Priority Planning with Mostafa Salim
04 Sep 2017 Arabian Business
Big Project ME – Middle East Construction News meets with Mostafa Salim, Principal at United World Infrastructure to discuss the outlook for urban infrastructure development in the GCC
What is the outlook for the regional urban infrastructure development sector, in context of overall government spending and priorities?
We are seeing a more responsive and measured approach to infrastructure investment with increased efforts to decrease gaps in funding through greater governmental efficiency, increased private sector participation, and new ways of financing projects.
In this decade, GCC governments have recognized the importance of continued investment to experience continued growth. Many GCC countries are, in fact, increasing their expenditure on infrastructure development from previous years in a drive to expand their country’s economic base. The UAE will continue to host more global events, requiring heavy investment in construction and infrastructure that include large-scale development, integrating multiple infrastructure networks and real estate development.
With a shift away from oil dependence, key government priorities in development address education, health, and social welfare across the region. Balancing this investment in human capital with investment in hard infrastructures is signaling a socially sustainable plan for growth.
What are some of the challenges around the development of urban infrastructure presently? How can they be overcome?
Well, some of the key considerations include increasing demand for urban infrastructure, a broader outlook on how to finance, and a commitment to quality and sustainability.
By 2020, Gulf cities are expected to hold 85% of the region’s population, 45.1 million people, which is a 25% population increase from 2010.[1] These burgeoning populations will put existing strain on available housing, transport networks, water and power systems, among others and will necessitate upgrading existing systems and building entirely new systems.
While there is growing interest in private sector investment in long-term assets like Gulf infrastructure, there is still more work to be done to establish policy frameworks conducive to attracting private investment. Some countries, including Saudi Arabia and the UAE, have come a long way in developing public-private partnership frameworks and standards.
If countries in the GCC were merely aspiring to provide infrastructure meeting basic needs, timeliness and funding might pose a smaller challenge. However, most of the governments in the GCC are aspiring to provide world-class infrastructure which will attract multinational corporations and globally mobile talent, be a model for modern and environmentally sustainable development, and facilitate the happiness of residents, workers, and visitors. This cutting-edge development requires world-class expertise in the sector and environments conducive to innovation and the protection of intellectual property.
These challenges can be addressed through an integrated approach to development with private partners at the start of the project to create a centralized planning, funding, and management platform. This can help improve efficiency and streamline decision-making, expediting large-scale developments on-time and within budget. In our projects, we develop partnerships with governments and government-linked entities at the outset and support them in establishing an investor-friendly policy framework, including an economic free zone, one-stop-shop, and fiscal and non-fiscal incentives.
We then work collaboratively with them to design a yield-driven investment model considering both the infrastructure requirements for a development as well as the real-estate which will complement the offering. By considering the relationship real-estate and infrastructure, governments and their partners can realize the full potential of land development and provide its users greater and more convenient services and amenities. For example, the development corridor associated with a mass transit network presents opportunities for unique types of mixed-use real estate investment and development.
Dubai has recently adopted policies which encourage unsolicited project proposals to spur creativity within the private sector for solving urban challenges through infrastructure development. Public-private partnerships can attract more cutting edge technologies to development as innovation and design does not solely rest with a governmental planning department.
Given the emphasis on societal development and economic diversification, what type of infrastructure projects are being focused on by regional governments?
Transport projects, full urban developments, and event preparations, including EXPO 2020 in the UAE, will dominate infrastructure investment in the GCC over the next few years, as well as investments in social infrastructure projects like new schools, hospitals, housing, and civil defense centers.
Mobility systems appropriately constitute over 50% of the current infrastructure projects. High transport connectivity such as road, air, rail, and port, will nurture trade and industry as the region moves away from oil-based revenues. The transport networks being introduced within each GCC nation will help connect more rural/less populated communities with one another and city centers as well as improve/extend current mass transit networks to alleviate the traffic stress caused by the rapidly growing populations.
Supporting its vision for a sustainable and diversified economy and capitalizing on its airport’s status as the busiest in the world, Dubai is fashioning itself into a world hub for trade, commerce, and tourism. Its ongoing investment, not just in Maktoum Airport, but in the ancillary logistics industry and surrounding mixed-use residential community, Dubai South, demonstrate well integrated infrastructure and real-estate projects which deliver economically sustainable communities.
