Modus Asia Edition 05.12

MODUS 05.12 ricsASIA.org

05.12 // olympic effort Meet the surveyors behind the project p14 rio 2016 Exporting expertise to the next Games host p28 Building better Raising safety standards in Hong Kong p24

The olympics issue

ricsasia.org

The olympics issue

With the compliments of

1403, World-Wide House, 19 Des Voeux Road Central, Hong Kong Tel: 2826 0111 Fax: 2845 2521 Website: www.reda.hk

Contents

No 5 05.12 //

The olympics issue I was very honoured to be nominated as Chair of the RICS Asia Commercial Property Professional Group Board, as I believe it will help me to broaden the exposure of critical issues in commercial real estate. We are currently in the process of recruiting members to help us produce Asia-relevant guidance notes, organise industry-relevant events, provide local expertise to the global professional group board, and to act as a bridge for members to voice their views concerning commercial real estate. We hope that, through the development and delivery of a series of products and services, and with the support of our members, the board will act as a pioneer and a thought leader in this field. And as the chairman of the organising committee, I look forward to meeting members at the RICS Hong Kong Conference on 4 May. It’s an excellent opportunity to learn from industry experts, and interact with government officials, clients, investors, stakeholders and other members.

Nigel Smith FRICS Chair, RICS Asia Commercial Property Professional Group Board

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Regulars 04_feedback Your views on Modus and the profession, and the latest poll

28_carnival time The opportunities in Brazil ahead of the World Cup and Olympics

06_intelligence Global news, plus opinions, reviews and reactions

34_top tier The world’s leading locations for commercial property investment

27_law advice A look at claims and diligent recordkeeping

36_eastern promise How the Asian love of luxury goods is fuelling a development boom

44_business advice The mutual benefits of flexible working practices

42_10 gadgets The latest must-have products for the tech-savvy surveyor

Features

In formation

14_2012 in 12 steps Delivering the London 2012 Games – with chartered surveyors involved all the way

45_rics news Updates from RICS

24_10 minutes with…

Mr Au Choi-kai, JP, Director of Buildings, HKSAR Government

49_events Training and conference dates

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50_the measure Shopping centre stats

05.12 // MODUS ASIA

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Feedback//

Join the debate :email your feedback to editor@ricsmodus.com

community action As regular readers of Modus, we’re impressed by your coverage of sustainability issues, and were particularly pleased to see your feature on Wildpoldsried [December/January]. Over more than 30 years of lending on properties and projects that respect the environment, we’ve seen that true sustainability needs to be embedded at a community level – not bolted on as an afterthought. As Wildpoldsried demonstrates, community involvement in sustainability initiatives is essential for ensuring places and buildings work both for the people that live in them and their immediate and wider environment.

When planned in a participative and integrated way, widespread use of renewables and low-energy design makes sense at a social, economic and environmental level.

In the UK, we need to apply this thinking not just to new builds, but to the urgent challenge to retrofit our existing housing stock. While we hope the Green Deal will be a success, we believe take-up will only be maximised through an approach that sees individuals as part of communities as well as consumers, and that takes into account the social aspects of our choices about our homes. Let’s hope places like Wildpoldsried become the norm, rather than the exception.

Jon Lee, Ecology Building Society a fair reward Of course we need to pay the going rate for people of the right calibre. We should as members always decide the appropriate remuneration for senior executives through the remuneration committee and not be swayed in any way by the baying of the

media. They just want to sell papers and have no interest in anything else despite what they indicate to the public at large. Our staff are paid for by our members. If the members are happy that is all that needs to be considered.

Michael Hoad FRICS, via rics.org

management, leasing and eventual management. Australia at that time was an owner-occupier country with hardly any leases, so the negotiation of long leases containing base rents coupled with a percentage on turnover was particularly uphill! Both proved to be extremely successful.

Arthur Comport FRICS, Adelaide

at the frontier Another excellent edition! As a very old member, it is amazing to read of the incredible growth of the shopping centre movement worldwide. Perhaps young members will be surprised that Jones Lang Wootton, acting on behalf of the Arndale Property Trust of Bradford, produced some of the earliest air-conditioned shopping centres.

The first opened in Adelaide in 1963, followed by another in the suburb of Marion in 1968 (later purchased by Westfield). We were involved in all aspects, from site selection through project

Get in touch // :Online ricsasia.org twitter.com/RICSnews :email ricsasia@rics.org editor@ricsmodus.com

the modus poll :what’s your experience of BIM? Total votes: 313

I cannot see it catching on

10.5%

I am using it on more and more projects

Not used it but I think it should be adopted

22.7%

44.7%

I have used it a little and liked it

15.7%

Used it a little and cannot see the value

6.4%

Visit rics.org/modus now to vote in our latest poll, or view past poll results.

Due to the volume of correspondence we receive, we regret that we are unable to print all letters or respond to every one individually.

The MODUS team// For Sunday

Modus Asia edition is the official publication of the Royal

For RICS

Editor Victoria Brookes // Art Director Christie Ferdinando //

Institution of Chartered Surveyors in Asia: Room 2203,

Editorial board Ian Fussey and Jaclyn Dunstan (UK)

Contributing Editor Brendon Hooper // Deputy Art Director

Hopewell Centre, 183 Queen’s Road East, Hong Kong

Roy Ying and Vivian Yuen (Asia)

Lauren Webb // Sub Editor Samantha Whitaker // Creative

Published by Sunday, 207 Union Street, London SE1 0LN

Asia advertising ROF Media

Director Matt Beaven // Account Director Stephanie Hill //

sundaypublishing.com

Bryan Chan +852 3150 8912 | bryan@rofmedia.com

Commercial Director Karen Jenner

Cover Nick Ballon

Views expressed in Modus are those of the named author and are not necessarily those of RICS or the publisher. The contents of this magazine are fully protected by copyright and may not be reproduced in any form without the prior permission of the publisher. All information correct at time of going to press. All rights reserved. The publisher cannot accept liability for errors or omissions. RICS does not accept responsibility for loss, injury or damage or costs that result from, or are connected in any way to, the use of products or services advertised. All editions of Modus are printed on paper sourced from sustainable, properly managed forests. This magazine can be recycled for use in newspapers and packaging. Please dispose of it at your local collection point. The polywrap is made from biodegradable material and can be recycled.

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04.12 // MODUS

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Intelligence//

Image Grischa R端schendorf (rupho.com)

:news :reviews :opinions :reactions

:Happy Magic Watercube Olympic park, Beijing Legacy has become a key issue in planning a successful Olympics. Much has been made of London’s post-Games strategy to turn its Olympic stadium into the new home of a local football club, and to transform the Olympic Village into hundreds of affordable homes after this summer. It seems that important lessons have been learned since the 2004 Athens Olympics, where many venues and buildings were underused and subsequently left to deteriorate for years after the city’s hosting. For a while, Beijing’s world-famous National Stadium, or ‘Bird’s Nest’, was beset by similar problems of underuse, but is now becoming profitable as a tourist and entertainment attraction, hosting events such as the China Cup this July, and the athletics world championships in 2015. Meanwhile, the National Aquatics Center, or ‘Water Cube’, underwent a ¥200m (US$30m) refurbishment in 2010 to become the Happy Magic Watercube – an ‘under’ water park reimagining by Toronto-based designers Forrec. As well as keeping all the park’s slides and towers within the distinctive ‘bubble-like’ building envelope, Forrec’s team completed the transformation within just 14 months, and were later presented with an innovation award by the World Waterpark Association.

Intelligence//

Opinion

the games is no substitute for economic policy Simon Rubinsohn RICS Chief Economist

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Philippines // Luxury heights Overseas property investment in the Philippines residential market remains strong despite rising prices, according to CBRE Philippines. Affordably priced middle-income residential developments have become increasingly popular, while sales of luxury condominiums have also remained robust. ‘Despite

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Nevertheless, the evidence from past Olympic Games tells a fairly consistent story. Typically, economic growth accelerates in the run-up to the start of the event, moderates during the spectacle itself, then falls sharply over the subsequent couple of quarters. Put another way, London 2012 will distort the pattern of growth during the course of this year, but it is doubtful whether the GDP figures will be materially higher as a result.

The extent to which the population in the five London Olympic boroughs – Hackney, Tower Hamlets, Greenwich, Newham and Waltham Forest – are seeing the benefits of developments ahead of the Games’ arrival is more than a little questionable. The proportion of Londoners resident in these local authority areas who are unemployed and claiming benefits has gone up by around two-and-a-half percentage points since the tail-end of 2007, compared with a London-wide average of two percentage points.

None of this should detract from viewing London 2012 as a hugely prestigious and entertaining event. Indeed, I am thanking my good fortune in securing tickets for an athletics session in the main stadium. But, critically, the Games is no substitute for economic policy. If a‘Keynesian boost’ is desired, so be it, but it would be misguided to believe that this is what this summer’s party will deliver.

their prices, there are always buyers of luxury condominiums because there are those who can’t buy a property in Forbes Park and Bel Air,’ said Jose Luis Matti, executive director of CBRE Philippines Asset Services. ‘For people who have the money, the next best thing is to buy a luxury condo.’

Dubai // Invest here

The Dubai Land and Property Department is drawing up a real estate ‘investment map’ to help investors in the emirate. The map will include a package of special investment opportunities and a list of projects with certain specifications such as the quality of infrastructure, transport links and reputation,

flying the flag Will London 2012 deliver the economic and social returns for the UK that have been predicted?

according to the centre for managing and encouraging property investment. ‘This map will help foreign and local investors who do not have sufficient information to manage their assets in a way that will ensure an added value for them and for the market,’ said Majida Rashid, the centre’s director.

Image London 2012

t was Harold Wilson who famously remarked that England only wins the World Cup when Labour is in power. Whether David Cameron will be able to make any grandiose claims about Olympic success and Conservative/coalition governments, only time will tell.

There is certainly a degree of optimism that the 47 medals and resulting fourth place at the Beijing Games should be matched, if not surpassed, at London 2012. This, alongside the celebrations to mark the Queen’s Diamond Jubilee in June, will ensure that something of a feel-good factor is in evidence at least through parts of the year.

However, it is questionable whether the Olympics should be seen as ‘a massive Keynesian boost to the economy’, as the culture secretary Jeremy Hunt suggests. To the extent that there is any validity in this claim, it has arguably already taken place, with the construction of the key facilities close to completion (at the time of writing). Moreover, while the Olympic Development Authority’s building budget of just over £7bn may sound substantial, spent over a five-year period it equates to an annual outlay of around £1.4bn, which adds just over 1% to national construction output.

Infrastructure spend is, of course, not the only economic benefit derived from hosting the Games. An influx of tourists is widely anticipated, and consumer confidence may receive a lift if that feel-good factor does indeed materialise. Also, the physical landscape of East London has clearly been transformed, with a spectacular new waterside park, a new village of 2,800 homes, an improved local rail network, 100 acres of development land, and some of the best shopping and leisure facilities in London.

:One big question How is your local commercial property market performing?

China

Social innovation Zaha Hadid Architects’ first permanent building in Hong Kong, the Innovation Tower at the Hong Kong Polytechnic University, is due to complete later this year. To be built by Ove Arup and Partners at an estimated cost of HK$520m (£42m), the tower will primarily be a base for the Jockey Club Design Institute for Social Innovation, funded by the Hong Kong Jockey Club Charities Trust. The design institute aims to support students studying social issues in and around Hong Kong, addressing themes such as service design and environment sustainability.

Hong Kong The office leasing market shrunk rapidly in the last quarter of 2011. But the property holding cost is still at historical low with the low borrowing rate and weak Hong Kong currency.

Vincent Kiu-cho Cheung MRICS, Cushman & Wakefield

US$5.5bn

The amount (£3.5bn) of secondary market real estate opportunities transacted globally in 2011 – an increase of 55% compared to 2010 (JLL)

China

High performance The waterfront of Wujiang in the Jiangsu province of South East China will soon be home to a 358m-tall ‘high-performance’ tower, after architecture firm Skidmore, Owings and Merrill (SOM) won a competition to design the Greenland Group Suzhou Center. Situated along Lake Taihu, the 75-storey mixed-use skyscraper will feature offices, apartments, a hotel and retail space across a 37,000m2 site. The tower will use energy recovery systems and feature an on-site energy centre, while cooler outside air at higher levels will be used for natural ventilation of the atrium.

632m

The height of the Shanghai Tower, China’s tallest building. The planned height of the Eco Tower Wuhan Center (606m) may soon be changed to surpass it

Beijing As the Chinese governments have been imposing stringent control on acquiring residential properties, real estate investment has shifted to the office and retail sector.

Alfonso Hin Ming Chu FRICS, Synergis Management Services

Bangkok Demand for office space entered into a recovery phase in late 2011. It’s expected that the gradual decline in rental rates that we’ve witnessed will slow, or even cease, over the coming months.

Marcus Burtenshaw MRICS, Knight Frank Thailand

Singapore There is still a lot of capital to be invested in the financial and business services sector, but the fear factor is high and most are adopting a wait-and-see attitude until the economy becomes clearer.

Ong Choon Fah MRICS, DTZ

Hong Kong Occupier demand in the corporate sector has weakened due to global events and the slowdown in China.

Investors are cashed up and ready to buy, but are waiting for more advantageous pricing.

