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Design and fit-out sectors have become more integral to each other’s success

Design and fit-out sectors have become more integral to each other’s success

Business news, Construction, Developers, Fit out, Interior design, Interiors and Fit Out Marke, The Gulf

In light of an increased momentum in the region’s construction activities, design and fit-out sectors have become even more integral to each other’s success.

With construction activities on an upswing in the region, the GCC interiors and fit-out market, too, continue to grow, constituting approximately 10 to 22% of the average construction project value.

According to a report by market analyst firm, Ventures Onsite, the overall GCC interior contracting and fit-out spend across all sectors is expected to increase by 9% from US$8.09 billion in 2017 to US$8.8 billion in 2018. The biggest interior and fit-out expenditure in the building construction industry in 2017 and 2018 is likely to be in the residential sector followed by a slew of new hotel launches.

Many developers in the GCC region are looking forward to providing a facelift to their existing structures to meet changing demands and shift in culture. Owners of existing structures, either residential or commercial, are more inclined to optimise their projects and maintain their market value by refurbishing them. Economic incentives aside, in many cases, refurbishing commercial properties is also a matter of municipal compliance.

Opportunities for fit-out contractors are growing as owners launch projects to refurbish hotels in the run up to mega events such as Expo 2020. The UAE continues to lead the GCC market in interiors and fit-out spend.


Lindner

With Dubai Expo 2020 less than two years away, the emirate’s infrastructure is undergoing major expansion. In addition to a slew of new projects, which includes not only hospitality related projects, but also leisure attractions and institutional buildings, refurbishment of existing structures, and retrofitting is one of the main growth areas.

Besides the UAE, Saudi Arabia, too, is showing an upward swing in its interiors and fit-out sectors. Upcoming high profile projects in the country include the King Abdullah Financial District, Kingdom City, and Jazan Economic City. Apart from these mega projects, Saudi Arabia has also undertaken a major renovation and refurbishment programme to upgrade old public buildings incorporating sustainability and technologies.

With the commercial sector diversifying and putting heightened emphasis on workspace, hospitality and leisure, healthcare and retail, the spending in the UAE alone is expected to surpass current estimates by 2022.

According to Ventures Onsite, the interiors industry for the residential sector is valued at $3.6 billion, followed by hotels at $2.1 billion, commercial real estate at $1.1 billion, retail at $872 million, hospitals at $410 million and education at $339 million.

In an interview with Facilities Management Middle East (fmME) magazine, Mohammed Rashid Ali, director of Unicorn Electromechanical, says that the purpose of refurbishment is no different from other sectors and will always be two fold — to keep up with the latest trends and to maintain general wear-and-tear works caused by facilities’ usage.


Locavore by Interact Group

From an MEP perspective, Ali also tells fmME that while refurbishment projects are fairly straightforward, shortage of resources such as power can lead to issues. Supply chain, contractual terms and skilled manpower are also topics of concern for most design and fit-out firms in the region.

Clients tend to hold part of the payment towards the fit-out or refurbishment subcontractor until the defect liability period (DLP) runs out. Usually the figure is set at 10% of the total contract value. This fee is held against a lack of service or major operational flaws port installation.

FIT-OUT IN THE MIDDLE EAST

Speaking about the general trends in the regional fit-out market, Dimitri Papakonstantinou, managing director of Plafond fit-out firm says: “I believe the main focus will still be on residential and hospitality projects this year with some of the Expo 2020 related fit-out works only starting later in 2018 or early 2019. The market still remains very competitive. With both developers and contractors being cost conscious, value engineering remains a hot topic and a key element to winning projects. This often varies from change of material specification to more fundamental re-design”.


Dimitri Papakonstantinou, managing director, Plafond

Papakonstantinou also feels that over the years the role of fit-out firms has evolved from being the main contractors. “As main contractors and clients try to keep costs down and reduce duplication of margins, many of the trades are split into single trades with more specialised areas such as lobbies, restaurants and spas, which are being tendered as complete interior design fit-out projects being undertaken by people who have a complete understanding of the fit-out cycle,” he says.

While he feels that unnecessary spending of resources still remains a concern, better management of expectations between fit-out firms and interior designers can definitely expedite the process. “Combining the designers intent with practical solutions by the contractor is always the best way to be successful. If there is trust between the designer and contractor and willingness to deliver a project which meets the client’s intent, programme and budget then the rest works itself out. ” says Papakonstantinou.

Additionally, contractual and payment issues which are relevant to the complete construction market still remain to be addressed, which can differ from sector to sector.

THE SUPPLIERS’ POINT OF VIEW

Suppliers remain an important part of the design and build process. Increasingly, more fit out companies are hiring procurement managers with a thorough understanding of product specifications and the buying process.


Poco Loco by Plafond fit-out

“The full understanding of clients’ requirements and the ability to propose cost effective solutions without sacrificing performance and appearance are greatly influenced by design and build,” says Giuseppe Fiore, head of specifications and marketing, Lindner Middle East LLC, who believes that the government organisations and public sectors are those showing more scope in the MENA region. “Besides the traditionally important office and commercial spaces, there has been an increase of scope in transportation, healthcare, hospitality and retail, leisure and food and beverages projects,” he adds.

Fiore says further:  “Over the years, the tendency has moved to creating highly productive, intelligent spaces where the occupants, or users and their wellbeing have paramount importance without forgetting functionality, efficiency, sustainability and performances. For instance, at Lindner, we work with the needs of end users in mind. Using the most modern and environmentally-friendly techniques, we produce systems that are not only aesthetically excellent and easy to operate, but also have no negative effects on health. With low-emission materials without any solvents or contaminants, we provide a better indoor air quality and an enhanced overall work or leisure experience.”

Short timelines and the availability of skilled workers remain an area of concern. “One of the most reccurring issues is the coordination among sub-contractors, which frequently causes delays, and the work environment during the hottest months of the year can also pose challenges,” he says.

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