Building sustainable growth

As the industry shifts towards more sustainable building practices, Gurjit Singh, Chief Property Development Officer at Sorouh Real Estate, outlines why Abu Dhabi is taking the lead.

“In terms of delivery, our goal is to push ahead on all the developments we currently have under way”
-Gurjit Singh

Sorouh Real Estate is one of the largest real estate developers in the Middle East. Based in the heart of Abu Dhabi with a reach that stretches across the UAE and the wider Gulf region, the company currently has more than AED70 billion worth of projects under development. But as the fallout from the global credit crunch continues to be felt in the region's once booming construction industry, is the firm's growth sustainable?

Gurjit Singh, the firm's Chief Property Development Officer, certainly thinks so. Even in the face of toughening market conditions, the developer recently reported full-year growth for 2008. And while conceding that it has been impacted by the credit crunch, Singh maintains that Sorouh's long-term strategy leaves the company well placed to successfully navigate the downturn. "We have been impacted, as have all real estate developers around the world," he admits. "But Abu Dhabi has a strong high net worth economy and therefore is in a stronger position than most other markets, and we remain positive about the future outlook."

He believes that Abu Dhabi is strongly positioned to weather the current economic crisis, and that the real estate market will be one of the main beneficiaries. The source of his confidence is Plan Abu Dhabi 2030, a policy document published by the Urban Planning Council in 2007 that aims to ensure growth is sustainable and benefits all Abu Dhabi residents and businesses. The plan is designed to help Abu Dhabi respond to current and future development needs, establish a planning culture and introduce strong guiding principles for new development. It also provides a sustainable foundation for Abu Dhabi's growth, taking into account building heights, land use, density and many urban development related issues.

It's a policy that appears to be paying off. In a recent Jones Lang Lasalle study, Abu Dhabi was forecast to be the strongest performing MENA real estate market over the next two years. Through so-called 'pump priming' – government actions taken to stimulate the economy – and the implementation of various infrastructure development programs, Singh expects the population to experience steady growth over the coming decades, which will have a huge multiplier effect on the economy and create a derived demand for real estate. Add this to the strong economic fundamentals of the emirate, which has one of the highest levels of per capita GDP in the world, along with high hydrocarbon revenues and future reserves, and Singh believes the future looks bright.

"There is a virtuous circle of supply and demand factors in Abu Dhabi," he says. "Sorouh will be able to play an important role in capitalising on that relative strength because we are involved in developments that are an important strategic element of the city's framework Plan 2030 for Abu Dhabi and Al Ain, the economic Plan 2030, and the surface transport masterplan."

Singh explains how over the next 12 months, Sorouh's strategy will focus on two key areas: customers and delivery. "With our customers, we are looking at ways to help them through the current global financial situation. That means initiatives such as new financing packages on all our properties – for example, our new re-pricing initiative at Alghadeer," he says. "In terms of delivery, our goal is to push ahead on all the developments we currently have underway. The first phase of Golf Gardens is about to be handed over and we are making great progress on Sky and Sun Towers, on the Gate Towers and at Alghadeer. These have been challenging times for all real estate developers, but with these areas of focus, we are confident of our future path."

His firm's approach is symptomatic of a subtle but significant shift in industry thinking in recent years. "Property developers are no longer just constructing buildings," he explains. "They are creating places and destinations. We are involved in the creation of SHAMS Abu Dhabi as a unique destination, both as a viable extension to the Abu Dhabi central business district as well as an investment destination. Here within SHAMS Abu Dhabi, our place making is taking shape with the topping out of the Sun and Sky Towers development. We are also making place making progress with the Gate Towers, Alghadeer, Golf Gardens and Lulu Island."

And whereas companies in the Middle East previously competed to offer the highest, biggest or most luxurious developments in the world, today this focus has changed to reflect the need to develop buildings and communities that are more sustainable and offer greater long-term value. In this respect, Abu Dhabi is something of a pioneer.

"Abu Dhabi has always had a pragmatic approach to sustainable development," he says. "More and more emphasis is being placed on sustainability. Property and facility managers have to include in their skills the management of carbon footprint reduction. Abu Dhabi is taking a lead in this respect, and this is clearly illustrated in the comprehensive framework of Plan Abu Dhabi 2030. There is a clear focus on better management of its coastline, as well as the incorporation of sustainability elements into all developments. In addition, Abu Dhabi has introduced sustainability certification ratings through the Estidama principles and rating system, which not only applies to buildings but also to communities."

Estidama was launched in May 2008 as a joint collaboration between the Abu Dhabi Urban Planning Council, The Environmental Agency, Abu Dhabi Municipality and Masdar. The word means 'sustainability' in Arabic; however, the primary objective of the program is to ensure sustainable design, operation and maintenance of all types of buildings and communities in the emirate. The first program of its kind that is tailored to the region, Estidama aims to promote a new 'sustainability at large' mindset among the government, developers, operators and individuals.