David Faulkner FRICS, Colliers International Source: RICS Commercial Property Survey Q4 2011

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209 5

Intelligence// Insight

the commercial benefits of bim can’t be ignored David Bucknall FRICS Chairman, Rider Levett Bucknall

T

he RICS BIM Conference on 9 February was a great success, with the 230-strong audience receiving an integrated view of BIM’s potential influence on the industry going forward. This started with a national and global overview from Paul Morrell OBE FRICS, the government’s chief construction adviser, and moved smoothly through the gears to give an outline of the changes in practice and behaviour necessary to enable the significant benefits of BIM – in other words, built assets delivered with significantly better whole-life value.

From then it moved on to discuss in detail how chartered quantity surveying practitioners can add value and benefit commercially through the application of BIM. The discussion finished with a major private sector customer outlining a strong commitment to BIM, which enabled them to gain significant commercial competitive advantage.

The large audience participated throughout the day and all appeared to be very positive. However, a‘show of hands’ straw poll at the end indicated that fewer than 5% were currently involved with BIM, and that only about 15-20% would be likely to take it up in the next 12 months. This represents a massive opportunity missed, and the QS & Construction Professional Group Board will be banging as many drums possible to ensure RICS is seen to be strongly encouraging everyone to embrace and deliver the benefits, which were so blindingly obvious at the conference.

If successful, this should enable chartered quantity surveyors to be more commercially sustainable, due to the tangible beneficial outcomes they can bring to their customers and their customers’ businesses.

Some key themes and issues emerged from the day: BIM will be mandated by government, simply because it sees it as a key component of its drive for ‘more for less for the whole life of public assets’ Wholesale adoption should enable the industry to achieve the seemingly impossible task of lowering output costs and improving sustainable margins – simply by improving process and reducing waste and rework Brendan Patchell FRICS indicated the close beneficial relationship between the New Rules of Measurement and BIM – RICS’ contribution to the seamless delivery of projects through design, construction and operation.

In the late 1980s, Eastman Kodak turned down digital cameras because they didn’t sell enough of its film. Let us learn from this and adopt BIM as the way forward. Quantity surveyors and project managers must, however, brush up their ‘soft’ leadership and communication skills to be leading deliverers of the output benefits BIM can offer.

adding up At the conference, Simon Rawlinson FRICS of EC Harris indicated solid evidence of BIM-related projects that reduced output costs by 10%

Global

Energy and power projects could change the direction of construction in 2012, according to KPMG’s annual Global Construction Survey, with 41% of industry leaders expecting the sector to offer the biggest opportunities for revenue growth in the next 12 months. ‘The demand for firms and individuals with energy -sector-specific skills will rise as power projects proliferate,’ said Richard Threlfall, UK head of the infrastructure, building and construction practice.

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Top 10

Most expensive retail locations € per square metre 1. 5th Avenue, New York 16,704 2. Causeway Bay, Hong Kong 14,426 3. Central, Hong Kong 12,022 4. Tsim Sha Tsui, Hong Kong 10,224 5. East 57th Street, New York 8,909 6. Ginza, Tokyo 7,750 7. Pit Street Mall, Sydney 7,384 8. Avenue de Champs Elysées, Paris 7,364 9. Omotesando, Tokyo 7,130 10. New Bond Street, London 6,901 Source: Cushman & Wakefield’s Main Streets Across the World 2011

Images Corbis; iStock; CUBE

energy boost

China

Lucky coin Construction is underway on a waterside scheme on the Pearl River in Guangzhou, which takes inspiration from Chinese jade bi discs. Designed by Italian architect Joseph di Pasquale for the Guangdong Plastics Exchange, the 33-storey commercial facility’s golden coinshaped design, situated next to a river, is supposed to signify luck in Cantonese culture. The GDPE Landmark Building is expected to complete by the end of the year, and reach a height of 138m with a 47m-diameter hole in its centre.

1m ft2

(RICS Global Real Estate Weekly) (RICS Global Real Estate Weekly)

Hong Kong Property market activity is set to decline over the coming months Japan The total value of construction orders held up well in December, rising 18%

Rising

Falling

The amount of space (92,900m ) Emaar Properties will add to The Dubai Mall this year – already the world’s largest mall

Singapore

Capital idea Construction has begun on CapitaGreen, a 40-storey office tower on the site of the former Market Street car park, in a joint development by CapitaLand, CapitaCommercial Trust and Mitsubishi Estate Asia. The S$1.4bn (£703m) building, which will include 65,000m2 of leasable space, will feature a number of measures to reduce energy, such as a façade made from high-performance double-glazing to reduce solar heat gain. Meanwhile, a ‘cool void’ in the centre of the building will draw in fresh air from the rooftop. The tower is expected to be complete in late 2014.

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05.12 // MODUS ASIA

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Shaping Public Policies in hong kong’s new cbd Kowloon East

10,374

Sales of mass-market homes in Singapore’s outside central region hit a record high in 2011, selling 65% of the total number of new private homes

David Faulkner FRICS Colliers International

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ast year, an RICS report discovered that the availability of quality work space in Hong Kong has reached a critically inadequate level, making the prime CBD the most expensive office market in the world, surpassing New York, London and Tokyo. In response, the Hong Kong government has formed an initiative to expedite the transformation of Kowloon East – comprising the new Kai Tak development area, Kwun Tong and Kowloon Bay – into an attractive, alternative CBD. It’s hoped the development will provide around 4m m2 of new floor space.

Working with the newly formed Pre-Kowloon East Development Office (KEDO) under the HKSAR’s Development Bureau, RICS Hong Kong has formed a special task force to produce a comprehensive policy report on a number of key issues for Kowloon East, such as the vision for a new CBD; connectivity; the redevelopment of multititled industrial buildings; the use of open space; street level attractiveness; and the institutional governance of the district. To ensure success, we feel it will be important to

take a holistic view, so that the components fit together and the area can be developed in a logical sequence. A big challenge for the government will be to ensure the brownfield zones in Kwun Tong and Kowloon Bay can be redeveloped in a way that fits into an overall urban plan for this new CBD. Connectivity is everything to a new CBD. Developers, landlords and tenants need to know exactly how this new area will be connected to the rest of Hong Kong. The proposed monorail is a good start, but there needs to be a greater infrastructural commitment from the government, as well as some interim measures. In addition, from the feedback collected from a member survey conducted by RICS Hong Kong, we noted that one of the ways to address the connectivity issue is to plan for a mixed-used community where people will be able to live and work within Kowloon East, therefore lowering the need for road traffic in and out of the area.

David Faulkner FRICS is Chairman of the RICS Hong Kong Energizing Kowloon East Task Force.

China

Green partners Foundations are being excavated at the Sino-German Eco-Park, in Qingdao, in a joint project between China and Germany to develop a green energy technology park. Due for completion around 2020, the park will become an exemplary zone for European-Asian cooperation in high-end renewable energy, energy reduction and environmental protection industries. Supported by the Chinese and German governments, it will be constructed with know-how and technologies from companies including Siemens (Germany), Bayer (Germany), and the General Technology Group Holdings (China).

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Asia

High rise High-end property prices are falling in Shanghai and Hong Kong but rising in Jakarta and Bangkok, according to the Asia Pacific Residential index from Jones Lang LaSalle (JLL), which tracks the luxury markets of eight cities. ‘We expect a multispeed market in 2012,’ said Jane Murray, from JLL. ‘Prices in Hong Kong and Singapore are expected to decline due to projected rental correction, tighter credit and government measures. That said, low holding costs will limit the extent of price correction.’

news bites Mega projects

Architecture firm Benoy has completed two new schemes in Taiwan and Thailand. Megacity, a 13-storey retail scheme covering 60,000m2 has become the largest department store in New Taipei, while the Central Plaza Rama IX, developed

by Central Pattana Group, provides 80,000m2 of retail space in Bangkok.

Mixed fortunes

Rental growth in most major Asia Pacific office markets slowed in the final three months of 2011, according to Jones Lang LaSalle’s Q4 Asia Pacific Office Index. Of the 27 featured office markets, only 14 saw an increase in net effective rents, while for the remainder, rents stabilised or declined.

Second chance

Shanghai has eased restrictions on home purchase to allow a wider range of buyers to aquire a second property. Residence permit holders who have lived in the city for at least three years can now buy a second home. Previously, the law limited the second home option to locals or those born in the city.

Building boom

Christchurch and Auckland are expected to lead a boom in New Zealand’s building sector over the next year, according to forecasts from Australian bank Westpac. The country’s construction industry has benefited from strong performance over the past six months, with the majority of work sourced in the healthcare, retail and agriculture sectors.

Images © gmp Architekten von Gerkan, Marg und Partner

Opinion

04.12 // MODUS

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the London games has been almost a decade in the planning – with surveyors involved at every stage, finds stuart watson Illustration by Ciara Phelan

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London 2012//

T

he opening ceremony on 27 July will mark the beginning of the London 2012 Olympics. Over 17 days, 8.8m ticketholders and a global audience of billions will watch 10,500 athletes compete in 26 sports in and around the capital. The Games themselves are only the tip of the iceberg, however. Since London was selected as the host city by the International Olympic Committee (IOC) on 6 July 2005, thousands of people have been involved in planning, designing and constructing the 34 competition venues on the Olympic Park and elsewhere, as well as the Olympic Village and other related infrastructure. All the indications are that their efforts will bring the project to fruition on time and well within its £9.298bn budget, with the latest anticipated final cost for delivery standing at £6.856bn.

Chartered surveyors have played a vital role at every stage of that process. Many of them work at the three public bodies involved in delivering the Games: the Olympic Delivery Authority (ODA), developer of the Olympic Park in London and a number of new venues outside the capital; the London Organising Committee of the Olympic Games (LOCOG), which will install much of the temporary infrastructure required and run the event; and the Olympic Park Legacy Company (OPLC),

which is charged with transforming the park and its surroundings into a new and thriving district once the Games are over. Many more have worked with the contractors and consultants employed by those bodies.

‘The surveyors who have worked on the Olympics cover every discipline in the profession,’ says Alison Nimmo FRICS, former director of design and regeneration at the ODA and now chief executive of the Crown Estate. ‘The story of their involvement reaches across the whole project from the beginning to the end; from the bid, through the delivery, to the legacy.’

Make a winning bid

In 2001, the London Development Agency (LDA) received a commission from the then mayor Ken Livingstone: find a potential site for the Olympic Games in London. ‘We had a steer from him that regeneration in East London would be his preferred option,’ says Gareth Blacker MRICS, who was then development director of the LDA. ‘Our consultants, CBRE, did a site search and

came up with Stratford and the Lower Lea Valley. It was seen as a win-win situation whether we got the Games or not. We started picking out acquisitions that would be key sites for regeneration in any case.’

Over the following two years, government enthusiasm for the London candidacy began to grow. In April 2003, prime minister Tony Blair indicated that a bid would have his backing, and London put together a pre-qualification document for the IOC. Barry Winterton MRICS, projects director at Franklin + Andrews, was one of the team charged with working out how much the venues would cost. ‘There was a finite budget that couldn’t be exceeded,’ he says. ‘The number we had in our minds was £2.4bn.

It was the number that the government said: “If it’s less than that, we should bid.”’

As a result, London’s proposals included many temporary venues that would reduce costs, as well as the risk of creating facilities that would be under-utilised after the Games. The London bid would be considered in the light of its predecessors as Olympic hosts, Athens and Sydney, both of which were left with costly venues that were neglected after the event. Legacy would be a key element in the bid’s success.

‘The IOC wanted 2012 to be a green Games,’ says LOCOG director of venues James Bulley MRICS, who was part of the >>

bid team. ‘Their reputation would have been damaged if there were buildings left behind not being used. We were only building permanent venues where we had a solid business case for their use after the Games.’

Bulley and Nimmo, who was also part of the bid team, were in Singapore when IOC president Jacques Rogge announced that the Games of the XXXth Olympiad would go to London. ‘The day of the decision was the longest day of our lives,’ recalls Nimmo.

‘It came down to us and Paris and it was too close to call. They went first and made a beautiful presentation, but they left the goal open for our pitch, which was very brave and very emotional. It was a life-changing moment when we won. The next morning I woke up thinking, “Did that really happen?”

Then we had to get on and get it delivered, which felt like an overwhelming task.’

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Plan, plan, plan

For Londoners, the jubilation of winning the bid did not last long. The following day, four suicide bombers blew themselves up on the capital’s transport network, killing

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52 people. ‘Halfway home we realised the bombs had gone off,’ Nimmo remembers.

‘It gave us a very tough start. It was hard to get people to think beyond the next day and start planning.’

The outline planning application for the Olympic Park had already been approved before London knew that its bid had been successful. Niall McNevin MRICS, director of planning and sustainability for the OPLC, was part of the team at the LDA involved in drawing it up and persuading the four boroughs involved – Waltham Forest, Hackney, Tower Hamlets and Newham – to approve it, which they did at a special summit of all four council planning committees in 2004. ‘The IOC seeks certainty of delivery, so for the bid team to have a technical planning permission endorsed by the boroughs and the mayor was very important,’ explains McNevin.

The London Olympic Games and Paralympic Games Act 2006 set up the ODA, which took over development control powers for the Olympic Park. A more detailed masterplan was prepared, which aimed to strengthen the legacy aspects of the development and integrate it more effectively with the neighbouring privately controlled Stratford City development.

