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Sat 4 Jul 2009 04:00 AM

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FM enters the spotlight

Sobhi Agha tells us how companies are actively investing in facilities management solutions to enhance long-term sustainability.

FM enters the spotlight

While unprecedented global economic challenges have affected real estate and construction markets, several companies have managed to stave off extinction by harnessing all available resources that help improve competitiveness. The key to this approach is to invest in solutions and services that enhance long-term sustainability and improve operational efficiency.

In the property sector, for instance, firms are taking proactive steps to counter the effects of diminishing demand by investing in facilities management solutions and other value-added real estate services, which are now a lot more accessible because of a more competitive pricing structure.

There had been a prolonged period of diminished construction costs as a result of reduced property demand and slow construction activities. The corresponding price corrections naturally reverberated across the real estate value chain, including facilities management solutions. I believe this is a very crucial situation wherein businesses must be able to correctly asses how they should be able to take advantage of competitive pricing structures to offset the effects of slow demand.

Some companies capitalise on the low costs by optimising their construction activities. On the other hand, property owners, based on our experience, are investing more on products and services that enhance long-term sustainability such as facilities management solutions. Either way, they are making the right decision by focusing on the future. Demand gaps and fluctuating construction costs are short-term issues and the best way to take advantage of the situation is to think long-term.

I have seen a significant increase in the number of developers and building owners that are now seeking suitable facilities management solutions and other complementary real estate services. Just recently, we sealed an agreement to deliver sales, leasing and property management services to Dunes Village, a US $81.6 million (AED300 million) development in Dubai Investments Park. The growing emphasis by local authorities on green building regulations has likewise increased demand for our energy-efficient property management solutions.

It's all about consolidating your business. Different economic situations present different challenges and opportunities. In this period of economic difficulty, property management solutions serve as important consolidating measures that help developers and building owners boost business and asset value. Moreover, government-led efforts to promote green building standards have further enhanced the demand for the services that we offer. This is why business has remained upbeat, as usual, for us as our value-added real estate solutions offer companies an opportunity to focus more on their long-term business prospects and abide by green building regulations.

While costs of construction materials have previously declined by up to 30%, recent reports show that they have jumped by 15%. However, we believe that the fluctuating figures do not suggest anything concrete at the moment and may be the result of companies buying to replace stock, and not necessarily because of a sudden sharp surge in construction activities.

Things don't change overnight. The best approach is still to prepare and invest in solutions that offer the best long-term value. In this regard, there have been several companies that are now reaping the benefits of adopting facilities management services through reduced maintenance costs, streamlined operations, energy efficiency, and long-term sustainability. Surely, such an investment puts them in a very good position to weather the downturn and, more importantly, capitalise on the excellent opportunities when the real estate and construction industries finally stabilise.

Agha is the General Manager of The Specialists, a real estate solutions provider with over 20 years experience in the Gulf. He has been working in the region since 1994 in various sectors including insurance, investment, telecommunication, wireless and real estate. Agha recently completed his PhD in management in the US. He also has an MBA degree in marketing.

The opinions expressed in this column are of the author and not of the publisher.

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