IPMS: adoption in the Middle East
In equal measure
28 September 2016
Robert Jackson gives an update on the adoption of international standards in the Middle East
Countries in the Middle East have been looking to diversify their economies and depend less on oil and gas. In recent years, therefore, they have focused on sectors such as tourism, professional services, logistics and trade hubs, manufacturing and industry.
As part of the economic diversification, land and real estate have become increasingly important, and Dubai has been leading the way in opening up to foreign direct investment. It was the first place in the region to allow foreigners to purchase freehold properties and has been seeking inward investment since the early 2000s. Dubai has also become the preferred location for businesses to establish offices, from which they can target markets in the Middle East and North Africa.
As Dubai has developed, it has attracted large corporations looking to set up headquarters. Commercial and residential real estate are being supplied by a growing number of local and global developers and managed and built by a diverse and international supply chain. Sales and purchase transactions as well as leasing of real estate have therefore proliferated. However, this activity has all occurred in the absence of clear international guidance until the creation of the International Property Measurement Standards (IPMS).
Dubai has a largely expatriate population with professionals coming from all over the world. As there were no clear local standards, they have all used their preferred measurement models. This has led to complete inconsistency and lack of clarity, with a variance of up to 24% in measurements depending on the standard used. This inefficient method has led to confusion and disputes relating to space measurements across the region. In an interconnected global marketplace, this is a risky strategy for all property owners, occupiers and investors, especially those who are operating across borders. Fundamentally, it makes analysing property portfolios very difficult.
|
IPMS signatories Other major organisations based in the Middle East that have signed up to IPMS include: |
To enable IPMS to be adopted in the region, buy-in from Dubai’s government was essential. The Dubai Land Department and the Real Estate Regulatory Authority are the government bodies responsible for property title deeds, transactions and rental indices. The local RICS team began building relationships with stakeholders and ran a workshop that was attended by government representatives from around the region. This early involvement with government bodies ensured they played a vital role in reviewing and commenting on the draft IPMS.
Dubai is now leading the way in IPMS adoption; the standard will be used on Burj 2020 – which at more than 700m is set to be the tallest commercial tower in the world – together with a number of projects linked to the World Expo in Dubai in 2020. The Dubai International Financial Centre has also announced that IPMS will be incorporated into its tenancy agreements for all its occupiers, many of which are high-profile global corporations, including international financial institutions and professional services firms.
RICS has been working with several Middle Eastern governments, relevant associations and corporate occupiers, and the international standards are now receiving huge support in the region. In addition to their use on the projects in Dubai, the government of another emirate, Ajman, has pledged its support to the standards, while the Saudi Arabian government is also now engaging with stakeholders in its market on IPMS.
Robert Jackson is Director for RICS Middle East and North Africa
Further information
This feature is taken from RICS Property journal (July/August 2016)