The detailed framework was approved in summer 2007. That was far from the end of the planning story, however. A host of detailed applications still had to be prepared and approved for the many venues and structures, both permanent and temporary, on the Olympic Park and elsewhere.

Although the ODA was both developer and planning authority, that did not lessen the level of scrutiny, according to Roger Hepher FRICS, head of planning and regeneration at Savills, which worked as a consultant on the reserve matters application for the Olympic Stadium.

‘They were conscious the eyes of the world were upon them, so they put us through the mill more than the most vigorous planning authority,’ he says.

Erin McDonald, now a graduate surveyor at CBRE, moved to London in 2009 to work on the ODA planning team. It was her first job after graduating from Heriot-Watt University in Edinburgh, and her first experience of London. She was involved in preparing applications for the post-Games transformation of the Olympic Park.

‘Everyone at a senior level was handpicked from the best in the industry. I learnt a lot from them,’ she says. ‘From the beginning I was able to work on an application by myself, attend design meetings and have an input. Even though it was a public company, it felt like a private company.’

London 2012//

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Secure the site

Negotiations to secure the site for the 500-acre Olympic Park in Stratford were already under way before the summer of 2005. Blacker and his land team at the LDA were faced with a tough task: the site accommodated 198 businesses, 435 residents and 35 traveller families. Two compulsory purchase orders (CPOs) were prepared, one for the land and the other for the power cables carried on the site’s 52 electricity pylons, which would need to be buried underground.

‘It became clear July 2007 would be a critical date. We had two years. It was an incredibly difficult timeline,’ says Blacker.

The LDA went to work negotiating with businesses. Rosanna Lawes MRICS, who worked alongside Blacker and is now director of development at the OPLC, remembers, ‘As an economic development agency we were keen to protect all the businesses, but also to secure the land.

We had quite a conflicting challenge.’

Some of the businesses on the site resisted strongly. Fish smokery H Forman & Son ran a particularly vociferous press campaign against relocation before eventually agreeing to move to a new address overlooking the park. The process took place at the height of the property boom. Michael Eckett MRICS, head of compulsory purchase at Drivers Jonas Deloitte, was one of the team of consultants who worked with the LDA. ‘One of the main thrusts of the arguments made by surveyors acting for the claimants was the affordability of replacement premises,’

he says. The LDA provided two industrial sites in Beckton and Leyton to prevent private landlords taking advantage of businesses needing to relocate.

Meanwhile Ralph Luck FRICS, at the time regional director for London at English Partnerships and now director of property at the ODA, was in talks to take the site of the adjoining 180-acre Stratford City mixed-use development out of the scope of the CPO while securing part of the land to build the Olympic Village. ‘In the second week of November 2005 we negotiated all week [with landowner London and Continental Railways and the shareholders of its development partner, Stratford City Development Ltd], including through two nights, to get an agreement in place,’ he says. ‘It cut down cost and meant the Westfield Stratford City retail centre could be developed.’

Despite the need for 30 more planning permissions for relocations and six High Court challenges, the site was handed over to the ODA on schedule at the end of July 2007. No evictions were necessary.

04

Set your budget…

Only a year before London’s successful bid, the Athens Olympics had demonstrated how far and how fast the cost of hosting the Games could rise without tight budgetary controls. The final figure of £11bn was more than double the initial estimate and left Greece with a burden of debt that the country could ill afford. To make matters worse, Britain had a poor record of managing big publicly funded projects. The costs of the new Wembley Stadium were already escalating from the contract’s initial value of £326m towards the final bill of £708m.

The Millennium Dome and Scottish Parliament were other recent examples of high-profile budgetary meltdown.

In late 2005, the then secretary of state for culture, media and sport, Tessa Jowell, launched a review to find out what the real cost of London 2012 would be. Jon Coxeter-Smith MRICS, then a partner at Davis Langdon and now a director at consultant Sagacity MCS, worked on the report with accountants KPMG. It paved the way for the baseline budget prepared in 2007.

‘There was a background determination that this wasn’t going to go the way of other public projects,’ he says. ‘The budget had to >>

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be rigorous enough to withstand scrutiny and robust enough to withstand change.’

It was clear that the hitherto widely circulated figure of £2.375bn was going to be only a fraction of the final cost. It excluded £1bn of government money for infrastructure in Stratford, as well as an anticipated private sector investment of £700m. Neither did it include sums for contingency or VAT. The scope, schedule and risks of each project were carefully assessed. By the time ministers agreed the original baseline budget, known as the ‘Yellow Book’, in November 2007, the figure had grown to £7.095bn, including project budgets, project and programme contingency funding, and VAT. A further £1bn of government contingency, plus funding for security and elite sports training, made up the rest of the £9.298bn overall cost.

05

…and spend it wisely

The budget was designed to be sufficient to allow the ODA to meet its liabilities in the available time. However, it was clear that there would be a significant level of change during the construction period, so rigorous management would be required.

In April 2007, Alan Willby FRICS, a partner at Davis Langdon, was brought on

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board as head of cost management. ‘When we selected design teams for the venues we made sure they understood the budgets they were working with,’ he says. ‘There was a big focus on value management – are there things that we don’t need to do?

And on value engineering – how do we get the best value for money? On every single venue we went through that. We looked at what could be temporary and how the legacy use would be best served, and then picked the best value for money in delivery.’

Davis Langdon was a strategic partner to the ODA’s delivery partner CLM (a consortium of construction companies Mace and Laing O’Rourke, and consultants C2HM Hill), which was selected in August 2006. Working with a partner to manage the delivery allowed the ODA to draw down construction management expertise in each area as required, rather than continually hiring and firing. It also provided a contractor of last resort should one of its major suppliers go bust.

CLM’s first task was to set up and run the procurement process. It was given a timescale of 100 days to create what Martin Rowark MRICS, then senior procurement leader for venues and now procurement director at Crossrail, refers to as the ‘sausage machine’ – a procurement method that would allow CLM to ‘turn the handle’ churning out 120 key

contracts and many smaller ones with the contractors that would carry out the work.

‘Standardisation was the key,’ says Davis Langdon partner and former CLM procurement team manager Peter Sell MRICS. ‘In the first 100 days we wrote a procurement code that said how we bought things. Then the use of electronic tools allowed us to drive the process through as fast as we could.’ CLM used e-tendering system Bravo to ensure piles of paper were avoided and that every document, plan and item of correspondence was easily accessible.

There was still the issue of whether contractors would want to bid, however.

John Mead MRICS, a director at Davis Langdon and former head of supply chain management at CLM, was asked if he thought there was enough capacity in the construction sector to handle the Olympic

‘We were only building permanent venues where we had a solid business case for their use after the Games’

London 2012// contracts: ‘I said, “Yes – but given that Wembley has just gone over budget and we are in a booming economy when there is plenty of private sector work about, is there enough appetite to work on a contaminated site with an immovable deadline?”’

Mead went out on the road explaining what the ODA wanted to buy, and to what timescales, at industry days and through contact with trade associations. The feedback gained ensured there would be no unpleasant surprises when bids were submitted.

Once the contracts were under way, a strict change control mechanism ensured they were not allowed to drift over budget. ‘Only a limited number of people can make decisions at a certain cost level,’ explains Graham Seage FRICS, senior commercial leader for venues.

‘A £10,000 issue can be sorted out on site, but a £5m one is elevated within the client’s organisation before the money is committed.

A lot of smaller changes can add up to a larger amount, so we would track those as well.’

Meanwhile, the impact of the credit crunch was being felt on the projects where private sector backing was expected. Lend Lease had been selected as developer for the Olympic Village, but securing bank funding for the project was proving difficult.‘Whenever we felt we had a deal, something else went wrong in the market,’ remembers Luck.‘By late 2008 we realised we would have to put our hands in our own pockets.’ Finding commercial backing for the International Broadcast Centre/Main

Press Centre (IBC/MPC) was also proving problematic. Both ultimately had to be paid for out of contingency funding.

Pre-selling the part of the Olympic Village earmarked for affordable housing to Triathlon Homes for £268m eased the cash flow, however. The private element of the development has been contracted to be sold to investors Delancey and Qatari Diar for £557m. Much of the rest of the additional cost was offset by savings made in other areas. Despite the economic downturn, Willby believes the ODA will deliver its facilities within a budget envelope of £7.3bn including contingency, rather than the £8.1bn originally anticipated, so that £800m is handed back to taxpayers.

06

Stay on schedule

‘A 2-4-1 formation’ is how Nimmo describes the overall timescale for London 2012: two years to plan and secure the site; four years for the big build; and one year for LOCOG to install the Games-time infrastructure known as ‘overlay’ and test it. In preparing for an Olympics, the key factor is time.

The deadline cannot be missed, and if there is a last-minute rush to completion then spending can spiral out of control.

On a huge construction programme such as the Olympic Park, one delay can swiftly lead to another if work that is necessary

before another project can start has not yet been finished. ‘We put together an integrated programme so all the contractors were linked and we could flag up any potential areas of conflict,’ says Seage. In addition, each project had a built-in time contingency in case of overruns. Site logistics were also managed carefully. Each delivery had an agreed time slot to prevent delays due to traffic congestion.

Meanwhile contractors and subcontractors were monitored to ensure they had the ability to take on more work.‘We developed a model to show if any contractor was reaching the peak of their capacity,’ Mead says.‘We could also understand if they had cash flow problems so that we were able to identify potential insolvencies. One subcontractor could fail and the whole project could miss its deadline.’

For LOCOG, the time pressures are even more acute. Head of venue development Paul May MRICS says, ‘The ODA build programme has been four years. What we have to do on some of our venues is all about preparation because we don’t have much time to get things built.’

At Horse Guards Parade, a 15,000-seat venue for beach volleyball must be built in just 36 days after the Queen’s Diamond Jubilee celebrations have concluded.

Meanwhile, the construction of five temporary venues at the ExCel arena in Docklands must be arranged around other scheduled events. >>

Stephen Jepson MRICS, a director at Drivers Jonas Deloitte, which is project managing the construction of several temporary venues including Horse Guards Parade and the equestrian venue at Greenwich Park, says that close working with event organisation companies is essential. ‘There is a very detailed schedule in place and we spend a lot of time with suppliers who are used to putting things up quickly – seating stands, cabins, stables – about how long it takes them to do their different pieces of work,’ he says.

07

Build it right

The eyes of the world are upon the hosts of an international sporting event. Such projects can provide a shop window for the excellence of a nation’s construction industry. They can also expose its embarrassing weaknesses, as India’s troubled Commonwealth Games in 2010 showed.

One of the most-praised buildings on the Olympic Park is the graceful 6,000-seat Velodrome. Dubbed ‘the Pringle’ because of its sweeping roof, in 2011 it scooped the prime minister’s Better Public Building Award and was shortlisted for the RIBA Stirling Prize for architecture. Richard Arnold MRICS, projects sponsor at the ODA, says team-working was vital to getting the Velodrome build right.

As with the other venues on the Olympic Park, the ODA selected a design team rather

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than a design. Led by Hopkins Architects, the designers first ensured the legacy plans met with the approval of the cycling groups that would use it after the Games. Contractor ISG was brought on board at an early stage to contribute construction expertise, and offered practical suggestions such as the use of a cable net roofing solution.

Both contractor and design team then worked closely together with the ODA and CLM to ensure a smooth and effective construction process. ‘CLM were our eyes and ears on site,’ says Arnold. ‘I also spent a lot of time there and we used the NEC [collaborative procurement] contract, which requires a near-independent supervisor who ensures the quality defined in the works information is achieved.’

Olympic Village developer Lend Lease set up a separate quality control team to oversee work across a scheme that delivered 2,818 homes across 30 separate projects.

Lend Lease also utilised prefabricated concrete panels for the cladding, rather than using conventional brick or render solutions. ‘We had as much off-site manufacture as possible. That improves health and safety and quality control,’ says Australian surveyor Tim Urquhart, delivery director for the village.

LOCOG’s programme to deliver temporary facilities is very different from

any other construction project, says Bulley.

‘We have enough tents to cover Hong Kong.

One of the first things we had to do was understand the nature of the event industry and back that into the construction industry.’

LOCOG is delivering around 120 facilities outside the park, from the archery venue at Lord’s Cricket Ground to logistics centres, which has brought its own set of challenges, particularly in sensitive locations. Bulley describes how LOCOG has tackled the construction of a 23,000-seat temporary equestrian arena and cross-country course at Greenwich Park. ‘To give people confidence that we are not damaging the historic park, we have done archaeological surveys and worked with groups like English Heritage,’ he says. ‘We are also building the arena on stilts so we are not damaging the surface of the park.’

Over the course of his career so far, Micah Stennett AssocRICS, who joined CLM on a school leavers’ programme in 2007, has witnessed the entire scope of the Olympic Park construction programme. He started work as a commercial assistant on the stadium and has subsequently been promoted to commercial manager on construction contracts for the Water Polo Arena, the Royal Artillery Barracks shooting venue and the Eton Manor wheelchair tennis venue for the Paralympics.

‘It would be easy for me to take for granted the projects I have been involved in, but I can

London 2012// clearly remember working on the stadium project when there was nothing there,’ he says. ‘I can compare my own progress with the progress on site. I am extremely grateful for the opportunity given to me, and to be able to make a career from it.’

