Facilities Management Middle East - - COVER STORY - Words Nikhil Pereira Pho­tog­ra­phy Lester Apun­tar

Asteco man­ag­ing di­rec­tor John Stevens is at the helm of a large real es­tate man­age­ment com­pany that has its pulse firmly on the prop­erty and FM mar­ket in the UAE. Stevens’ firm man­ages a sig­nif­i­cant chunk of the real es­tate in the coun­try — 20,000 units to be pre­cise — out of which 70% of its port­fo­lio is res­i­den­tial, a lit­tle more than 20% is com­mer­cial and 7% to 8% is in the re­tail.

He says Asteco en­gages with a wide range of FM / main­te­nance com­pa­nies but it de­pends on the kind of prop­erty in­volved. “We man­age ‘Grade A’ build­ings to de­vel­op­ments in older more es­tab­lished ar­eas of Dubai, up to Shar­jah and the North­ern emi­rates.

“For ex­am­ple, Oceana on the Palm de­mands premium ser­vice with a premium FM op­er­a­tor on site. But, in case of a client who has a hand­ful of build­ings, they may not even have an FM com­pany on board be­cause they re­quire main­te­nance to be done on an ad­hoc ba­sis,” Stevens tells fmME.

In the Oc­to­ber is­sue of fmME,

Ian Harfield of Cofely Be­six Fa­cil­ity Man­age­ment said that the “res­i­den­tial sec­tor is on a race to the bot­tom”. Harfield was re­fer­ring to the in­tense com­pe­ti­tion cou­pled with chal­lenges sur­round­ing ser­vice fee col­lec­tion.

Asteco’s has a ma­jor share in the res­i­den­tial sec­tor and Stevens weighs in on the mat­ter. He says: “The chal­lenge that’s been voiced by the FM sec­tor is be­cause the mar­ket is ma­jo­ryly land­lord rep­re­sented rather than owner’s as­so­ci­a­tion, and they are be­ing squeezed on price. And when it comes to build­ing op­er­a­tional ex­penses the FM com­pa­nies are in a harder place than we are. There’s no doubt about that.”

A build­ing’s util­i­ties con­sti­tute a ma­jor­ity of its run­ning costs — any­where from 60% to 80% — “that can­not be brought down by more than 30% to 40% by en­ergy sav­ings mea­sures”.

“I don’t think a lot of the land­lords ap­pre­ci­ate that a higher qual­ity of ser­vice from the FM com­pany will get you higher lev­els of oc­cu­pancy, rents and ten­ant sat­is­fac­tion. A hand­ful of ser­vice providers may ap­pear to be costlier in the short term but a build­ing

is a long term as­set that you need to in­vest in.

“It’s prob­a­bly the sin­gle largest con­tract a lot of FM com­pa­nies have and that’s why it’s un­der pres­sure most of the time. Hence, you end up with lower qual­ity at a lower price point of­ten with lesser skilled tech­ni­cians which puts pres­sure on ten­ants and the as­set. Maybe there are quick sav­ings to be made in main­te­nance but if you are not look­ing af­ter the as­set well, you even­tu­ally end up with high re­pair costs,” he says.

Asteco’s strat­egy, for the as­sets they look af­ter, has seen them move away from in­te­grated FM ser­vices in favour of more sin­gle ser­vices. “The chal­lenge we face is that we can­not use our in­flu­ence to buy bulk ser­vices. We can­not have a re­la­tion­ship with a sin­gle FM com­pany be­cause in most cases a build­ing is ten­dered in­di­vid­u­ally. We have no full ser­vice FM con­tracts, all of our build­ings are in­di­vid­u­ally ten­dered and we man­age each func­tion ac­cord­ingly — hard and soft ser­vices.”

He adds that quite of­ten land­lords and own­ers have an ex­ist­ing re­la­tion­ship or an in­ter­est in work­ing with a par­tic­u­lar FM com­pany or se­cu­rity com­pany, and have to in­vari­ably work them.

More­over Stevens isn’t too im­pressed with FM ser­vice providers billing the ‘one-stop shop’ so­lu­tion. He ex­plains: “FM com­pa­nies are not al­ways of­fer­ing in­te­grated ser­vices — they might be good at do­ing se­cu­rity and clean­ing or MEP but not HVAC. Whereas if we ten­der in­di­vid­u­ally there is a bet­ter pos­si­bil­ity of get­ting the best in each field. And whilst on larger scale de­vel­op­ments there is a cer­tain value, I can­not see it be­ing too vi­able from a land­lord’s per­spec­tive,” he ex­plains.

Prior to work­ing in the Mid­dle East, Stevens was in­volved in the Asian and Far East prop­erty sec­tor. And he re­calls the so­phis­ti­cated na­ture of FM op­er­a­tions in those mar­kets prior to 2004. “The last agree­ment I en­tered into be­fore I left for Dubai was a five-year fixed price con­tract which cov­ered


ev­ery­thing in a TFM agree­ment — from el­e­va­tors, MEP to clean­ing. The com­pany spent eight months au­dit­ing the as­set thor­oughly, from the stage a pump’s life to when the small­est piece of equip­ment was ex­pected to fail un­der their main­te­nance.”

