insight...insight insight / page two real gdp growth rates (%). source: world bank, imf versus...
TRANSCRIPT
Welcome
Welcome to Insight #1. In our first edition of Insight we take a look at the global economy and the Middle East markets, and we take a focused look at the hospitality and leisure market, including a 2014 cost model and typical construction costs. We also include our commodities price analysis to keep you up to date with the latest prices.
Page one / Global
Page three / Middle East
Page four / Oman / United Arab Emirates
Page five / Qatar / Kingdom of Saudi Arabia
Page six / Commodities price analysis
Page eight / FOCUS: Hospitality and leisure
Page twelve / Currie & Brown Offices
Currie & [email protected]
Global
The global economy has experienced one of the most sustained and significant economic and financial crises since the 1930s. Thankfully, 2013 provided indications that confidence and growth were returning to the markets with gross world product growing by 2.1 per cent (WESP 2013).
With most developed economies facing both uphill gradients and stiff headwinds as a consequence of the financial crisis, both fiscal and monetary levers are being pulled to stimulate growth.Interest rates have been held at their lowest rates in most jurisdictions for the longest period in history. As an example, the Bank of England has now held interest rates at 0.5% since March 2009. Indeed, current indications are that the new Governor, Mark Carney, is seeking to revise the Bank’s interest rate policy to sustain these record low levels, as a consequence of falling unemployment and economic recovery within the United Kingdom. Indications are that interest rates within the UK are being forecast to increase to two per cent by 2017 with the first rise in spring 2015. Other members of the G8, the world’s strongest eight economies, are equally aligned.
The US Federal Reserve, following similar levels of reduced unemployment to that of the UK (6.6%), introduced its tapering of quantitative easing (QE1 - QE4) late in 2013. QE1 was initiated in the fourth quarter of 2008 when the Federal Reserve announced plans to buy $800 billion in bank debt, mortgage-backed securities and treasury notes. The current level of QE on the Federal Reserve’s balance sheet is $4 trillion. The initial global reaction to US tapering had significant consequences, particularly on developing economies and their currencies. The initial announcement to introduce tapering in June 2013 had a negative impact on bond markets and interest rates, resulting in the Federal Reserve delaying the actual taper to December 2013.As interest rates increase, currencies in those markets become more attractive and with the level of stability and growth that mature markets provide, capital flows from one market to the other.
Over the last five to seven years, emerging economies have evidenced significantly greater growth profiles than developed economies with the so-called two-speed global economy (developed
Insight #1
Insight / Page one
Insight
Insight / Page two
Real GDP growth rates (%). Source: World Bank, IMF
versus emerging). However, as a consequence of the low-interest growth stimulus strategy of QE coming to an end, interest rates in the developed economies are under pressure to rise, thus attracting cash away from developing economies. This saw aftershocks in countries such as India, Turkey, Brazil and Thailand in 2013. Currencies have weakened, making foreign loans for development increasingly difficult and expensive to secure with a negative consequence for the growth potential of emerging economies.
The BRICS countries (Brazil, Russia, India, China and South Africa) have experienced significant deceleration in growth over the last two years to within a range of four to seven per cent from their previous double-digit values. Reduced consumption within these countries has had a direct effect on the export market from mature economies, restraining their own growth and recovery.
Equally, geopolitical instability within the Middle East region has impacted on oil prices. Prices have stabilised around $100-110/barrel and most oil-rich economies in this region have set their annual budgets on these values to maintain budget surpluses. Most notably, the western economies’ move to supplement their own consumption of imported oil and gas for domestic purposes has seen a shift to shale gas production. Most commentators view this as having only a short- to medium-term impact on the oil-rich states in the Middle East whilst production of oil and gas in the likes of Iran, Libya and Iraq remains below pre-crisis levels. Subject to the geopolitical environment, oil prices are likely to remain stable over the year.
So what does this mean looking forward for the coming months?
As the global economy recovers from the worst financial crisis since the 1930s, 2014 is seeing fragile recovery with the after-effects of
quantitative easing reducing the growth gap between developed and developing economies. Capital reserves and balance sheets are being strengthened while low interest rates in mature economies continue to provide support for future economic growth.
Key indicators require time to evidence true positive trends with unemployment figures, manufacturing and export figures fluctuating around the margins. Inflationary pressure continues to be contained within both mature and emerging economies, with a caveat linked to interest rate movements and the consequences of other monetary pressures. The impact of unusual weather patterns and political instability in Asia, the Middle East and Eastern Europe continues to undermine confidence in the markets.