08

Make it green

Lord Coe set the bar high for sustainability at the bid stage by claiming that London would host the greenest Games in history. In 2007 the sustainability strategy for London 2012 set out targets including pledges that carbon emissions for the development would be 50% lower than current building regulations would permit, and that renewable energy would provide 20% of the requirements for the Olympic Park and Olympic Village.

‘That was embedded into our contracts and the design of the venues,’ says Nimmo.

The Games brought immediate environmental improvements for Stratford.

Much of the site was contaminated, and soil was washed on-site and reused. Power lines were sunk below ground and waterways surrounding the site improved. Organisers pledged to recycle or reuse 90% of waste from the site, and 50% of construction materials were to be transported by water or rail. An energy centre with a biomass boiler that uses woodchip fuel to generate heat, and a natural-gas-powered combined cooling, heat and power plant, were constructed to serve the park and surrounding communities during and after the Games.

‘The basic sustainability point was only building what we had to,’ explains Arnold. ‘It was about looking at it in the most effective way rather than adding environmental bling.’

Nevertheless, some venues boast striking environmental features, such as the use of recycled gas pipes to form part of the steel structure of the Stadium and Velodrome, and the tubes that reflect sunlight to illuminate the Handball Arena.

Urquhart says that Lend Lease decided from an early stage to ‘future-proof’ the Olympic Village by building it to conform to level four of the Code for Sustainable Homes.

It will be the first large-scale high-rise development to do so. The scheme’s eco-friendly features include low-energy

LED light bulbs, sustainably sourced timber and 95% waste diverted from landfill. A new railway siding was constructed alongside the development to bring in concrete, saving 40,000 tonnes of CO2 that would have been generated by lorry movements.

Sustainability is also a feature of the construction of LOCOG’s temporary venues, claims David Higgins MRICS, a partner at advisors Rider Levett Bucknall. ‘One of the key things is that we hire whenever we can,’ he says. ‘We have the best part of 2m square metres of tents and the vast majority is existing stock, so it is reusable.’ In addition, LOCOG is using as little air-conditioning as possible, and will use particulate filters and biofuels for some of its portable generators.

09

Make it innovative

LOCOG will deliver most of the technology needed to support the London Olympics.

During construction, the organising committee has worked closely with the ODA’s systems and technology team to plan IT infrastructure within the venues, as well as liaising with surveyors working with the delivery partner to provide advice on its installation. The organisers adopted a ‘fitted for but not with’ strategy to ensure that if new technology requirements for the >>

Games emerge they can be accommodated without expensive changes.

Even before the design and construction process began, surveyors from the delivery teams were using innovative technology to engage potential suppliers. In a scheme backed by the Regional Development Agencies, small businesses were able to bid for Olympics-related contracts through the CompeteFor web portal. ‘It is now also used by the Greater London Authority to get their opportunities out to small and medium-sized enterprises,’ says Sell.

Technology will also be an important legacy consideration. Lawes says that the OPLC is working with Tech City to link the IBC/MPC to the East London digital business cluster, as well as with sponsors to create a ‘smart’ urban environment with super-fast broadband for the post-Games communities on and around the park.

10

Make it safe

London 2012 has the distinction of being the first modern Olympic Games in which no fatal accidents have taken place during construction – no mean feat for a process

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‘I would hope that in the future other cities will look back and say we got it right from the very beginning’ that involved 40,000 site workers overall and up to 14,500 at a time during periods of peak activity.

The achievement was made possible by a strategy that integrated health and safety considerations with every planning, design and construction operation. ‘The number one priority was health and safety,’ says Arnold. ‘We were determined that people went home safely every night. We held weekly meetings of all the principal contractors, and if they came forward with good ideas we took them on board.’

With construction almost complete, the focus is now switching to the safety and security of spectators and athletes. ‘If there is

security infrastructure going in, the LOCOG venue development team is responsible for understanding the brief, procuring the suppliers, getting permissions and putting it up safely,’ says May. ‘Our project management team for security infrastructure is almost exclusively composed of chartered surveyors.’

Higgins describes the security infrastructure as more akin to that found at an airport than a normal sporting event.‘The security project management team has had an enormous task over the past two years,’ he says.‘They pulled together the requirements from government; blast mitigation measures, vehicle barriers and so on. Then they refined the measures, designed and procured them so that contracts are now in place for work to be integrated with the other overlay packages.’

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Ensure it runs smoothly

After completion, the venues constructed by the ODA remain under the control of the delivery body’s park operations team. ‘We decided the best people to maintain the buildings are the ones who built them,’ says Malcolm Lewis MRICS, commercial manager for park operations at ODA. The agreements originally signed by the ODA with its contractors did not include maintenance services, so Lewis was charged with putting contracts in place to ensure the

London 2012// people most familiar with the buildings keep them pristine before and during the Games.

The year-long hiatus between completion and the beginning of the event brings with it a unique set of maintenance challenges. Plant must be kept in working order with ‘tick over’ maintenance so that it does not seize up from disuse. Meanwhile, the park operations team is engaged in familiarising facilities management staff from surrounding buildings with the Olympic venues so that when the Games begin there is a large enough pool of trained staff to look after them 24 hours a day.

‘When the Games start there will be a lot of things we won’t be able to repair during the day,’ says Rob Higton, FM coordination manager for the ODA, who is seeking to qualify as a chartered surveyor. ‘It will be about cordoning it off, making it safe and making sure that at night you have the right people with the right bits to fix it.’

Meanwhile LOCOG is running training programmes for contractors and volunteers while working through its schedule of 40 test events. ‘By the time we get to the Games, every foreseeable incident will have been scenario-tested,’ says Bulley.

One of the best-prepared venues will be the furthest-flung facility where a complete event will be held. The Weymouth and Portland National Sailing Academy worked with the ODA to deliver £7m of improvements to the academy’s marina facilities and was the first venue to be completed in November 2008. ‘We have run a number of large events,’ says its chief

executive John Tweed FRICS. ‘Those have given it a very good stress test before the Games as well as providing us with three years of legacy use already.’

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Leave a lasting legacy

Legacy has been at the heart of the planning and design of London 2012 since a bid was first contemplated, but LOCOG will still have a tough task to avoid the mistakes of previous Games and deliver a meaningful inheritance for the people of East London.

In 2010, the newly created legacy body revised the LDA’s original masterplan to place more emphasis on family housing.

The new scheme reduced the number of homes to be built over a 20-year period on the plots that currently house the temporary venues from 10,000 to 6,800. Developers have been shortlisted for the first of the legacy communities, Chobham Manor on the north east of the park.

Meanwhile, potential future users have also been shortlisted to take over the IBC/ MPC, which, along with Stratford City, is to be the main focus for employment provision.

Creating jobs on the site will help to drive forward the Olympic boroughs’ convergence agenda, which aims to use the Games as a

catalyst to close the socio-economic gap between the East End and the rest of London.

The OPLC, already the landowner of the Olympic Park, will be reconstituted as the London Mayoral Development Corporation in April, and will take on the ODA’s planning powers in October after the Paralympic Games are over. It will face a tough task in a still-depressed property market to encourage private developers to invest. ‘We are looking to share the risk and share the burden,’ says Lawes. ‘We will look at joint ventures with developers to de-risk the project for them.’

The legacy company’s long-term vision for the site is a place with sustainable and technologically exemplary places to live and work, as well as a popular visitor destination with top sporting venues.

That is still a long way off, but McNevin is pleased with the progress made so far and optimistic about the future. ‘I have been privileged to have this opportunity to see plans implemented and then transformed into a new piece of city,’ he says. ‘I would hope that in the future other cities will look back and say: “Gosh, those London guys got it right from the very beginning.”’ london2012.com Watch a video of some of the chartered surveyors who’ve been involved in London 2012 talking about the project at rics.org/olympics.

Profile//

Mr Au Choi-kai, JP FRICS works for the HKSAR Government in the Buildings Department and has more than 30 years’ experience in building control

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1o minutes with…

mr Au Choi-Kai, jp Director of Buildings, Hong Kong SAR Government Interview by Kit Gillet Photograph by Virgile Simon Bertrand

‘

When I was a small child I lived in public housing in Hong Kong. Whenever I looked outside my window I saw construction in progress and wondered how the building quality was being ensured. Are there people overseeing the work and the workers? At the time I didn’t know the term ‘building control’, but later I joined the Hong Kong Polytechnic to take a surveying course and became one of these people. I’ve been Director of Buildings in Hong Kong since October 2008.

There is no typical day for me. That said, I usually try to begin every morning with what we call the morning prayer: talking to the information officer, checking all the newspapers for matters involving the Buildings Department, particularly reports on criticism on our enforcement against any unauthorised building works or perceived dangerous buildings. We have to deal with those cases and any criticism about the department very quickly. Everyday I have to clear more than a hundred emails, many of which require my approval or steer immediately, as well as have scheduled and ad-hoc meetings. I am supposed to work 9-6, but 8.30-8.30 has become my standard day.

I’ve been in this profession for 38 years. When I first began my career it was a lot more on the professional surveying side, but as I have risen up, I have had to learn new skills in areas like public administration, and dealing with the media and legislative members. There is no formal training for this type of experience. The worst day of my career was 29 January 2010, when a building collapsed in Ma Tau Wai killing four people. It was the worst building disaster in Hong Kong for decades, and there was a lot of media attention. Because of misconception, the public had put the blame on the Buildings Department for not checking old buildings like this one properly. It was particularly hard on me as one of the victims was a young boy who was at home studying, and who was the same age as one of my sons at the time.

The Buildings Department is concerned with building safety in Hong Kong, both existing buildings and newly constructed ones. Typically, owners of buildings in Hong Kong don’t have a strong culture of building care. They think that the units or flats they own are only a small space for their occupation and there is a ‘big’ owner of the building, who should be responsible for its repair and overall maintenance. This has resulted in a lack of repair and maintenance of existing buildings and has created a huge workload for our department.

This situation can’t be improved solely by enforcement or legislation. We already have the power to issue orders for owners to repair their properties, but even if we use the power to carry out the works in owners’ default and charge them after – it is not a good state of affairs. >>

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Profile//

‘RICS’ global presence can help members develop new thoughts and ideas using international perspectives’ We need to properly educate people to care about their own building, and so in recent years we have enhanced our public education programmes. This is where RICS’ global presence can help members develop new thoughts and ideas using international perspectives, and with exchanging knowledge.

I favour tall buildings: they are efficient in their use of land and energy. But tall buildings are a challenge when you have to ensure fire safety and proper methods of emergency escape. Hong Kong is improving all the time regarding the planning, design and construction of buildings to ensure fire safety, but it is a gradual improvement. Nowadays people demand high-quality buildings because they have to pay so much. But they are also concerned about the environmental performance of buildings more than ever before. However, under existing legislation, our focus cannot be on that, and we have found it difficult to satisfy the public’s aspiration for green buildings. There is a real lack of high-level policy on environmental protection and sustainability, which the government needs to address.

,

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Law advice//

Focusing on

claims and record management Illustration by Dale Edwin Murray

Records! Records! Records! This typical mantra can be heard when parties to a construction contract assert their rights to, or in other words, claim, what they perceive to be their rightful contractual entitlements on time or additional payment or compensation. Dissatisfaction with the determination or rejection of the claim becomes, in the absence of any consensus or a settlement, the subject of arbitral or court proceedings.

IMPORTANCE OF RECORDS That claims are simple to originate but not always easy to substantiate is a good reason for the employer to be astute in ensuring that sufficient evidence is presented when a contractor advances a claim for time and cost. What are the records the employer should expect a contractor to keep for satisfactory demonstration of his entitlement? Most contract forms set out specific procedural requirements for contemporary records that should be maintained, and the consequences if the contractor fails to do so.

The International Federation of Consulting Engineers (FIDIC) Forms of Contract sub-clause 20.1 notes that the ‘Contractor shall keep such contemporary records as may be necessary’ if he intends to claim an extension of the time for completion and/ or any additional payment.

The records must be kept on the site or, with the approval of the engineer, at another location.

The engineer may monitor the status of recordkeeping and order the contractor to keep further contemporary records.

The contractor must make records available for inspection, and provide copies to the engineer if requested. More often than not, the failure to maintain or the lack of contemporary records can adversely affect or even extinguish the contractor’s entitlement to claim an extension of the time for completion or recover loss and expense.

The term‘contemporary records’, and what it constitutes, was considered in Attorney General for the Falkland Islands v Gordon Forbes Construction (Falklands) Limited [2003] BLR 280. Here, contemporary records are defined as ‘original or primary documents, or copies thereof, produced or prepared at or about the time giving rise to the claim, whether by or for the contractor or employer’. The court made it clear that contemporary records were not ‘witness statements produced after the time giving rise to the claim’. Thus, documents or records prepared in an

Record what happened – and how, when and where it happened – as soon as the event or circumstance arises

attempt to reconstruct the historical event, or chain of events, from memory or statements on what had happened or did not happen in the past do not constitute contemporary evidence. The emphasis is on immediate recordkeeping at, or very close to, the time the claim arose.

WHAT DOCUMENTS ARE NECESSARY? Broad and sweeping statements that the employer and/ or his consultants have attributed to the loss suffered without establishing the link between cause of the delay and effect would not sustain a claim. What is required from the contractor is the actual loss and/or actual expense – not some notional figures that bear no resemblance to the claim. The employer should be mindful of contractors taking shortcuts to link the cause (the particular breach or claim event) with the effect (cost or time incurred or loss suffered), leading to global or rolled-up claims where all causes of delay are lumped together. Claims made on a global basis have been cautiously allowed by the courts, but only where it can be shown there is an extremely complex interaction of events that made it difficult, or even impossible, to separate and prove each individual item, and where as much detail as possible was given.