The read­ily avail­able records made it pos­si­ble to carry out a de­tailed anal­y­sis, and Stevens says he was “met with blank looks” when he first came to Dubai and en­quired about records. “To­day the con­tracts that I see in the UAE aren’t as ad­vanced as the ones I saw in Asia. The mar­ket has def­i­nitely im­proved but I still don’t see the de­mand of that top level anal­y­sis from a suf­fi­cient num­ber of clients. And whether FM op­er­a­tors have the ca­pa­bil­ity and the in­for­ma­tion to be able to de­liver is a dif­fer­ent as­pect al­to­gether.”

Speak­ing about per­for­mance-based con­tracts, Stevens says that the UAE FM sec­tor is get­ting up to stan­dards that have been preva­lent in the East. “I was deal­ing with out­put-based con­tracts 15 years ago and we are only start­ing to get there now be­cause we have been push­ing for them to hap­pen in this mar­ket. Tech­nol­ogy has en­tered the mar­ket but it’s de­pen­dent on the com­pe­ten­cies of the prop­erty man­agers to make use of that data for the bet­ter­ment of the as­set.”

Stevens says there is a dif­fer­ence be­tween im­ple­ment­ing the lat­est CAFM / build­ing man­age­ment sys­tem (BMS) and whether they are be­ing used in an op­ti­mal man­ner. “Around 15 years ago peo­ple were buy­ing BMS be­cause it was a nice idea, and they bought what the sup­plier sug­gested rather than buy­ing what they needed. To­day, the chal­lenge in the UAE is al­low­ing the prop­erty man­agers and fa­cil­i­ties man­agers to have a truly ac­tive par­tic­i­pa­tion dur­ing the de­sign stage of the build­ing.

He ex­plains: “Ma­jor­ity of the de­vel­op­ments aren’t ‘Grade A’ build­ings that wouldn’t nec­es­sar­ily ben­e­fit from this sort of early in­volve­ment. Most build­ings have a much dif­fer­ent fo­cus. But the mar­ket seg­ment is there to con­sider th­ese com­plexes of in­volv­ing PM and FM com­pa­nies early. If you are look­ing at a multi-build­ing de­vel­op­ment or mas­ter com­mu­nity you would cer­tainly look at do­ing it. But a de­vel­oper of a 90-unit tower in Deira or Bar­sha South might be less in­clined about those fa­cil­i­ties be­cause the plant and equip­ment you have less,” Stevens says.

For a while now Dubai’s Real Es­tate Reg­u­la­tory Au­thor­ity (RERA) has been mulling a rat­ing sys­tem for

build­ings. The idea be­hind it was to help ten­ants and land­lords fix on the right price and help ten­ants make the right de­ci­sion. The rat­ing sys­tem would also, in essence, help ar­rive on fix­ing ac­cu­rate ser­vice fees. But Stevens says the rat­ing sys­tem, which was sug­gested by RERA, is sub­jec­tive in na­ture. And hence the data from the Ejari mech­a­nism would have made a vi­able op­tion to clas­sify the build­ing ei­ther five- star or oth­er­wise.

“We were in­volved with RERA be­fore dis­cus­sion of the build­ing rat­ing sys­tem hap­pened. And we sug­gested that it would be a lot more prac­ti­cal to use the Ejari data (in or­der to grade build­ings) rather than the in­spec­tion process they were con­sid­er­ing. Be­cause ev­ery build­ing in a res­i­den­tial com­mu­nity is al­ready reg­is­tered through the sys­tem and Ejari is taken into ac­count for the rental re­view calculator. The new leases and rents that are to be quoted can be ex­tracted from there,” he opines.

The merit to this con­cept is as fol­lows: Two build­ings lo­cated be­sides each other might have a huge dis­par­ity in the rents but it should be the mar­ket that de­cides it. And that could be due to the con­di­tion of the fa­cil­i­ties and ameni­ties in­stead of an in­spec­tor’s sub­jec­tive anal­y­sis. He says: “For in­stance, a pool that I per­ceive as fives­tar might not hold the same value for some­one else. Whilst I do ap­pre­ci­ate the grad­ing sys­tem is ben­e­fi­cial there are sev­eral pa­ram­e­ters that need to be taken into ac­count.”

A grad­ing sys­tem for FM com­pa­nies was also be­ing dis­cussed. And Stevens be­lieves the rank­ing will be of use to those who are not di­rectly in­volved in the sec­tor.

“We al­ready have our own grad­ing sys­tem — we are well aware of the ca­pa­bil­i­ties of dif­fer­ent FM com­pa­nies we deal with. Then again a rat­ing sys­tem has to be fluid and de­signed in such a way that it can evolve — quite of­ten the driv­ing force within one com­pany leaves and that might af­fect the qual­ity of ser­vice,” he says.

Asteco will be launch­ing a por­tal which will en­able a range of ser­vice providers and sup­pli­ers to sign up and regis­ter. “Hence­forth, we will be able to track their as­sess­ment. If I am mov­ing into the higher end (of FM ser­vice providers) I want to see the com­pe­tency of their per­son­nel, their skill set and ex­per­tise in the mar­ket place. For in­stance, I am look­ing at a handy­man ser­vice to man­age smaller com­pounds, I don’t need an Em­rill to look af­ter a com­pound of 40 vil­las be­cause it’s far too pricey.”

In con­clu­sion Stevens says FM com­pa­nies need to know what mar­ket seg­ment they are tar­get­ing and show their com­pe­ten­cies in that field.

The Adri­atic Build­ing, one of the Tow­ers at the Oceana res­i­dence has re­cently been recom­mis­sioned fol­low­ing a fire in­ci­dent a few years ago.

Asteco’s in­ven­tory of units ex­ceeds more than 20,000 across the UAE.

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