Global events have provided a welcome distraction and a catalyst for growth. The winter Olympics, held in Sochi, were a success and buoyed President Putin’s Russia, although concern remains around the ability of Brazil to deliver the World Cup in fewer than 100 days. In the Middle East, the scale of development in Qatar continues to pick up pace looking forward to the 2022 World Cup, and similarly, Dubai and the UAE are responding positively to the news of securing the World Expo
in 2020.
2014 looks like a year when stability, confidence and predictability will be key words economically, culturally and politically. Only time will tell.
Middle East
Many countries in the Middle East are still facing challenging social, political and economic development. The predominantly hydrocarbon based economies of the Middle East produced 28.2 million barrels daily in 2012, accounting for one third of total global production while sitting on over 48% of global reserves (as at 2012).
However, with expanding economies, development and population growth, domestic consumption has risen at an annual average rate of 3.8% over the last 20 years. As the demand for domestic energy supplies increases, diversifying domestic economies is a key objective for national development plans. Typical hydrocarbon components of country GDPs in this region account for between 11% in Bahrain to 70% in Iraq, with the UAE, Saudi Arabia, Qatar and Oman sitting in the median of 50-60% for net exporters.
With a sluggish global economic environment reducing demand for
oil and gas and the exploitation of shale oil and gas reserves, the drive for economic diversification is accelerating within the region. Through increasing domestic manufacturing and service components within GDP, construction activity in the infrastructure and commercial (residential, hotel, retail and office) sectors will blossom.
Construction accounts for between 4-10% of Middle East GDP with growth in this component anticipated in the key markets of Saudi Arabia, UAE, Qatar and Kuwait. The UAE, with the highest proportion of GDP investment, expects construction activity to contribute 11.1% to GDP in 2015. This compares to a significantly larger geographic market in Saudi Arabia but a lower contribution to GDP of 4%. This equates to a current annual construction contracts award value of $10-15bn, with an overall construction spend of between $30-60bn. The focus of this investment is squarely in transportation and civil infrastructure areas followed by commercial and energy and utility investment acting as the enabler for population and business growth.
Construction price inflation is currently on a par with general consumer price inflation across the region, ranging from 3.5 to 5.5%. Both labour and material
Insight
Insight / Page three
costs are remaining steady, due to the global trading environment, particularly in the large consumer markets of the United States, China and Europe. Locally, however, we anticipate that preliminaries, overhead and profit levels will rise as regional demand continues to grow for management expertise and supervision. Likewise, as capacity within the market is absorbed, margin recovery will take place leading to increased levels of sub-contract and main contractor overhead and profit levels.
Strategic procurement and scheduling of project delivery into the market will deliver commercial benefit as well as securing quality of project outcome, while managing price and delivery risk.
Oman
The Sultanate of Oman was protected from the financial crisis thanks to increased oil revenues. Like other Middle East states, the government announced significant investment in social and civil infrastructure projects as well as oil and gas field developments.
Significant investment is being made around transport and aviation projects including the expansion of Muscat International Airport, whilst Salalah Airport is projected to be complete in 2015/16, increasing passenger
capacity to the Sultanate. Oman’s ports in Muscat, Sohar, Salalah and Duqm are likewise being enhanced, enabling increased export and import logistical capacity. Contracts continue to be let for the Batinah Expressway programme providing increased road capacity and coverage across Oman.
Such levels of investment will also introduce increased business and tourist visitor numbers. Corresponding gains will be seen across the hotel, retail, commercial office and residential sectors.
United Arab Emirates
The UAE has seen the benefit of taking a leading position in its diversification, with Dubai providing a “safe haven” for capital reserves, business and trade within the region. With significant investment in infrastructure already in place, the recovery of Dubai has been as acute as its fall in October 2008.
Success breeds success and the UAE is bearing testament to that as momentum grows off the back of its success in securing Expo 2020. The nation continues to benefit from investment in social and civil infrastructure with a progressive approach to further investment.
Grabbing the headlines at the Dubai Airshow, Emirates evidenced the role of the Middle East as an aviation hub with its record-breaking aircraft orders from Boeing and Airbus. Combined with Abu Dhabi’s Etihad Airways, their combined world record order of 400 aircraft totalling $151 billion provided a clear statement of intent. Dubai World Central - Al Maktoum International airport also opened with a projected passenger capacity of 160 million passengers per annum by 2020. With expansion in Abu Dhabi, Dubai Airport’s combined passenger capacity will easily outstrip the current leading airport (per passenger volume) – Hartsfield Jackson Atlanta International Airport at 95.5 million passengers.