Record what happened – and how, when and where it happened – as soon as the event or circumstance arises.

This ensures that an actual representation of the factual environment can be produced to counter and discredit any claim submitted without any proper contemporary documents, or wanting in evidence and substantiation.

A diligent recordkeeping and document management policy is critical, and this cannot be overemphasised.

Eugenie Lip FRICS is head of KPK Contracts Support Group and a director with KPK Quantity Surveyors. kpkqs.com

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Rio 2016//

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CARNIVAL L TIME With brazil investing billions in preparation for the 2016 RIO olympics, the construction industry is booming. Roxane McMeeken looks at how surveyors can win work

:Rio 2016 site selection The 2016 Games will take place in four areas of Rio de Janeiro. Barra da Tijuca (pictured),

a suburb to the west of the city, will contain the 1.18m m sq Olympic Park, including the Olympic Arena, Aquatics Centre and Stadium, Velodrome, Tennis Centre and the

International Broadcasting Centre/Main Press Centre.

Deodoro, a northern neighbourhood, will house the ‘X Park’, a sports complex that will combine traditional

Olympic disciplines with more modern sports, with the aim of engaging disadvantaged young people. Maracanã, another northern suburb, houses the iconic Maracanã

ondon 2012 may be almost done in construction terms, but in Brazil, where the next Games will be held, things are just hotting up.

The country’s sizzling pace of economic growth alone should be enough to attract the attention of internationally minded surveyors – now the world’s seventh-largest economy, GDP grew at an enviable 7.5% in 2010, and is expected to continue at more than 5% a year until at least 2014. But when you consider that Brazil has earmarked some £368bn to invest in logistics, energy, and social and urban infrastructure, the market starts to look even hotter. And the 2016 Games, set for the spectacular city of Rio de Janeiro, offers the best opportunity of all.

‘Here in Brazil we are very interested in what London has done – it’s seen as very successful,’ says architect Marc Duwe, whose firm Tetra Arquitetura operates in the sports and transport sectors. According to Marcia Ferrari, Country Manager for RICS Brazil, members now have an unprecedented opportunity to win work. ‘Brazil has an established construction industry, but we need foreign expertise for the Olympic building programme because arenas are not something we build every day,’ she says.

‘We need extra support to improve our transport infrastructure, and build hotels and restaurants on the grand scale required.’

Rio will spend £14.2bn on the Games and related infrastructure, according to UK Trade and Investment (UKTI), the arm of government that helps British firms work abroad. Of this, 10% is being spent on sports venues, with the rest going on transport enhancements, accommodation, sanitation and environmental remediation. The figure doesn’t include the venues and infrastructure for the 2014 World Cup – where most major contracts have been let – but does include planned works that are being brought forward because of the Games. As with London 2012, the themes of legacy and sustainability underpin the whole building programme.

Transport features heavily in the preparations. Plans include crisscrossing >>

stadium, which will host the opening and closing ceremonies, while the famous Copacabana beach will host a temporary beach volleyball stadium.

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The Maracanã stadium (above), which will host the football competitions and the opening and closing ceremonies, is currently being refurbished for the 2014 World Cup. Rio’s famous Copacabana beach (below right) will be the site of a 12,000-seat temporary stadium for beach volleyball

Rio with a new bus rapid transit network comprised of four main lines, expanding the metro system and upgrading the suburban rail network. The Rio ring road and the three main thoroughfares providing access to Olympic venues (Avenida Ayrton Senna, Avenida Abelardo Bueno and Avenida Salvador Allende) will also be improved and, in the case of the thoroughfares, extended. A programme to upgrade Brazil’s airports is already under way, and includes expanding Rio de Janeiro International Airport to provide capacity for 25m passengers a year by 2014.

The hotels sector will also be busy. Rio needs to add 9,000 rooms and upgrade many of its existing 25,000 rooms. This will be funded wholly by the private sector, with

:Brazil’s top 10 contractors Ranking | 2010 gross revenue US$ x 1,000 | % revenue from public sector work | % revenue from private sector work 1. Norberto Odebrecht | 2,649,378 | 62 | 38 2. Camargo Corrêa | 2,635,628 | 35 | 65 3. Andrade Gutierrez | 2,094,011 | 72 | 28 4. Queiroz Galvão | 2,020,292 |100 | 5. OAS | 1,307,759 | 59 | 41 6. Galvão Engenharia | 1,065,653 | 51 | 49 7. Delta Contruções | 1,056,000 | - | 8. Mendes Júnior Trading | 690,703 | 80 | 20 9. Gafisa | 614,718 | - | 10. Carioca Christiani-Nielsen | 601,585 | 50 | 50 Source: UKTI

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efforts focused on central Rio and new residential neighbourhoods Barra da Tijuca and Port of Rio. Construction of the Olympic and Paralympic Village started in December 2010, under contractor and developer Carvalho Hosken, which owns the 75-hectare site.

So how can RICS members get involved?

Jon Coxeter-Smith MRICS is a member of the RICS Olympic Programme Steering Group and former head of global sports at Aecom, which masterplanned the London 2012 site. In November 2010, he launched his own consultancy, Sagacity MCS, with the aim of helping Rio’s organisers reach international expertise. ‘Rio will need surveyors for a range of roles, including major programme management, cost consulting, project management, environmental planning, managing procurement and handling land assembly issues,’ he says. Although the surveying profession is not yet well known in Brazil, Coxeter-Smith says this should not put people off. ‘This is more about the British name for the role not being so known, but whatever you call it, procurement needs to happen, schedules need to be developed and costs need to be controlled.’

Encouragingly, the launch of RICS’ Brazil office in São Paulo last year will help raise the profession’s profile, as will the fact that Davis Langdon’s partner Aecom has won a key contract to masterplan and manage costs on the Rio Olympic Park, alongside consortium partners Wilkinson Eyre and Brazil’s DG Architecture, Expedition, IMG Sports and Pujol Barcelona Architects. Niall Aitken MRICS, a Davis Langdon director on Aecom’s Rio team, says it’s up to individual members to promote the profession, too.

‘There is a deep need for surveyors here,’ he says. Indeed, following reported delays on the World Cup venues, the argument for project management and cost control services is now particularly powerful in

:Brazil’s top 10 engineering companies Ranking | 2010 gross revenue US$ x 1,000 | Employees 1. Engevix Engenharia | 734,543 | 2,630 2. Promon Engenharia | 304,232 | 844 3. Concremat Engenharia | 266,561 | 2,976 4. Cnec Engenharia | 186,872 | 590 5. Technip Brasil | 135,620 | 1,054 6. Logos Engenharia | 125,252 | 870 7. Tecnosolo | 90,638 | 1,049 8. Minerconsult Engenharia | 89,599 | 926 9. Progen - Projetos e Gerenciamento | 88,685 | 1,600 10. Leme Engenharia | 87,400 | 821 Source: UKTI

Rio 2016// Brazil. ‘It’s incumbent on all UK firms in Brazil to explain what QS can do’, he adds.

With 2012 seen as such a construction success, experience on the London Games looks set to be in demand in Rio. Knowledge of cost-managing temporary stadiums, for example, will be valued. Paul Mitchell MRICS, executive director at Arcadis and cost manager on the 2012 Olympic Stadium, says, ‘The top 50,000 seats and part of the roof of the 2012 stadium are temporary, which means they do not have to meet all the building regulations that permanent fixtures would – less insulation is needed, for example – so this lowers costs significantly.’

With Brazil planning temporary elements, this kind of expertise will translate well.

Not everything is exportable, however.

‘The setting in Rio is very different from East London,’ says Bill Hanway, who is leading Aecom’s 2016 team.‘It’s a beautiful physical environment based around a rainforest with around 25,000 species, so there is a lot to draw on from the site. There is also the commitment and passion for sport of the population of Rio, which contrasts with the challenges in some European cities.’

Experience of sports venues outside the UK will therefore be an advantage. ‘It’s one thing having worked on the 2012 Olympics,

:Rio 2016 spending breakdown By sector (Million US$) Permanent Temporary Total Sports and facilities 1,315

360

1,675 Urban legacy and villages 10,753

140

10,893 Transport 7,833 - 7,833 Environment 1,235 - 1,235 Security 970 - 970 Total 22,107

500

22,607

% 7 48 35 5 4 100

Source: UKTI

but that’s just one unique group of venues,’ says Mitchell, whose portfolio includes stadiums in Berlin and Amsterdam. ‘If you can demonstrate a global spread, that will be a better base for exporting UK expertise.’

The two main agencies in Rio are the Autoridade Pública Olímpica, the equivalent of London’s Olympic Delivery Authority, which is tasked with overseeing the delivery of all Olympic projects (though it may have a wider role, encompassing infrastructure), and the Organizing Committee, which will deliver the event. A further body, the Olympic Board, coordinates relations between the two agencies and stakeholders.

It’s also worth getting to know Brazil’s top

‘Here in Brazil we are very interested in what London has done – it’s seen as very successful’

contractors and engineers (see panel below left). Malcolm Bairstow, partner for construction and infrastructure at Ernst & Young, says that these giant firms typically act as construction clients, awarding contracts. ‘Whether they come to perform this role for the Olympics or not, try to talk to them because they will have useful information if nothing else.’

For making initial contact, UKTI is a good place to start. The organisation’s role is to introduce British firms to foreign contacts, and it runs frequent trade missions to Brazil.

Look out for Brazilian delegations visiting London too, and firms such as CoxeterSmith’s can help. Mitchell says that teaming up with a local partner is a prerequisite for getting along in Brazil. ‘You need a local hook-up because people with a local base who understand the culture and how business works there are essential,’ he says.

‘Also, business is done in Portuguese, so unless you have the capability in-house you’ll need a partner for that too.’ Finding the right people may not be easy, warns Coxeter-Smith. ‘I have seen a lot of failed alliances in Brazil because they were formed after a quick internet search and there was a lack of common understanding,’ he says.

‘There are no short cuts – you have to do deep research on a potential partner and spend a long time understanding their approach and ethics.’

With the right partner, is there anything else surveyors should be aware of? ‘Be prepared for unexpected fees, which may be called “facilitation” or “success” fees,’ advises Bairstow. ‘These are not bribes – the Brazilian industry is too sophisticated for that – it’s more just a different way of doing business.’ He advises doing thorough due diligence on potential clients and contracts to ensure you are working with the best people. With Olympic projects you are likely to be on safe ground. ‘In every country, Olympic projects tend to show the very best practice, so a positive, can-do attitude prevails. UK construction and property firms should be really excited about Brazil.’ >>

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Insight

‘it’s a great start for rics brazil’ Neil Shah, Managing Director, RICS Americas

Wherever in the world there is growth, property and infrastructure are critical components of that growth. RICS and its members are always at the forefront in markets where development needs are significant. In all of the BRICs countries, RICS has established a base of operations to help set and enforce professional standards and raise the level of professionalism in the property space. With the World Cup and Olympics coming, the world is watching to see how Brazil develops and tackles the challenges and opportunities presented, and RICS is helping to ensure the public interest is served and the mark of the profession expands.

RICS opened its São Paulo office in November 2011, after almost a year of meeting with key firms, government and other industry players to understand the needs of the market. We established that, to be successful in Brazil, you first need to be successful in São Paulo and Rio de Janeiro, where the bulk of the commercial enterprise is done. Our focus is to build recognition by delivering training and RICS credentials to differentiate those professionals that are driving the growth in infrastructure and property. We have to learn to work within established government and industry organisations, and many of our communications have to be translated into Brazilian Portuguese.

The demand for global standards across all of RICS’ disciplines is high, but the need is for those standards and services to be localised.

We’re off to a great start with a new Country Manager and teams poised to support Brazil from the US and UK. So far, the market has been very receptive, and RICS has been welcomed as an organisation that is establishing itself for the long term. ricsamericas.org

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A SPORTING CHANCE

more opportunities abound in russia and qatar’s world cup building programmes

I

f we haven’t convinced you to board the next flight to Rio, consider the massive sports-fuelled building programmes of Russia and Qatar, which will host the 2018 and 2022 FIFA World Cups respectively.

Between now and 2016 alone, Qatar is spending £64bn to create the sports, accommodation and transport facilities it will need to host an expected 3m visitors in 2022. The tiny desert state has a fraction of what it needs – only 15,000 hotel rooms, for example – so a monumental construction effort is required. Plans include building nine stadiums and upgrading three existing ones, and spending £16bn on a rail network, £13bn on roads, £7bn on a new airport and £3.5bn on a new port. Qatar is also bidding to host the 2020 Olympics – if it wins, even more facilities will be needed, and the building programme will need to be accelerated and expanded.

No doubt London 2012 expertise will be welcome in Qatar, but another plus point for RICS members is that the surveying profession has a strong foundation here. Stewart Blair FRICS, co-director of construction consultant Blair Anderson, leads the firm’s Doha office. ‘There is a lot of international competition – for example, the Japanese are seeking a more active role – but Brits can have an edge because, unlike elsewhere in the world, there is a long understanding of surveying here,’ he says. Another bonus is that the language of business is English. The Qatar construction programme will differ significantly from London 2012 in some ways, however. For example, if the event takes place in summer, which has yet to be decided, temperatures are regularly over 40˚C, so shading routes from car parks to venues, and air-conditioning for all stadiums will be needed, which will be hugely challenging in terms of costs and sustainability.

