Nippon Kanzai, a Japan-based building and environmental facility management firm. “The Middle East is known for spectacular skyscrapers, yet their awareness regarding the asset value of buildings or fulfilling tenants’ needs is not fully developed,” the company said in late October via a statement announcing it would be attending a facility management trade fair in Dubai. The statement added that the firm can bring their experiences from Japan to bear in the local market.

According to Alexandre Mussallam, the CEO of MAF Dalkia, a local facility management firm, one way that developers and property managers can make the best use of facility management services is to become involved in the early stages of the design process, rather than getting on board at the last moment.

“Early involvement at the concept design stage and then monitoring installations during the construction phase to match operational requirements remains a top strategy for facility management companies,” Mussallam told the Zawya Dow Jones news service in an interview in late October.

The importance of quality facility management as a marketing tool is set to rise in the coming year. A recent study by Jones Lang LaSalle, a global real estate services firm, estimated that up to one-quarter of Dubai’s residential properties are vacant and, with a further 25,000 units due to be delivered in 2013, this glut could deepen. The picture is similarly concerning in the commercial segment of the market: up to one-third of office space in Dubai’s main business district is currently empty, and an additional 900,000 sq metres – the equivalent of 13% of existing stocks – is set to be completed in 2013.

While there has indeed been an improvement in the emirate’s real estate market, prices and total sale values are still well down on their pre-crisis levels of 2008, according to the emirate’s Land Department. As a result, facility management has become an increasingly important component of recent real estate deals, with the offer of well-regarded services boosting the market appeal of a property.

Even if many of the new properties entering the emirate’s real estate market, in addition to the surplus already in existence, remain vacant for some time to come, there will still be a need for management services, as the developments will still require care and maintenance. This means that firms in the segment will continue to have opportunities to expand, even if the real estate sector’s recovery takes longer than expected.