A significant component of GDP growth is being derived from increased passenger volumes and the corresponding growth in tourism-related spend in hotels and retail. The trading environment continues to be attractive to business and enterprise with manufacturing and service sector growth requiring office, warehouse and manufacturing/assembly facilities and employees requiring housing, education and health and leisure facilities.
Increased demand, in particular for schools and residential accommodation, is driving
Insight
Insight / Page four
consumer inflation and the government is introducing measures to maintain steady growth and control around these sectors. With market demand comes the need for increased supply, which will introduce inflationary pressure on construction prices. Capacity within the supply chain and material prices should be reasonably contained due to the general trading environment, though a period of limited wage increases will begin to place pressure in addition to competition for resource from Qatar and Saudi Arabia.
Qatar
With eight years to go before the Qatar 2022 World Cup, progress is being made with the huge capital investment in civil infrastructure. In addition to the new metro system and expressways, the construction of 12 stadiums and over 200 hotels continues apace. It is anticipated that the level of construction spend in Qatar will double by 2021, an equivalent of $15 billion per annum in real terms.
Like other Middle East countries, Qatar has a "National Vision 2030" and aspires to become an advanced economy. In line with its neighbours, this includes provision of new transportation infrastructure, long-distance
freight and passenger railways connecting into the new regional network, ports, social infrastructure and residential sectors.
With such a level of spend and concentration on 2022, price inflation is expected to increase towards the end of 2014 around raw materials, plant and equipment. As indicated above, the competition for resources with the UAE and Saudi Arabia will continue to grow over the next five years.
Kingdom of Saudi Arabia
Saudi Arabia is investing heavily in significant social infrastructure and economic diversification programmes. This includes the development of six new economic cities in the Eastern province: Tabouk, Hail, Medinah, Rabigh and Jazan. In full support of economic diversification, these cities will provide 1.3 million new jobs for a population of 4.5 million and a contribution to Saudi Arabia’s annual economy (GDP) of $150 billion.
In common with other parts of the region, Saudi Arabia is also investing heavily in social infrastructure projects in the sectors of health and education in addition to religious tourism. Over 3,000km of railway infrastructure
projects are also currently underway, providing significant eventual improvement to domestic transportation network capacity.
With higher levels of unemployment than comparable neighbouring countries, Saudi Arabia (5.6% unemployed) has the potential to engage this labour supply to develop both its economy and overall levels of productivity. However, with the introduction of their Nitaqat system, the tenure of the expatriate population has been capped at eight years with requirements on businesses to increase their proportionate employment of Saudi Arabian nationals.
Insight
Insight / Page five
Commodities price analysis
■ Non-ferrous metal prices derived from London Metal Exchange, whereas steel prices derived from Middle East steel price Indications; all based on average prices for the month.
■ The price of rubber derived from International Rubber Board, based on average prices for the month.■ All prices for commodities are based on bulk quantities, cash trade, US dollar.■ Where ranges have been provided, an average price has been assumed for the purpose of comparison.■ The rate for beams - channels has been derived from Far East/Europe/India market.■ Cement prices derived from UAE local supplier.■ Crude oil derived from light crude brent, US market.■ Diesel rates are from Eppco.■ Concrete rates AED/m3 based on the average price of concrete 45/27 from four UAE suppliers.■ Reinforcement bars are taken from four UAE suppliers
■ Cement rates AED/tonne based on the Dubai Government cap imposed in 2008.