All too often in the infrastructure development sector, you see disparate road, airport, residential development projects which fail to meet expectations, or fully realize their potential, because they were planned in silos. The UAE government, and increasingly Saudi Arabia, has shown forward thinking in the way they’ve managed to break down these silos to promote the integration of infrastructure systems and real estate divisions to further drive economic development.
How do these projects tie in with regional government aims to introduce smart cities and solutions to their countries?
Many GCC countries have developed a long-term digital strategy which includes investment in high speed internet and greater cybersecurity mechanisms as examples of direct infrastructure development. Currently, the IT sector in most GCC countries largely comprises consultants and outposts of international suppliers. To undergo a digital transformation, the GCC will need to have home-grown innovators in the IT sector.
Dubai has attempted to accelerate these types of innovative businesses through their Government Accelerator programs which have hosted the Hyperloop as well as other smart technology entrepreneurs working to improve the lives of end-users through technologically enhanced infrastructure. Oman provides technical training and businesses services to IT SMEs to help develop an IT industry cluster.
The digital strategies in several countries have recognized that human capital will be the cornerstone to an evolving and improving digital landscape and investment in education systems will support future digital innovation. Reliable and high-quality infrastructure will also attract global talent which can transfer knowledge and skills.
In the GCC, as part of each country’s digital strategy, infrastructure assets often have a digital e-governance platform and/or built in sensors to gather data and provide real-time maintenance alerts. Saudi Arabia is targeting a healthcare platform of formal and informal providers that, one day, will be able to share information to best meet patient needs and provide remote care.
How is UWI working with local governments to achieve their infrastructure development aims?
Taking full advantage of the strategic location of the UAE, we have been mostly focused on Southeast Asia, and now Africa and India. However, the region’s growing interests and commitment to happiness and wellbeing is drawing us into this market.
On International Day of Happiness, we launched our enhanced approach to advancing happier cities through infrastructure.
Our new approach includes a multi-dimensional index which measures happiness and wellbeing, both subjective and objective, around 9 domains which will be used to assess and monitor measures of happiness and wellbeing and set objectives for future development and a framework which identifies the most relevant policies, infrastructure, and services to improve happiness and wellbeing in these areas.
While this approach will be naturally integrated into our own urban developments, we will also be providing advisory services to governments and government-linked entities to measure happiness and wellbeing in their communities and to provide recommendations which will improve urban happiness as it pertains to infrastructure outlay.
Considering the GCC’s growing interest and initiatives to support individual social and economic development, and improving happiness, we anticipate many opportunities to collaborate with local governments to help them meet their citizen’s quality of life needs through infrastructure.
What are your thoughts on the development of sustainable urban infrastructure and is it achievable in the GCC?
Like others in this sector, we see sustainability as the only path to take. Every government, private sector partner, and contractor needs to be integrating sustainable practices into their business model for development. The GCC, and particularly the UAE, have set ambitious goals for achieving three different categories of sustainability – environmental, economic, and social – through urban infrastructure development.
While not every country is setting specific targets for emission reduction, GCC countries are promoting environmental sustainability by focusing on a shift to clean energy, improving air and water quality, reducing water consumption, preserving natural resources, and promoting green growth. The UAE is currently developing the largest solar panel park in the world and has committed to achieving 75% clean energy supply by 2050. Oman has one of the world’s largest solar parks in the world as well.
Dubai has developed its own green rating system for buildings, Al Safat, made mandatory since 2014. Smart building technologies also contribute to decreased energy and water consumption. These initiatives are further supported by government funding for R&D in advancing technologies advancing greener and more environmentally sustainable living. Even the most ambitious targets and projects will be for naught if there is not an ongoing enthusiasm for greater innovation in the industry.
The region’s efforts to diversify their economies beyond sole dependence on a single sector and their high investment in developing human capital, through education and support for small business development, underscore their strategy for economic sustainability. High-quality and reliable infrastructure play an important role in attracting multinational corporations and global talent. This churn of talent and new perspectives promotes ongoing technology transfer to the region and drives job creation.
Similarly, robust healthcare networks, education systems, and community services rely on heavy investment, and adoption of best practices. The region’s continued construction of new schools and hospitals and digital systems to facilitate services for residents, workers, and visitors contribute towards long-term, and sustainable, social development.
[1] The National. UAE urban population will grow to 7.9m by 2020, says United Nations. September 16, 2013. UN Data.