Russia, meanwhile is arguably a less welcoming market for British surveyors – the profession is not widely recognised, the building programme is smaller since much more of the infrastructure required is in place and business is conducted in Russian. However, Russia needs at least 13 stadiums – although the host cities have yet to be confirmed – and is likely to spend around £30bn on upgrading transport. The cost and technical challenges due to the climate will also be different. A Russian stadium roof, for example, needs to be able to withstand heavy snowfall and severe freezing. Despite the challenges, however, ‘the World Cup is really putting Russia on the map as a major construction market’, says Jon Coxeter-Smith, ‘and it should be high on the list for any UK firms with aspirations to work internationally.’

Advertorial//

The 2012 edition of the RICS Red Book Following discussions with the International Valuation Standards Council, the new edition of the ‘Red Book’ includes the International Valuation Standards (IVS)

This latest version of the Red Book reflects the inclusion of IVS in full within its covers and incorporates a number of revisions to reinforce the principle that compliance with the Red Book will also ensure compliance with the IVS. In particular, the following revisions have been made: The glossary has been revised to incorporate IVS 2011 definitions.

The standards on bases of value, terms of engagement, inspection and reporting have been revised to incorporate the respective IVS requirements together with RICS specific requirements.

The standards on valuations for

specific applications, ie financial statements, secured lending and public sector, have been reinstated and now incorporate a summary of the relevant IVS. A new appendix provides detailed cross-references between the new IVS and the relevant Red Book standard.

There is new text to confirm that the revised standards apply only to valuations where the valuation date is on or after their effective date.

A new UK standard and appendix relates to the provision of market rent in connection with the calculation of affordable rent.

First published in 1980, the Red Book contains mandatory rules, best practice guidance

To order your new Red Book

RICS Valuation – Professional Standards, March 2012. Incorporating the International Valuation Standards (retail price £40) Global and UK edition – combining standards of global application with UK-specific guidance To buy a hard copy, visit ricsbooks.com/ redbook, call +44 (0) 870 333 1600 or email

and related commentary for all RICS members undertaking asset valuations. Changes to the standards are approved by the RICS Valuation Standards Board, and the book is updated accordingly on a regular basis.

David Park, Chair, RICS Valuation Standards Board: ‘Valuation standards are crucially about delivery and assurance. This latest Red Book edition ensures that effective implementation of the new IVS forms an integral

mailorder@rics.org, quoting redbook6. £120 to RICS members, £200 to non-members Format: Spiral bound with cover Item code: 19035 To access the Red Book online via isurv.com (which includes all Red Book translations) call +44 (0) 24 7686 8433,

part of RICS members’ overall service to valuation users.’

Ben Elder, RICS Global Director of Valuation: ‘Valuation standards drive improved services for our customers, ensuring a consistent approach that delivers valuations to an internationally recognised market norm, which is increasingly demanded by clients. The latest Red Book edition reinforces the convergence of thinking in the arena of IVS.’

quoting isurvredbookoffer6. Or visit isurvvaluation.com to sign up for a free seven day trial and view the benefits for yourself.

Please note: all RICS standards are available to isurv subscribers and RICS members through rics.org.

05.12 // MODUS ASIA

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top tier

five of the best cities for global commercial property investment Illustration by Ian Dutnall

One World Trade Center Already an icon in terms of history and design, the new tower will feature 240,000m2 of office space and 5,000m2 of retail space. Though build costs have risen to an estimated US$3.8bn (£2.4bn), no expense is being spared, particularly on safety and evacuation systems such as extra-wide pressurised stairs and enhanced elevators. Cushman & Wakefield is acting as exclusive leasing agent.

% growth compared to previous 12 months

150 125 100

75 50 25

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15

10

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GD P US (2008 $ ) Typ 565bn ica Offi l yie (£360 ld c b Ret es 4% s (UK n) ail 2 011 Ind 3% ) 50% ust r Rea ial The amount of global 6 l US estat % commercial real estate $63 e in Inv .8b ves investment concentrated es n tm 2.4 tmen (£40 ent 2 in 30 high-order cities. % t vo .6bn 00 9-1 Tot lum ) al o 1* e g 23. ffic row 8m e st t h** m2 ock (20 11) 150 Holborn Camden Council recently granted planning permission for the renovation of this eight-floor commercial scheme, built in 1985.

Development manager Ocubis will remodel and extend the building to create 7,500m2 of prime office space and six apartments, and is aiming for a BREEAM Excellent rating.

bn) 8) £889 1) 0 0 ( 201 P (2 bn GD 1,406 s (US ld $ US al yie c i Typ es 5% c Offi il 5.5%.15% ent a 7 tm t Re strial inves u e ) * Ind estat * l 11 8.6bn wth* a e 0 2 ro R -2 (£ g e 9 n 200 44.9b volum t $ ) US tmen 011 2 s ( e Inv 5% stock . e 165 l offic 2 a Tot m m 5 46.

bal glo e s th ing top ttract , n do r a nt Lon ing fo stme 9bn) e k £ ran gn inv .2bn ( r i a 4 e for US$1 the ye n is o h wit ted in . Lond risk, s 1 e v in 201 s a low at 3 h a to Q eived tion t ity c loca ual r e p re h-q rs. u g o sec s a hi nvest i r e o t ff o uct d pro

The inv increa es s in t tmen e in p he t in rop The year Ne erty w t demcity ha o Q3 York 2 s risk and a seen 011. n s foc avers d acti trong vity us e i n big on t ves as ges he t tor t an rad s d b ition est all loc y atio n.

New York Metro London Metro Tokyo

Paris Hong Kong Los Angeles Metro Washington DC Metro San Francisco Metro Singapore Chicago Seoul Toronto Boston Shanghai Beijing Stockholm (South Florida) Miami Melbourne Dallas Moscow

Top 20 cities for global property investment (12 months to Q3 2011)

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*excluding development sites (Cushman & Wakefield) **Q3 2011 (compared to previous 12 months) Sources: Winning in Growth Cities 2011/12 (Cushman & Wakefield); A new world of cities (Jones Lang LaSalle); Global Capital Flows (Jones Lang LaSalle); Global Investor Sentiment (Colliers International); Emerging Trends in Real Estate 2012 (Urban Land Institute); joneslanglasalle.com.hk; knightfrank.com.hk; knightfrank.fr; bis.com.au

Investment// US$400bn

) 8) 359bn 0 0 P (2 (£ GD 564bn s ld $ US al yie 1) c 201 i p Ty ce % an (Fr es 4.5 c % Offi il 4.5 % ent a 7 tm Ret strial inves u e Ind estat l bn) a Re -11* (£22 e 9 n 200 35.1b volum t $ n US tme es ) Inv th** 011 2 ( w gro % ock 1 ce st .

1 4 l offi a 2 Tot m m 1 .

26

The i n v to t a l y es e offi tmen ar-to ce t Gre real (£5b date ate est n) i 201 r Pa ate n in r 1 an ). Thi is reg the inc s re ion 32% reas pre (Q3 e s mo , over of €1 ented nth the .4b is s s o firs n, o f r e t dive en as 2010. nine rse offe Par a la ten rin is r g a and ge ma nt ba a s t i for s sec ure m e and on a a inv ttract d to L rket, est ing on me fo don nt. reig n

LHT Tower The supply of highquality commercial space in the Central area of Hong Kong is extremely limited, so the redeveloped Luk Hoi Tong tower, built on the site of a 1920s theatre, attracted a lot of interest when it opened in July last year.

Jones Lang LaSalle has been providing property management services for the 27-storey building, which features 10,800m2 of Grade A office space and 3,000m2 of retail space.

Origami building Barclays Capital has set up its HQ in the 12-floor Origami building – so-called because of its ‘folded paper’ design

by Manuelle Gautrand.

The rebuilt 4,900m2 scheme was leased by property firm Gecina, with advice from DTZ, and has met a series of France’s HQE standards by using sustainable construction products and methods.

The amount (£254bn) of direct investment into commercial real estate in 2011, a 25% increase on 2010.

The inc year-o re n ren ase in -yea ts i pr r larg n 20 ime r e 1 200 st gr 1– th etail o 7 e mo . Hon wth si st e g K nce ma xpe ong rk n i term et in sive o s the the ffic s cos of to wo e rl t t Lon , just al occ d, in a don he upa ’s W ad o ncy est f End .

ANZ Centre Located in Melbourne’s Docklands, the ANZ Centre is the largest single-tenanted commercial office building in Australia. The 130,000m2 scheme is arranged like a campus building, with a publicly accessible ground floor featuring cafés, a visitor centre and art gallery.

The addition of efficient energy, water and waste management facilities gained the building a 6 Star Green Star rating from the GBCA in 2010.

GD P US (2008 $ ) Typ 320bn ica 201 l yie (£204 1 lds ( bn) Offi ) Hon ces gK Ret 2.5 ong ail % Ind 3% u Rea strial 5 l 200 estat .2% 9-1 e inv US 1* es $ tm ent Inv 34.8b est n ( £ m gro en 22 .2 w t 34. th** volum bn) 3% e Tot al o 4.2 ffic m m2 e st ock (20 11)

1) ) 09bn) a 201 8 0 1 ali 0 P (2 (£ str GD 172bn s (Au ld $ US al yie % c 5 i 1* Typ es 6.2 9-1 0 0 c nt 2 Offi il 5% % a al 8 estme t e * R stri inv ) th* n u e Ind estat £5.8b grow e l ( Rea 9.1bn volum t $ 1) US tmen 201 s ( e k v In 4% stoc . e 120 l offic a 2 t To m m 4.1 er s und kland e pac Doc ors and in o fl of CBD ket the unt in the t mar ng in of o am on en mi lue The tructi vestm n boo ord va e s c in con . The has be h a re t a i e e ar ourn ars, w 10. e 0 lb Me few y s in 2 t n s o pa sacti n tra 05.12 // MODUS

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eastern promise With Asia’s economies going from strength to strength, consumer spending on luxury brands is booming – leading to a surge in retail development activity, says Kit Gillet

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Luxury retail//

F

or those who haven’t noticed, the world is changing, and fast. Countries in Asia once known as the factories of the world are now leading the way in newly minted high-end consumers, and luxury brands struggling in the aftermath of the global financial crisis have been quick to see the potential – and rush in and help those with money spend their cash. Cue a surge in luxury retail developments everywhere from India and Vietnam to Hong Kong and, of

course, China – the Mecca for brands on the lookout for millions of untapped consumers.

Even a decade ago this wouldn’t have seemed likely, with much of the region’s dominant powers at the time still struggling to recover from the Asian financial crisis, and countries such as China and Vietnam still finding their feet in the global consumer world.‘Twenty years ago we were limited to a small number of high-end hotel arcades with probably room for 20 small shops, each about

2,000-3,000ft sq,’ explains Sebastian Skiff, executive director of CBRE Retail Asia. Now the region boasts dozens of luxury-only malls and a strong presence from most of the leading global luxury brands.

‘Five years ago it really started to change,’ says Skiff. ‘At that time there were still only two or three international malls in cities like Beijing. Now brands are increasingly launching their seasonal fashion collections in Asia before anywhere else. This was unheard of >>

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‘We were initially worried about the global financial crisis, but sales since then have been amazing. Sales in luxury goods have tripled in the last three years’

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five years ago. For big luxury brands, half their sales are now from Asia, or at least from Asians travelling overseas.’

In fact, in 2010, sales of luxury goods in China reached US$10.7bn (£6.8bn). And that doesn’t include the small fortune spent abroad: Chinese consumers ranked first in terms of overseas consumption in 2010, with US$50bn (£32bn) worth of luxury goods purchased in Europe alone.

‘In Shanghai, luxury retail is growing at 20% a month. Where else in the world is like this?’ says Maureen Fung MRICS, general manager of leasing at Sun Hung Kai Real Estate Agency, one of the largest real estate companies in Hong Kong and the developer of the International Financial Centre (IFC) Mall in Shanghai, one of Asia’s leading luxury malls. ‘In 2006 the luxury market was still at the beginning, but since then the speed has

building boom To help realise this trend – and to stop wealthier consumers shopping abroad – luxury malls are appearing with increasing frequency across Asia. From the six-storey, diamond-like IFC Mall in Shanghai to the 300,000ft sq DFL Emporio in New Delhi, India, and Savills’ soon-to-be-opened The Crescent in Ho Cho Minh City, Vietnam, specialised malls are being set up to cater specifically to luxury brands and their deeppocketed consumers.

‘Historically, luxury brands in Asia operated out of hotel lobbies. It was an easy access point into a country for them, but it meant there was no room to expand,’ says Vivek Kaul MRICS, head of leasing and corporate marketing at real estate developer DLF. Six years ago his company felt that India was ripe for a luxury-only shopping venue and established the country’s first luxury mall, DLF Emporio. It now boasts many of the world’s leading brands – from Cartier and Armani to Versace and Tom Ford – as well as top Indian fashion labels.