Insight
Insight / Page six
2014Commodities Unit Q1 Q2 Q3 Q4Non-ferrous metals Aluminium alloy US$/tonne 1,831.67 Aluminium US$/tonne 1,708.00 Copper US$/tonne 6,896.67 Lead US$/tonne 2,086.83 Nickel US$/tonne 15,220.00 Tin US$/tonne 22,878.33 Zinc US$/tonne 2,032.50 Steel Reinforcing bars US$/tonne 571.67 Reinforcing bars (Dubai local) AED/tonne 2,556.33 Steel beams - channel US$/tonne 582.50 Hot rolled plates US$/tonne 573.33 Cold rolled coils US$/tonne 708.33 Prepainted galvanised steel, 0.35 US$/tonne 890.83 Stainless steel HR coils 304 base US$/tonne 2,360.00 Energy Crude oil US$/barrel 103.61 Diesel (Dubai only) AED/gallon 3.63 Cement Cement AED/bag 12.94 Concrete (local supplier) AED/m3 252.00 Cement (government cap) AED/m3 360.00 Rubber Rubber US$/kg 241.36
Commodities price analysis
Insight
Insight / Page seven
-
5,000.00
10,000.00
15,000.00
20,000.00
25,000.00
30,000.00
35,000.00
40,000.00
45,000.00
50,000.00
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4
2006 2007 2008 2009 2010 2011 2012 2013 2014
Copper
Nickel
Tin
Non-ferrous metals (2006 - 2014)
US$
/tonn
e -
15.00
30.00
45.00
60.00
75.00
90.00
105.00
120.00
Q1
Q2
Q3
Q4
Q1
Q2
Q3
Q4
Q1
Q2
Q3
Q4
Q1
Q2
Q3
Q4
Q1
Q2
Q3
Q4
Q1
Q2
Q3
Q4
Q1
Q2
Q3
Q4
Q1
Q2
Q3
Q4
Q1
Q2
Q3
Q4
2006 2007 2008 2009 2010 2011 2012 2013 2014
Crude oil (2006 - 2014)
US$
/bar
rel
-
5.00
10.00
15.00
20.00
25.00
30.00
Q1
Q2
Q3
Q4
Q1
Q2
Q3
Q4
Q1
Q2
Q3
Q4
Q1
Q2
Q3
Q4
Q1
Q2
Q3
Q4
Q1
Q2
Q3
Q4
Q1
Q2
Q3
Q4
Q1
Q2
Q3
Q4
Q1
Q2
Q3
Q4
2006 2007 2008 2009 2010 2011 2012 2013 2014
Cement (2006 - 2014)
AED
/bag
-
1,000.00
2,000.00
3,000.00
4,000.00
5,000.00
Q1
Q2
Q3
Q4
Q1
Q2
Q3
Q4
Q1
Q2
Q3
Q4
Q1
Q2
Q3
Q4
Q1
Q2
Q3
Q4
Q1
Q2
Q3
Q4
Q1
Q2
Q3
Q4
Q1
Q2
Q3
Q4
Q1
Q2
Q3
Q4
2006 2007 2008 2009 2010 2011 2012 2013 2014
Reinforcing bars
Steel beams - channel
Hot Rolled Plates
Cold Rolled Coils
Prepainted Galvanised Steel, 0.35
Stainless Steel HR Coils 304 Base
Steel (2006 - 2014)
US$
/tonn
e
-
500.00
1,000.00
1,500.00
2,000.00
2,500.00
3,000.00
3,500.00
4,000.00
4,500.00
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4
2006 2007 2008 2009 2010 2011 2012 2013 2014
Lead
Aluminium Alloy
Aluminium
Zinc
Low non-ferrous metals (2006 - 2014)
US
$/to
nne
6.00
8.00
10.00
12.00
14.00
16.00
18.00
Q1
Q2
Q3
Q4
Q1
Q2
Q3
Q4
Q1
Q2
Q3
Q4
Q1
Q2
Q3
Q4
Q1
Q2
Q3
Q4
Q1
Q2
Q3
Q4
2009 2010 2011 2012 2013 2014
Diesel (2006 - 2014)
AED
/ G
allo
n
INSIGHT FOCUS Hospitality and leisure
The hotel sector has seen strong growth globally, with a post-financial crisis recovery well established. As the global economic recovery continues, so have commensurate indicators of hotel trading fundamentals equally improved. This recovery has been led in the mature markets with emerging markets, in general, lagging behind. However, the Middle East region is benefitting from continued investment, world-class facilities and a climate suited to the key growth markets for outbound travel, China and Russia.
As a consequence, growth in the regional hotel supply is evident. Regional room supply pipeline data indicates strong growth, particularly in the UAE (13.7% in Dubai and 10.6% in Abu Dhabi according to Jones Lang LaSalle). Occupancy rates in excess of 80% are being enjoyed within the Emirates, leading to increased investment and capital spend (as well as refurbishment of existing stock).
