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Fri 10 Dec 2010 12:00 AM

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Solving Saudi

The work may be growing in KSA, but the challenges remain.

Solving Saudi

It is common knowledge that architecture firms suffering elsewhere
in the GCC have flooded into Saudi
Arabia in the last 12 months, attracted by projects
such as the King Abdullah Financial District (KAFD) as well as the kingdom’s dire need for houses and schools.

But the kingdom remains as challenging a market for international
firms at the end of 2010 as it was a year ago. Consultants are as constrained by
the intricacies of doing business in Saudi as they are by visa policies and a lack
of contacts among the major players.

“The Saudi market has become more competitive with many Dubai architecture firms opening
branch offices as well as American companies entering the market,” explained Brenton
Mauriello, CEO of Bahrain-based firm Design Worldwide Partnership (DWP). “This has
put a downward pressure on fees and is impacting the profitability of projects.”

That said, the numbers remain attractive. Around 1.1 million
m2 of office space is currently underway in Riyadh – including the both the KAFD and the SAR
15 million expansion of the Riyadh Governorate. The former has already engaged FXFOWLE,
Henning Larsen and Foster + Partners.

Jeddah and Al Khobar too are bearing fruit, and the news last
month that Saudi Bin Laden will carry out a $7.2 billion redevelopment of the Jeddah’s
archaic airport will only bode well for more development in the city. At the same
time, the ever-growing market for tourism facilities and infrastructure in Mecca is only likely to increase
as the Saudi government moves towards its goal of doubling the number of pilgrims
traveling to the city for the Hajj.

Taking Saudi
Arabia as a whole, education too is a massive
market for international designers, and it is telling that the government committed
a substantial portion of its latest budget to improving schools and universities.
Charles Collett, Riyadh-based Saudi
Arabia director for Aedas pointed out that this
is an area where international firms can shine.

“We currently see that
education is a very significant area of investment due to the huge budget allocation
in the Saudi development plan. Over 50% of the budget is going on education and
that has to be a big area for us,” he said.

Speaking to firms looking to make their first foray into the
Saudi market, the perception seems to be that housing – and Saudi Arabia’s desperate
need for it – is another lucrative area for designers. This is particularly true
for those firms with experience of residential in the UAE.

But those firms looking to cash in on housing in the kingdom
may find it difficult to compete on price for any projects outside the high-end
luxury sector. And, as Dubai
has proven, there is only high-end luxury residential that a city can take.

Collett believes that what international firms have to offer
in Saudi Arabia
are skills that local Saudi outfits may not have – in education, infrastructure
or transport – not areas where locals will benefit from experience and a low cost.

“The Saudi firms are dominant in those areas. We would not compete
for executive architect role either for housing or mixed developments, they are
very simple and what we bring to the party is skills,” he said. “We can’t compete
at the local level. Why would anybody pay for something as straightforward as housing,
why would they pay a premium for that? That doesn’t seem sensible.”

But business aside, DWP’s Mauriello explains that it is often
the procedural, bureaucratic hassles that are the biggest challenges for doing business
in Saudi Arabia.
Securing a local partner, which is required by any non-Saudi-based firm, is one.

“It is difficult to a find local partner whose corporate culture
is similar to our own. There are many local architecture firms looking for international
partnerships to increase their competitive advantage - the difficulty is finding
the right one,” he said.

Another huge challenge, Mauriello added, was the ever-present
bureaucracy of securing visas for members of staff. “It is a continual nuisance
and can be almost impossible for our women team members,” he said.

As one of very few Western architects actually based in Saudi Arabia, Collett
has a unique perspective on the intricacies of doing business there. He says that
the importance of face time with clients cannot be understated, a fact that does
not gel well with the endless visa problems associated with working in Saudi Arabia.

“My experience is that the decision makers are in Riyadh, but one also needs
to be able to travel to Jeddah and Al Khobar regularly. You have to be willing to
travel to meet these people,” he said.

And, DWP’s Mauriello concluded, the challenges are worth the
opportunities for designers in the kingdom. “The rewards are worth it,” he said.

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