‘It took us some time to get 100% occupancy,’ Kaul says. ‘When we opened three years ago, the challenge was finding the right brands; there were a lot looking but they were being cautious. We also wanted a healthy mix of high-end Indian brands as well as global brands. Top Indian designers charge thousands of dollars for dresses, and

Images Getty; Corbis

been beyond imagination. Even in Hong Kong, which has had luxury retail for a long time, it really picked up in 2009. This was mainly due to Chinese consumers coming to Hong Kong to buy luxury items. We were initially worried about the global financial crisis, but sales since then have been amazing. Sales in luxury goods have tripled in the last three years.’

Six of the 10 economies with the fastestgrowing millionaire populations are now in Asia, led by Hong Kong and Vietnam, which each saw annual growth of 33% in 2010. The Asia-Pacific region is home to approximately 3.3m US dollar millionaires, according to the 15th annual World Wealth Report by Merrill Lynch and Capgemini, an increase of roughly 10% from 2009. ‘We did a survey on global luxury retail,’ says Matthew Green, head of research in the consulting division of CBRE Middle East.‘Asia had four or five places in the top 10. In fact, Hong Kong was the top location for luxury fashion brands, with Dubai second.’

In short, Asia’s love affair with luxury retail shows no sign of waning. In fact, it is likely to pick up pace as Gucci handbags and Louis Vuitton dresses continue to become no longer unobtainable status symbols but something consumers strive towards on the everyday streets of Asian cities such as Beijing, New Delhi, Hanoi and Singapore.

Luxury retail// lots of women wear Indian couture to weddings and functions, so there is a desire for it in the retail space and it is a huge business in the country.’ DFL Emporio hit full occupancy in 2010, and Kaul says that his company is now looking at opportunities in other cities across India where high-end retailers have yet to enter prominently.

However, big luxury brands don’t want to set up shop somewhere that may quickly be forgotten by consumers, or where the building design or structure ages badly, adversely affecting brand perception.‘They are cautious about where to establish themselves because everything here is moving so fast and trends change overnight,’ explains Skiff. While a challenge for developers, this also presents a great opportunity – if they create a stylish location with the right buzz, they can become the one-stop location for many of the global luxury brands in their market.

‘Our most important decision was what to make it look like – it needed to be both modern and classic Indian and designed by top architects,’says Kaul of DFL Emporio.‘After we had created the space the biggest challenge was then convincing the brands that the healthy mix of Indian and global luxury brands will be maintained. We need to continually do this.’

Part of the overall caution for luxury brands is about entering markets with which they are unfamiliar, but a large part is due to the limited number of outlets they can have in a single market: unlike Starbucks, which can be placed on every street corner, high-end retailers are likely to have a single signature store in any one market, and perhaps a few smaller outlets.

They must therefore choose their locations wisely. This explains why rent on Hong Kong’s Canton Road is among the most expensive in

the world, and why The Dubai Mall has an entire fashion avenue filled with all of the world’s leading brands – they cluster together to guarantee that the there is no better location to buy high-end goods in the whole region. market knowledge The importance of a singular location leads many brands to choose trusted developers with a good knowledge of the local taste and market. This has so far given an advantage to those with strong regional backgrounds, such as Swire Properties, whose high-end developments in Hong Kong have given it a proven track record among many of the leading luxury brands that have made their entrance into mainland China in the past few years. The limited number of locations in which luxury brands will set up shop also means developers can’t afford to make mistakes or not keep up with trends.

‘Five years ago in China all the malls were gold-covered and traditional looking,’ says Fung. ‘Now they are all fresh and following international high-end sensibilities.’ Many developers are bringing in top architects in an attempt at differentiation, but in order to succeed every element needs to be considered.

‘When it comes down to the nuts and bolts >>

‘Big luxury brands are cautious about where to establish themselves because everything here is moving so fast and trends change overnight’ Previous page: rents in Canton Road in Hong Kong’s Central district are some of the most expensive in the world.

Far left: the Plaza 66 shopping mall in Shanghai, where retail is growing at 20% a month.

Left: Many Chinese cross over from the mainland to shop in Hong Kong, ranked the top retail destination for luxury brands by CBRE

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Luxury retail// it is very hard for shopping centres to be different,’ says Skiff. ‘Architecture is one way, so having the wow factor is important, but the right management also becomes key since luxury brands can’t afford to mess up their first entrance.’

Developers have found that even simple touches such as smartly dressed security guards can help to draw in the crowds, and the top brands with them. But it can be initially expensive to attract the big names, with one

developer explaining that each luxury brand looks for contributions from the landlords on improving the space, which can cost as much as US$2-3m per brand for the developer.

However, with experts predicting that Asia is at the beginning of a wealth creation cycle that could last 25 years and create millions of new millionaires, luxury retail developers who are able to successfully tap into this massive opportunity are potentially sitting on a gold mine. The main challenge for those

involved, however, is simply keeping up with the growth. ‘With everything moving so fast it is hard to plan even three years ahead.

Developers have to try to predict the trends,’ says Skiff.

‘We have learnt some lessons,’ adds Kaul.

‘We could have built bigger, since now we don’t have room for the luxury brands entering the market. We also want to add features like a spa or salon but there is simply no room. It is a learning curve.’

:New luxury retail developments across Asia ∑

DLF Emporio, New Delhi

Developer: DLF Size: 320,000ft sq (30,000m sq) Rent: INR900-1,000 (£11-12) per square foot per month India’s first luxury-only retail development opened in 2008, offering exclusive shopping and dining experiences to the growing high-end consumer class in New Delhi. Designed by architects Mohit Guiral and Chandu Chadha, it houses more than 70 global luxury brands and 100 top Indian designer brands centred around two dramatic atrium courtyards.

∑

International Financial Centre (IFC) Mall, Shanghai

Developer: IFC Development (Sun Hung Kai Properties, Henderson Land and Towngas) Size: 1,000,000ft sq (100,000m sq) Rent: HKD250-300 (£20-25) per square foot per month Opened in time for the Shanghai 2010 Expo, IFC Mall is located in the city’s Lujiazui financial district and offers six storeys of luxury brands and one of only a handful of Apple stores in China – a significant draw for technology-hungry Chinese.

∑

Developer: CC Leung Size: 225,000ft sq (20,000m sq) Rent: N/A Opened in 2009 to compete in the already crowded Taiwan luxury market, Bellavita offers shoppers a ‘European-style’ mall, complete with flagship stores by Bulgari and Hermès. Located next to the Taipei 101 in Taipei’s Hsinyi district, the mall will further heat up top-end retailing in an area already known for its availability of luxury brands.

∑

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The Crescent, Ho Chi Minh City

Developer: Phu My Hung Corporation Size: 485,000ft sq (45,000m sq) Rent: N/A Intended to become the social heart of the new urban area of Phu My Hung, and the first international-standard complex in the city, The Crescent is set to be the gateway for many luxury brands to expand into one of Asia’s fastest-growing economies. The development is leased and managed by Savills, which invested US$200m (£128m) in the project.

Images Corbis

BellaVita, Taipei

Asia’s largest real estate industry gathering 26 – 28 June 2012, Marina Bay Sands, Singapore Meet 600+ senior executives, including developers, investors and professional services from every sector in 1 place across 3 days!

Over 100 speakers confirmed, including:

Richard Price Chief Executive, Asia Pacific CBRE Global Investors, Hong Kong

Chistopher Heady Senior Managing Director, Real Estate The Blackstone Group, Hong Kong

Register now to secure your place.

The earlier you book the more you save

Peter Pereira Gray Managing Director, Investment Division The Wellcom Trust, United Kingdom

The 11th Annual

Register now and get the offer price on your phone Scan this QR pattern with the camera on your smartphone

A s i a

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www.reiwasia.com

Don’t have a QR reader app?

You can download one for free from the App Store.

Don’t have a smartphone?

You can also register on our website: www.reiwasia.com Quote voucher code 171662IREI.

co-located with

supported by

10 GADGETS

What do you buy the surveyor who has everything?

Mark harris puts together his technology wish list

1

Apple iPad From US$400

Taking a shiny new iPad on site is about as sensible as packing Waterford crystal in your lunch box. But invest a little more in a protective case and you’ve suddenly got a practical digital assistant.

OtterBox’s Defender features a polycarbonate shell, silicone skin and self-adhering screen protector (US$60). apple.com

2

Spheron Spherocam HDR US$50,000

High dynamic range (HDR) aims to reproduce scenes exactly as they are seen by the human eye, taking two images in quick succession and combining them into one photograph.

The Spheron goes a step further, taking a series of exposures that it blends into a spherical 360˚ image, complete with GPS tagging and time-stamp. spheron.com

3

SureFire G2X Pro US$95

When is a torch not a torch? When it’s a high-efficiency tactical illumination device. With a superb grip and a virtually indestructible polymer casing and polycarbonate window, the G2X can switch between a penetrating 200 lumens beam and a 15 lumens mode that extends run time up to 45 hours. surefire.com

4

Faro Focus 3D laser scanner US$40,000

This compact scanner captures 3D point clouds at a speed of nearly a million points per second, and with millimetre accuracy. It can measure distances, surfaces and volumes at a range of up to 120m, and has wi-fi remote control and a colour touch-screen to control its built-in digital compass and altimeter. faro.com

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5

Trimble S8 Total Station US$38,000

The Total Station brings together technologies to cope with virtually any measuring situation. Traditional prisms can be used at up to 7,000m, while its Direct Reflex system lets you shoot distant cables, bridges and elevations quickly and safely. A portable controller lets you see everything without a trip back to the tripod. trimble.com

Top buys//

6

Sensefly swinglet Cam US$12,400

This Swiss mini drone is designed for aerial mapping, carrying a 12MP camera that can be triggered at set points or remotely from a laptop. Simply shake it three times and it leaps into the air, remaining aloft for around 30 minutes on a single charge before landing gently just yards from where it took off. sensefly.com

7

Latchways R20 PRD US$TBC

When you’re working above ground, a safety harness is a legal (and sensible) essential. This personal rescue device has a simple parachute-style ripcord and a 20m spool of cable with integrated brake mechanism that lowers the wearer gently to the ground in a matter of seconds. Longer cables are coming soon, and it conforms to all the latest EN, ANSI and BS standards. latchways.com

9

8

CEL633 Advanced Sound Level Meter US$3,600

This powerful sensor package measures and records the key parameters for industrial and residential environmental noise surveys simultaneously, so you can test quickly and review the data at leisure.

It has 1GB of storage and can be set to automatically make repeating measurements. noisemeters.co.uk

Leica Disto 3D US$8,000

Think of this flexible gadget as the Swiss Army knife of surveying. Just aim the built-in laser at any visible point to record its distance, angle and inclination, or let it automatically scan an entire room. It can display measurements in real time, project your design on to any surface point for point, and shoot photos to accompany your scans. leica-geosystems.com

10

Pentax Optio WG-1 GPS camera US$270

This 14MP compact camera is dustproof, waterproof (to 10m), shockproof (for 1.5m falls), freezeproof (to -10ËšC) and crushproof (to a very specific 979 Newtons). It has a decent 5x zoom lens, shoots HD video and is particularly strong on close-ups. Better still, a built-in GPS receiver geo-tags each image with your precise location. pentaximaging.com

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Business advice//

The benefits of

flexible working Illustration by Dale Edwin Murray

Between 27 July and 12 August, nine million spectators will be travelling around London to various Olympic events, along with 30,000 athletes and officials. Transport for London (TfL) estimates that the number of journeys made during the two weeks of the Games will need to reduce by an average of 13% each day – and around 30% on busy days in certain areas – and is working with 400 businesses in transport hotspots to encourage flexible working. But such practices can offer advantages for every business, not only those based in or visiting the capital during the Games.

With the strident growth in technology over the past few years, we don’t have to go about our work as we have done in the past. Working from home some or all of the time is preferable in certain situations, if employees have childcare responsibilities, for example, or if there is limited space in the office. The term ‘flexible working’covers a range of‘not in the office from nine to five’ arrangements, including part-time working, flexitime, annual or compressed hours, and teleworking , where employees work mainly at home using information and communication tools (ICT).

Mobile working takes teleworking a step further so that employees can work from multiple sites – in the office, at home, on client premises and while travelling.

Many employees find that certain tasks can be performed better at home, where there are fewer distractions and interruptions. For others, the flexibility simply suits their lifestyle, allowing parents to take their children to school, for example, and many find working at home simply more relaxed and comfortable than working in the office.

For managers, the principal benefit of flexible working is more productive staff. BT reports that teleworkers are 15-30% more productive than office workers, as they suffer less distraction, often work through some, if not all, of their commuting time and can, within agreed limits, work the hours of the day that they are most productive.

Companies can employ teleworkers from a wider geographical area than office-based workers, or have employees located at particular locations, for example near key clients. Staff working from home can potentially be accessible outside normal working hours to provide client contact and support, and can maintain business continuity during severe weather or travel disruption. Staff members who might otherwise have to resign because of parenting or caring responsibilities, moving home or reaching

Many employees find certain tasks can be performed better at home, where there are fewer distractions

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retirement age, might also consider staying on in some capacity if they can work from home.

Another key benefit for organisations is that less office space is needed, reducing the cost of premises, heating, lighting and cooling, etc. Where staff telework part-time, hot-desking can be implemented. Companies that use teleworking also have a better understanding of the way ICT can make travel for meetings unnecessary, which encourages a reduction in business travel. This is all good news for the environment, reducing the carbon footprint of office space and business travel, as well as commuting journeys. Knowledge Ability estimates an annual saving of 1.3 tonnes of CO2 from office energy emissions alone when an individual teleworks three days a week.