Securing global events such as Expo 2020 and Qatar World Cup 2022, the requirement for increased hotel room capacity over the next five to eight years, represents a significant opportunity. According to Dubai’s Department of Tourism and
Commerce Marketing (DTCM) estimates, the investment in hotels, offices and retail space for Expo 2020 in the UAE is likely to exceed $8 billion alone in order to cater for the anticipated 25 million visitors. Converting significant transiting passenger traffic into tourist dirham revenues will be key to sustaining this level of capacity, post-global event.
But what are the key considerations around this specific sector?
Developer/operator requirements
The hotel sector has undergone significant change in recent years. A number of major branded owner/operators have sold a large proportion of their property portfolio to investors.
Entering into leasing or management arrangements allows the hotelier to generate significant amounts of cash to reinvest in their product and concentrate on what they do well: running hotels rather than managing property.
The shift towards sale and leaseback has placed greater emphasis on the split between the operator and the developer. Put simply, the developer is now responsible for the construction and maintenance of the asset while the operator is responsible
for implementing the brand with a focus on guest experience and service.
Developers and their investors are willing to accept the risk profile of non-guaranteed income, because this can be improved through effective asset management. The long-term value is primarily generated by service quality and is facilitated by building a high-quality environment in the first place. In addition, the developer has to balance the needs of the operator with capital spend and avoid over-specifying, while retaining a degree of flexibility, as the operator may change over time.
On the other hand, the operator needs the location, space, provision, build quality and facilities to enable it to establish a
Insight
Insight / Page eight
hotel that is closely aligned to its brand standards. Areas that are of particular importance include bedroom size, circulation capacity and front-of-house amenities.
Territorial standards exist for hotel classification such as the National Quality Assurance Standards in the United Kingdom. Within the Middle East region, individual countries have their own classification eg DTCM’s hotel classification scheme, underpinned by revised legislation enacted in 2013. These systems are benchmarked globally but there remain subtle differences in guest expectation for hotel rooms and facilities within each region.
Procurement
As with all construction projects, the balance between cost, time and quality is a vital factor. The balancing act is further constrained in the hotel sector as there is usually a fixed budget and a set opening date.
A limited budget will affect the level of specification and, to minimise cost risk, dictate that the majority of design work be completed before entering into contract between the developer and the contractor. This may extend the project programme. Likewise, the point at which an operator is engaged will also affect the design schedule, specification and
space standards/configuration. The level of interior design and operator fitting-out should also be determined and clearly established as soon as possible within the process.
Working to a fixed opening date on a relatively short programme may result in higher costs to meet quality expectations and provide extra resources to complete the job quickly. Selecting the most appropriate procurement strategy should be based on addressing the following issues: ■ Cost/programme/quality priority
as defined by the client ■ The type of relationship
required between client, design team and contractor
■ Whether single or multi-point responsibility for delivery is preferred
■ The spread of cost, time and design risk between client and contractor
■ The complexity of the project. For example, new build, mixed use, tower, conversion or refurbishment
■ The planned use of off-site manufacturing
■ The degree of repetition possible in the design and variations
■ Whether the project is part of a bigger portfolio of future work/rollout
■ Long-lead/bespoke joinery/interior design
■ Sourcing of FF&E (local versus international)
■ Clearly defined FF&E/OS&E segregation and point of responsibility.
The most common procurement methods for Middle East hotels are traditional, lump-sum contracts using either FIDIC or bespoke client contracts generally based on FIDIC contracts.
Value can be added by concentrating the budget on areas that enhance service quality or the guest experience, or by increasing the certainty of timely delivery. All three are largely defined by the brand values and commercial requirements of the operator.
Guest rooms: layout and services
The arrangement of guest rooms on the floorplate and the impact this has on the room mix affects the hotel’s ability to maximise occupancy and in-turn, revenue. Guest room sizes are by and large uniform, have a high degree of repetition and can be accommodated with a relatively short structural span. By contrast, public areas require a clear span to accommodate amenities. Other issues that affect floor-plate configuration include core location, vertical circulation requirements and the need to comply with civil defence escape legislation.Most hotels offer a mix of standard and executive double
Insight
Insight / Page nine
and twin rooms, with a small number of suites of varying sizes. Typical total area allowances for high-end hotels range from 100-120m² of gross floor area (excluding parking and external areas) per module. Guest rooms and suites will typically occupy 55-60% of the gross floor area with 20-30% allocated to public areas and the remaining 15-25% to back-of-house, support and service areas.
Single rooms are usually avoided but may be incorporated when an existing structure is being converted to hotel use, or where the efficiency of an irregular floorplate can be maximised by introducing single rooms. This is more common in “boutique” hotels.