"Sustainability has deep foundations in place management and sound economics," says Singh. "The initial cost of sustainability is almost always perceived as a burden. But of the cost is assessed as part of a long-term lifecycle cost over the entire life of a development, then the benefits of sustainability have a positive payback in energy conservation and lowering of operational costs."  

As such, Sorouh is keen to integrate concepts such as sustainability and greener building into its projects. "All of our developments are aligned to meet the Estidama rating system and we work closely with the Urban Planning Council to ensure our projects meet the Emirate's overall objectives," explains Singh. "Abu Dhabi leads the world in creating the right environment for sustainable development, with specific sustainability principles. Sorouh Real Estate takes its role in developing Abu Dhabi's future seriously, and follows these principles closely in its developments such as Alghadeer and Shams Abu Dhabi."

Of course, rapid urbanisation is putting pressure on built-up areas everywhere, and Singh feels that developers who follow a sustainable approach to managing urbanisation, with sound place making and place management frameworks in place, will be the long-term winners in the UAE real estate industry. "Rapid development growth causes impacts on the all aspects of the urban environment," he says. "Place-making and place-management frameworks address these needs and must be set in place at the onset of urban development management. A sustainability programme implemented early in the development process will ensure that the costs of place management operations over the lifetime of the development will be lower. This management of longer-term operational costs will go a long way in optimising the quality of a development for its inhabitants; it will become value accretive and hence will be an asset enhancement to the development and improve the balance sheet of the individual investors." 

Ensuring projects work within the context of their local environment has become a key requirement for real estate developers, and Singh is acutely sensitive to the need for close collaboration with both city planners and infrastructure developers in order to create the right synergies. "It is essential that as developers we understand fully the plans and requirements of Abu Dhabi in our place development," he concludes. "In this regard, we are guided by the framework plans for Abu Dhabi and al Ain as well as the infrastructure requirements in the Abu Dhabi surface transport masterplan. The Plan Abu Dhabi 2030 is a good guide to the coherent place-making and place management framework for Abu Dhabi, as it brings together the principles of balanced sustainable development in the creation of new urban areas within the capital."

Abu Dhabi 2030

Plan Abu Dhabi 2030 is founded on five overarching principles that guide all development efforts:

• Abu Dhabi will be a contemporary expression of an Arab city where people live and thrive in healthy and mutually beneficial proximity.
• It will continue its practice of measured growth, reflecting a sustainable economy.
• Abu Dhabi will respect and be shaped by the natural environment and its sensitive coastal and desert ecologies.
• It will manifest its role and stature as a capital city.
• Its urban fabric and community infrastructure will enhance and promote the values, social fabric and culture of the Arab community.

Sustainable development

Conceived to support the realisation of Plan Abu Dhabi 2030, Estidama is initiated under the direction of Abu Dhabi Urban Planning Council in collaboration with a number of government agencies and developers who share the vision to transform Abu Dhabi into the sustainable Arab capital. The aims of the Estidama program include:

• Reducing energy consumption
• Reducing CO2 emissions
• Reducing land consumption
• Raising the quality of the urban environment
• Reducing the government subsidies for water and energy
• Sustaining the image of Abu Dhabi

GOLF GARDENS  

Start Date: May 2006
GBA: 142,000 sqm
Completion: 2009

Golf Gardens is the first residential development in Abu Dhabi to combine golf and real estate. With its beautiful villas and townhouses overlooking Abu Dhabi golf course, this development sets a new standard for property development.

SHAMS ABU DHABI

Start Date: September 2005   
GBA: 5.1 million sqm
Completion: 2013

SHAMS Abu Dhabi on Al Reem Island will be a distinctive urban location and self-contained community. It has been designed to accommodate 45,000 residents and will be a blend of luxurious buildings and manicured green spaces.

THE GATE DISTRICT

Start Date: March 2006   
GBA: 620,000 sqm
Completion: 2012

The Gate District comprises a cluster of eight towers at the entrance to SHAMS Abu Dhabi, encompassing architecturally renowned designs for residential, office and retail space. It will include the 74-storey Sky Tower and the 65-storey Sun Tower.

ALGHADEER          

Start Date: October 2008
BUA: 2.7 m sqm
Completion Date: Late 2012

Various residential developments, offering charming villas, townhouses and apartments, will provide a cosmopolitan lifestyle that is complemented by a range of leisure facilities and amenities within each community.

SARAYA   

Start Date: December 2006
GBA: 730,000 sqm
Completion (infrastructure only): April 2009

A mixed-use, high-rise development in a prime location on the Abu Dhabi Corniche, Saraya includes residences, offices and a hotel with views across the Arabian Gulf.