Time-shifting commuting journeys is another way for businesses to reduce stress, cost and wasted time.

According to the Department for Transport, commuting travel is concentrated into the morning peak between 7am and 9am, and the evening peak between 4pm and 7pm.

For many businesses, not all employees need to be in the office during traditional office hours, and could consider commuting outside the morning and evening rush hours.

As well as making effective use of transport infrastructure capacity – and being considerably less expensive in many cases – travelling outside peak hours can be a much more pleasant experience for staff.

To help businesses adopt more flexible working practices, the Anywhere Working Consortium has launched an online portal (anywhereworking.org) offering training, guidance and case studies. The consortium, whose members include Business in the Community, Microsoft, Nokia and Vodafone, was launched in November with the aim of helping organisations drive greater productivity, reduce employee stress and lower carbon emissions.

For more information and advice on flexible working from Business in the Community, visit ways2work.bitc.org.uk.

Information :rics news :diary :benefits :resources

We suggest the government considers migrating the BPC into a set of compulsory regulations

Kenneth Kwan, Chairman, RICS Hong Kong

New rules RICS has published the New Rules of Measurement (NRM), a suite of documents that provide a standard set of rules, advice and best practice guidance understandable to all those involved in the cost management of construction projects. Although the NRM are based on UK practice, the requirements for a coordinated set of rules and underlying philosophy behind each section have worldwide application. And with the emergence of building information modelling (BIM), detailed measurement and description of building components is increasingly important. rics.org/nrm

RICS asia +852 2537 7117 General enquiries APC guidance Subscriptions Events Training Bookshop Regulation helpline +44 (0)20 7695 1670 confidential helpline +44 (0)20 7334 3867 Dispute Resolution Services +44 (0)20 7334 3806 switchboard +44 (0)20 7222 7000

05.1201.11 // MODUS // MODUS ASIA

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RICS news//

green investments

HK Property Awards

The winners of the two individual awards were: Property Person of the Year: Carrie Lam, Secretary for Development, HKSARG Young Achiever of the Year: David Chang, CBRE The winning teams of the awards were: Office Agency Team of the Year: Office Services Team, CBRE Retail Agency Team of the Year: Cushman & Wakefield Industrial Agency Team of the Year: Industrial & Logistics Services Team, CBRE Residential Agency Team of the Year: Knight Frank

Best Project Team of the Year: Mace, Rider Levett Bucknall, Simon Kwan & Associates (Hong Kong Science Park Phase 3 Development) Project Management Team of the Year: Responsive In-flat Maintenance Services by the Hong Kong Housing Authority Property Management Team of the Year: Harriman Property Management Sustainability Initiative of the Year: Facilities Management Team of Hong Kong Science and Technology Parks Corporation Best Deal of the Year: Sale of Arts Mansion

by Knight Frank For more details about the awards, visit ricsasia.org/awards.

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Illustration Oscar Bolton Green, Bernd Schifferdecker

RICS Hong Kong’s first annual Property Awards, held at the JW Marriott hotel, Hong Kong in March, was a resounding success.

RICS has launched a revolutionary prefabricated concrete panel-based mass housing concept for India, in partnership with Sam Circle Venture.

Reducing on-site construction time by 90%, the India Concept House provides scalable quality housing delivered in just four to six weeks. The modular component system can be expanded from one to four rooms at a typical cost of INR1,000-1,200 (£12-£15) per square foot.

The project was inspired by the motor industry, where vehicles were handcrafted until the introduction of assembly line production with Ford’s Model T in 1908. rics.org/india

30m m2

100m m2 Amount of overall commercial space to be built in China50’s main cities by 2020

80m m

2

Amount of retail space to be built in China50’s main cities by 2020

Amount of Grade A office space to be built in China50’s main cities by 2020

I PRESIDENT’S COLUMN

‘Promoting the achievements and high standards of the profession is exactly what RICS should be doing’ See Lian Ong FRICS RICS President

t seems like only yesterday that the International Olympic Committee announced London as the host city of the XXXth Olympiad in 2012, yet in just a few months’ time the eyes of the world will be on Stratford as the Olympic torch is lit.

I’m proud to see the involvement that our great profession has had in planning and delivering what is expected to be the most sustainable Olympics yet. This is truly a moment where we can celebrate the full breadth of talent surveying has to offer, and RICS is making considerable efforts to showcase internationally the achievements of chartered surveyors.

In December last year I was asked to host a delegation of ministers and officials from the government of Brunei at RICS HQ to outline the vital role that members have played in the delivery of major sporting events worldwide.

Also, later this year, RICS will present our profession’s achievements in this field to Brazilian ministers of state and business leaders as part of a major trade delegation in advance of Brazil hosting the 2014 World Cup and 2016 Olympics. This is timely given the launch of RICS Brazil in November last year.

I believe that promoting the achievements and high standards of the profession is exactly what RICS should be doing. Europe will continue to face considerable economic challenges, and I suspect that many may feel

uncertain about the future. The accepted norms of the old world order are breaking down, and Europeans will need to learn to coexist, and in some cases compete, with increasingly confident and outward-looking economies such as China, India and Brazil.

However, Europe has a huge amount to offer in the global market: the free market and its transparency; a rich heritage; good quality of service; professionalism; and a respect for high ethical standards. These qualities are respected the world over and, in the long term, Europe will remain a place where people will want to own property and do business. The successful companies and individuals will be those who shun complacency, look outwards and use their professional skills to seek opportunities, particularly in the emerging economies.

I believe that in the coming years we will see the growing influence of Chinese and Asian investors in Europe. And as RICS is a growing force in Asia, with total membership currently more than 21,000, RICS members in Europe will be well placed to win their business. As a symbol of this global recognition, in March I will be chairing the profession’s Governing Council meeting in Beijing for the first time. I’m proud of this profession and all it has to offer, and I hope that you will join me in celebrating our great reputation and global community.

new business valuation pathway RICS has launched its first new pathway in almost 10 years. Valuation of Businesses and Intangible Assets (also known as Business Valuation or BV) is a global pathway available

12%

Percentage of global growth China50 cities are expected to account for over the next decade

across all chartered routes to membership, developed in response to market feedback and member demand.

Business valuation refers to the act or process of determining the economic

9

value of businesses, or pieces of businesses, both public and private, including business assets, securities and certain intangibles. The information is often used for the purposes of buying or

Chinese cities are fast-tracking to maturity, including Chengdu, Chongqng and Hangzhou

selling a business, litigation, taxes, financial reporting or strategic planning.

The pathway was launched on 31 January and is now available across the globe. rics.org/businessvaluation

125m

The expected middleclass population of China50’s cities by 2015

*Highlights from Jones Lang LaSalle’s China50: Fifty Real Estate Markets that Matter.

Visit joneslanglasalle.com/ China50Cities.

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w

Advertorial//

NEW RICS videos to watch online

China’s construction industry What is the impact of economic reform on the Chinese construction industry?

RICS has published a report examining the impact of three decades of economic reform on the Chinese construction industry. The transformation in the industry has been underpinned by a shift to a market-driven system more akin to the ‘Western’ approach to achieve the government’s aim of developing a more efficient and costeffective industry. The enormity of this change presents many challenges in terms of cost engineering education, professional development and professional standards. The changes also present opportunities for cost management professionals within China and around the globe as the market is now open to international participation.

Findings include:

The government has gradually introduced competitive bidding and the use of market prices to help the industry cope with the change. A dual pricing system remains whereby contractors and cost engineers use a combination of fixed government standard norms and market rates.

The design-bid-build procurement system is the most common system used in the industry, which facilitates a traditional Western approach to pre-contract cost management.

Bills of Quantities (BQ) are widely used in the industry and required on most government projects as well as many private projects. BQs are required to be signed off by certified cost engineers.

A Standard Method of Measurement has also been developed for BQ preparation.

The consultant cost engineer is mainly used

in the pre-contract cost management stage of a project.

The cost management approach and documentation used in this stage is very similar to that used under the Western system.

RICS has made a series of recommendations based on the findings, with the most pressing need for the further development of education and training in cost management practices. The first cost engineering university course in China was introduced in 2003, whereas allied courses in many Western universities have been running for over 40–50 years. There’s considerable scope for closer alliances between Chinese and Western universities to help develop the quality and suitability of courses.

Read the rest of the recommendations at rics.org/research.

Recent additions to RICS’s video collection include a 28-minute film to celebrate the many members who have been involved in the delivery of the 2012 Olympic Games. We speak to some of the chartered surveyors who have played a major role at every stage of the project. Their combined expertise, breadth of specialist knowledge and ability to overcome seemingly insurmountable challenges have been vital to the success of the biggest construction project the UK has ever seen. There is also a video to accompany RICS’ first responsible business report, A Vision for Sustainability, which details the organisation’s holistic approach to corporate responsibility and sustainable development. In the video, Louise BrookeSmith FRICS, RICS Vice President, and Sharon Wilson, RICS Director of Human Resources and Corporate Responsibility, outline the organisation’s approach to corporate responsibility, citing examples of recent activity carried out through RICS’ Disaster Management Commission and the institution’s commitment to reduce its impact on the environment. You can also find out how a work-based qualification can boost your career, and about the RICS’ Associate qualification (AssocRICS).

Watch the full collection of RICS videos at youtube.com/ricsmediacentre.

RICS to support flat sale regulation RICS Hong Kong is supporting a new proposal by the government to regulate sales of new flats.

Over the past few years, RICS Hong Kong has been stressing the need to use saleable area and supports the measure put

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forward by the proposal. RICS further recommends that this measure should also be applied to the second-hand residential property market. This practice will offer more accurate market information to homebuyers.

David Tse FRICS, Chair of the RICS Housing Task Force, said: ‘the new measures can improve transparency of transaction details of newly launched flats and allow a unified definition to calculate the area of a unit, and

this is an important step forward.

Since homes are mostly the largest lifetime investment of the average households, we recommend that the use of saleable area be extended to the second-hand housing market.’

Shape your magazine

Membership Best Practice Checklist launched There are 33,000 estate agents in Hong Kong, involved in transactions amounting to over HK$10bn every year. Jointly launched by the Independent Commission Against Corruption, the Estate Agents Authority’s Best Practice Checklist (BPC), which incorporates RICS Real Estate & Brokerage Standards, has been set up to elevate the professionalism of estate agents, and

protect consumer interest in the real estate market. RICS would eventually like to see the principles under the BPC become mandatory industry regulations.

Global firms such as CBRE, Colliers, Cushman & Wakefield, Knight Frank, Jones Lang LaSalle, DTZ and Savills have already declared to subscribe to the BPC. For more details, visit ricsasia.org.

Governing Council in China In a historic first, RICS has held its annual Governing Council meeting in China.

More than 50 Governing Council members travelled to Beijing for the meeting, which was held 26-27 March. At its meeting,

Governing Council appointed Alan Collett as President and Michael Newey as President Elect, and elected Louise Brooke-Smith as Senior Vice President and Robert Mayhew as Vice President for the office term

Events For rics events bookings and enquiries ricsasia@rics.org // +852 2537 7117

HONG KONG RICS Hong Kong Annual Conference Building towards 2021 – Vision for Hong Kong as a World City 4 May, HK Convention and Exhibition Centre, Hong Kong RICS Hong Kong will host the conference to explore the

interaction between the commercial, residential, urban renewal and leisure/cultural environments.

Case studies from Australia, US, Hong Kong and other Asian countries will be presented and discussed. ricsasia.org/ hkconference

Modus Asia is for and about our members, and we strive to ensure that it carries content that is both relevant and engaging. To help us get this right, we’re carrying out a reader survey. This is your opportunity to tell us what you do and don’t like about the magazine, and provide your thoughts on what should be included in future issues. The survey will be available online from mid-May, and some questions will relate to this issue, so hold on to it if you’d like to take part. Look out for email with a link to the survey in May.

of 2012-2013. To coincide with the meeting, RICS organised a major conference, which was opened by RICS President See Lian Ong and RICS CEO Sean Tompkins. rics.org/governingcouncil.

SINGAPORE Real Estate Investment World Asia 2012 26-28 June, Marina Bay Sands, Singapore The region’s most established convention to showcase the strategies, personalities and companies that represent real estate investment management, development and finance. This is where institutional investors, property funds, developers and deal makers

meet to discuss innovative financing vehicles, investment structures and capital raising strategies across the risk-returns and geographic spectrums for the listed and private property investment community. 15% discount available for RICS members.

Registration and enquiry: yeelim.tan@ terrapinn.com; +65 6322 2701.

For more information, visit terrapinn.com/ conference/realestate-investmentworld-asia.

RICS Annual Asia Valuation Conference 2012 4 September, Pan Pacific Hotel, Singapore Themed ‘Valuation and investment – an assessment of partnership’, this conference will highlight the intricate relationship between valuation and investment, and provide an update on International Valuation Standards.

Prominent nternational speakers will share their experiences. ricsasia.org/asia valuationconference.

thailand RICS Bangkok Conference 6 July, Bangkok This one-day conference, which is themed ‘Vision for Thailand – Building a Sustainable Future through Standards and Infrastructure Investment’, looks at the opportunities and challenges facing investors and professionals in Thailand, with a panel discussions on helping to build the country’s sustainable future. ricsasia.org/ bangkokconference

05.1201.11 // MODUS // MODUS ASIA

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