Guestrooms are defined by three basic measurements: the width, the length of the room from the external wall to the bathroom wall and the size of the bathroom. Bedroom widths generally vary from about 3.5 to 5m.
In general, the net floor area of a budget guest room is 20-22m². Mid-range hotels vary from 30 to 40m² and, at the luxury end of the market, guest rooms can be 50-60m² and beyond. Suites including a lounge are usually formed from a number of modules and may be up to 200m² in area. Notwithstanding the size of the room, they should be designed
to facilitate ease of cleaning and short turnaround periods.
Most guestrooms are designed with an internal en-suite bathroom. This allows for an economical system of externally accessed service risers and helps with sound insulation from corridor noise. The downside is that the bathroom requires artificial lighting and ventilation.
Room fan coil units should be located in a position that provides maximum diffusion without creating drafts or excessive noise. The most common position is in a bulkhead over the entry corridor to the room (horizontal air discharge). This allows air to flow along the ceiling while maintaining accessibility to the ducts.
This last point is important since rooms are not occupied all of the time. An intelligent building management system that detects when rooms are occupied and facilitates central control can contribute to a reduction in energy costs. Once in the room, the guest should be afforded some level of individual control of the room services, allowing them to turn it off, up or down to suit their own comfort levels.
Reliable, efficient mechanical plant support profitable hotel operations. The chillers and air handling units, for example, must operate efficiently at part loading
but some redundant capacity should also be incorporated in case of failure.
Public spaces
Public areas include lobby, food and beverage outlets, function spaces, leisure/spa facilities and retail areas.
The lobby needs to be planned carefully in order to facilitate circulation and navigation to the support amenities. It must also be designed to create an initial welcoming impression that sets the tone for the hotel and will typically be generous in its proportions.
Food and beverage outlets and restaurant requirements will vary significantly depending on the grade, location and operator. Most hotels will have two restaurants with higher grade hotels providing a range of offer across seven to eight restaurants.
Meeting and function rooms will typically include a banquet hall/ballroom with a minimum size of 750m². A junior ballroom will typically seat 400-500 people. Function/meeting rooms will vary in size and capacity and will have a degree of flexibility built in to their sub-division.
The area that has the largest impact on the design of back-of-house operations is the main
Insight
Insight / Page ten
Cost model for typical mid-market hotel
C
Note that costs are based on a typical 300-key mid-market hotel, with a gross internal area (GIA) of approximately 25,000m2.
Typical construction costs
Note that the above costs are expressed as $/m² of gross internal floor area (as defined by the RICS Code of Measurement Practice, 6th Edition). Costs include FF&E but exclude OS&E, artwork, professional, statutory and legal fees, land purchase costs and taxes.
kitchen, as its position can determine circulation routes. Circulation of staff and guests between back and front of house should be segregated as far as is pragmatic.
A back-of-house services corridor allows effective circulation for catering and servicing of events. Space for storage of furniture and so on should also be incorporated.
Costs
The major cost drivers for hotel development include:■ Site location, shape, orientation
and means of access■ The external envelope, in
particular the complexity of facade and glass : solid proportion
■ The level of sophistication of building services (eg guestroom management systems)
■ Particular requirements from the hotel operator
■ Shape and layout of the guestroom and suite areas
■ Vertical circulation and servicing, if the hotel is a tower construction
■ The level of provision and services contained within the guestroom and suite
■ The storey height – exceptional floor to floor heights will increase structure, foundations, vertical circulation and civil defence/fire fighting provision
■ Location of function rooms – these spaces require
large column-free volumes and should therefore not be located under guestroom accommodation where transfer structures would then need to be introduced
■ Territorial standards for hotel classification
Insight
Insight / Page eleven
CountryBudget
($/m² GIA)Mid-market ($/m² GIA)
Luxury ($/m²/GIA)
Low High Low High Low HighAbu Dhabi 1,770 2,430 2,230 2,880 3,050 3,730Dubai 1,770 2,430 2,270 2,930 3,050 3,730KSA 1,450 1,880 1,910 2,470 2,390 2,920Qatar 1,850 2,550 2,490 3,220 3,210 3,920
Element Total ($)$/m² (GIA)
$/key %
Structure and envelope 15,300,000 612 51,000 23
Internal fit-out 7,975,000 319 26,583 12
MEP Services 16,625,000 665 55,417 25
External Works 2,650,000 106 8,833 4
Preliminaries, OH&P 9,975,000 399 33,250 15
FF&E 13,975,000 559 46,583 21
Total 66,500,000 2660 221,666 100
Please send any comments to [email protected]
Reproduction of the contents of this publication is prohibited without the express written permission of Currie & Brown. The contents of this publication are sourced from data which we believe to be reliable in the context thereto. This is for information purposes only and should not be treated as a substitute for professional advice. Currie & Brown does not accept liability in respect of any claim which may arise from errors or omissions contained herein.
