With the handover process starting in earnest within Dubai’s freehold space, their facilities management has become one of the hottest topics of interest. What should be the tariffs attached to these services and how much control should the owners of these properties have when it comes to fixing them.
These are still unexplored territories, but that have been injected with a sense of urgency with the Strata Law coming into effect. At the same time, specialist facilities management companies have been quick to realize the good times that are coming their way.
In a chat with Property Weekly, Dilip Khatwani, Chief Executive Officer of reliance FM, offered his insight into the shape of thins to come.
Q: With the Strata Law, is this the breakthrough that FM companies have been looking for?
A: Strata Law basically defines the powers and obligations of any homeowner. When an owner realizes his asset will be in trouble unless he does not manage it right, he would definitely want to take care of that. There is a huge market already for the FM companies the Strata Law will further spruce up things.
The FM industry has already broken through, I do not think the Law would do that per se. in fact, across any region, such a low does not necessarily lay stress on the FM industry. It automatically develops an FM outlook in its structure.
There have been wide disagreements on what the median service and maintenance charges should be.
Q: Do you think a consensus will continue to elude the market on this score?
A: Service charges, the way I understand it, have fixed formulas. Whenever you talk about service charges to a new market, there is always a debate.
This is on going until people start living in their apartments/villas and they realize the importance of maintenance. So basically the market is learning to define what should be the component of a service charge.
We are getting projects now where we are calculating services charges right at the design stage. It is a fast-emerging transition market and you will realize that another two years, the city will value service charges as an important component.
There will be a consensus, and yet you will have a buyer who will ask you as to why this should be included.
Q: With the creation of homeowners associations, do you see a move towards signing on FM companies offering the lowest service charge at the expense of quality? Is there any move on setting a tariff band among leading FM companies to ensure minimum base charges?
A: Yes. When the homeowner’s association was initially formed, there will always be people who want to pick the cheapest in offer till the time when you start living in the space and see for yourself your asset depreciating rather than enhancing.
To set a tariff band will be a tough thing to do in a country with 200 nationalities (as much if not more). It is difficult to set up a benchmark that this is the minimum we are going to charge.
You could still try to set minimum pricing, but will have a variance of 15 per cent, which is the manpower component. Every company has found its own niche and has found its own economy to work with. I do not think that will happen even if the market matures especially in Dubai.
Q: Along with the opportunities, the facilities management industry has to face up to challenges. Which is your biggest worry at the moment?
A: The biggest challenge today for the industry is how to plan and get your human resources right. In the coming five years, the FM is transitioning in any region or country; you see a lot of interest from developers as well. My experience has been that it is not a long way through.
Until the time developers realize their business differs quite a bit from the FM industry, which is more technocratic in terms of the input: output ratio differing quite a bit.
The market is huge at the moment for everybody and to think the city is still setting up its framework. Having said that, 10 years down the line yes you will see less developers getting into FM when they realize their returns are getting lower and they would rather outsource to other FM companies.
Q: Are you looking to align with any major developer(s) to expand your own sphere of influence in the respect?
A: We are working with all developers to manage their towers, but do not have exclusive agreements with anyone so far. We have received few offers from developers for partnerships. However, so far, we feel that if we tie up with one, other developers get away from us.
Q.: Are you looking at other regional markets? There has been talk about Qatar? Is it already a done deal?
A: Qatar – we have a few projects there and this year hope to open an office. Another market we are seriously looking at is Saudi Arabia. That is a huge market for us as well as Kuwait and Malta, we have done 10 million square across the board.
Q: There is a belief that some of the global FM majors will start making a pitch for this market very seriously in the days to come. Are local players equipped to meet it?
A: A few of the big players are already here. I think there will be more to come. The local developers are absolutely ready to meet them.
You will be surprised how fashionable a term facilities management has become. Currently there are 5 key players and 20 smaller players in the region. There are more to come.
Q: Which according to you are the evolved FM markets?
A: Europe, Australia, the US are evolved. In Asia, the concept of FM has been there for fifteen years.
However, for regions to take a holistic approach that is not yet there in too many places. That is why the FM professionals are looking more and more towards the Middle East, which is rather unique.
