Offsite construction is a win-win strategy

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Constructing units at a factory that can then be assembled at new sites could offer clients enhanced speed of construction and immediate investment returns.
Constructing units at a factory that can then be assembled at new sites could offer clients enhanced speed of construction and immediate investment returns.

A recent report reviewing last year's market trends by JLL noted that while sales prices fell in Dubai and remained stable in Abu Dhabi, there was a significant decline in the number of transactions across the overall market.

By Faizal E. Kottikollon (Industry Insight)

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Published: Tue 9 Feb 2016, 11:00 PM

Last updated: Wed 10 Feb 2016, 7:38 AM

Against a global background of declining oil prices, fears of a Chinese slowdown and the strengthening US dollar, it is no surprise that the growth of the UAE real estate sector slowed during 2015 in response to reduced government spending and a more muted economic environment.
A recent report reviewing last year's market trends by JLL noted that while sales prices fell in Dubai and remained stable in Abu Dhabi, there was a significant decline in the number of transactions across the overall market.
In both cities, just 8,000 residential units were completed in 2015, less than half the number completed in 2014. This trend is likely to continue this year as developers are obliged to factor in more subdued market conditions and tightened liquidity.
Despite this, developers can adapt to this new reality by looking at alternative ways to attract new investment from both foreign and domestic customers by offering more affordable asset options.
Rather than focusing on luxury projects, developers can look at broadening the appeal of their projects by tapping into a broader demographic; mid-level assets for a potentially wider range of clients will naturally be more attractive.
Cheaper alternatives
According to the JLL report, declining interest from overseas buyers is a result of the 'lack of supply' in the market. One solution is to diversify the range of assets offered to potential buyers in both the UAE and other countries. In particular, attracting mid-level buyers with more cost-effective alternatives could help re-energise the entire market.
Real innovation in the construction sector could also fulfil a social role in ensuring that a housing shortage is avoided and that public service, residential and commercial needs across the entire market spectrum can be met.
One of the most promising means of driving new mid-level projects is an increased use of offsite construction. Constructing units at a factory that can then be easily assembled at new sites could offer clients enhanced speed of construction, high quality units and expectations of immediate investment returns.
Through offsite construction, it is possible to manufacture entire building components such as columns, beams, hollow core slabs, wall panels, staircases, windows, doors, bathroom units and facades at one place and in a controlled setting before they are installed.
Given its assembly line and automated process, offsite construction can ensure time saving of up to 50 per cent and cost saving of up to 30 per cent. These savings come from the reduced need for preparatory work onsite, opportunities for clients to make quicker rental returns and reduced interest payments for investors.
Easing problems
Furthermore, offsite construction can ease problems related to deliveries of materials, construction of onsite storage and accommodation or impact on local traffic flows. Installing units assembled offsite also reduces noise disturbance for neighbouring residential areas and is less subject to variations in the weather due to the relative speed of the construction process.
Another advantage is the minimisation of disruption caused by sites located in congested inner city areas. Offsite construction can also help reduce wastage and disposal costs, minimise daily use of cranage to install modular units and require fewer site operatives to supervise the construction process.
KEF Holdings specialises in the fabrication and supply of graphic concrete panels that can feature customised architectural features according to the customer requirements. As these panels do not need to be clad, they can reduce the risk of fire damage.
Combined with greater scope to pre-plan the construction phase, offsite construction can help mitigate the restrictions on individual building sites. Construction sites are necessarily subject to variability in general conditions and locations, potential disruption to neighbouring residential or office buildings, or restrictions on noise and dust.
Since the construction happens in a controlled environment, away from the actual site, the air and noise pollution too is reduced to a great extent. Overall, offsite construction can have a positive impact on the urban environment.
The JLL report suggested that while the economic slowdown has hit residential sales, the rental market has 'stabilised' at worst, meaning that rents are still holding up for those investors looking to acquire property for letting.
Innovative solutions
Offsite construction can ensure that projects are completed on schedule and help to sustain the entire real estate sector through a new stream of investment. Through using innovative solutions such as modular construction, developers can help re-energise the sector, regardless of the adverse economic circumstances faced around the world.
Given the current market dynamics, the need of the hour is to drive innovation in the development of new projects that can help the UAE leadership achieve its vision of a dynamic and diverse economy that serves the needs of all the country's inhabitants.
The author is founder and chairman of KEF Holdings. Views expressed are his own and do not reflect the newspaper's policies.


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