Insight / Page twelve
AMERICAS
Arizona 60 E. Rio Salado ParkwaySuite 900TempeAZ 85281Tel: +1 602 748 1470
California71 Stevenson StreetSuite 414San FranciscoCA 94105Tel: +1 415 655 6880
MexicoAristoteles 776th floorMexico City 11560MexicoTel: +52 55 52 81 11 74
New Jersey731 Alexander RoadSuite 101 Princeton NJ 08540 Tel: +1 609 759 7000
New Mexico4801 Lang Avenue, NESuite 110AlbuquerqueNM 87109Tel: +1 505 798 7161
Oregon 1500 NW Bethany Blvd.Suite 200BeavertonOR 97006Tel: +1 503 547 0316
CHANNEL ISLANDS
Jersey12 Dumaresq StreetSt HelierJerseyJE2 3RLTel: +44 (0)1534 720 326
EUROPE
France13 rue Paul Valéry75116 ParisTel: +33 (1)55 04 74 10
FAR EAST
Japan7F TM Hiroo Bldg, 1-9-20 Hiroo Shibuya-kuTokyo Tel: +81 3 3442 6642
Taiwan7F 290Min Sheng West RoadTaipei10345Tel: +886 (0) 2 2555 5886
INDIA
Bangalore#73, SREE Complex Unit No. 215, 2nd FloorSt. John's Road Bangalore 560 042Tel: +91 80 4116 2435
ChennaiVedam Ambujam AptsG.Floor - H58/2Ind StreetAnna Lagar EastChennai - 600 102 Tel: +91 44 4353 1614
Mumbai and KolkataUnit No. 6416th Floor "Laxmi Plaza"Laxmi Industrial EstateOff New Link RoadAndheri (West)Mumbai 400 053Tel: +91 22 6574 9550/
New DelhiC-31A/1 , Kh.no. 394/341/82, Ch. Nathu Singh Mkt.MasoodpurVasant KunjNew Delhi - 110070Tel +91 11 26124372
MIDDLE EAST
Abu Dhabi, UAEOffice 031, Alia TowerKhalifa StreetPO Box 46418Abu DhabiTel: +971 2 671 6265
Dubai, UAESuite 902, NGI HousePO Box 183782DeiraDubaiTel: +971 4 295 5198
QatarBuilding 346, Office 3, C-ring RoadPO Box 47626DohaTel: +974 4434 0048
Sultanate of OmanPO Box 3267Ruwi 112Suite 23/24, 2nd FloorBldg # 3321, Al KhuwairMuscatTel: +968 244 83417
UNITED KINGDOM
AberdeenBishops Court29 Albyn PlaceAberdeen, AB10 1YLTel: +44 (0) 845 287 8500
CumbriaTG13, Gosforth SuiteInnovation CentreWestlakes Science and Technology ParkMoor RowCumbria, CA24 3TPTel: +44 (0)845 287 8620
Haywards HeathOakfield House35 Perrymount RoadHaywards HeathWest Sussex, RH16 3BWTel: +44 (0)845 287 8764
LondonDashwood House69 Old Broad StreetLondon, EC2M 1QSTel: +44 (0)845 287 8800
ManchesterCharter HouseWoodlands RoadAltrincham, WA14 1HFTel: +44(0)845 287 8626
Milton KeynesFortuna HouseSouth Fifth StreetCentral Milton KeynesBucks, MK9 2PQTel: +44(0)845 287 8700
PlymouthPoseidon HouseNeptune ParkMaxwell RoadPlymouthDevon, PL4 0SNTel: +44 (0)845 287 8475
Portsmouth13 Grove Road SouthSouthseaHants, PO5 3QRTel: +44 (0)845 287 8400
Scotland HubBuilding 3, 2 Parklands AvenueMaxim Office ParkEurocentralLanarkshire, ML1 4 WQ Tel: +44 (0) 845 287 8500
Currie & Brown offices