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Leveraging technology to drive real estate sector
December 24, 2017 | 7:33 PM
by Syed Haitham Hasan
It’s only a matter of time when people will demand tech savvy buildings and a veteran developer will hold the edge over new players that will arise then.
 
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Home to Central Bank of Oman, the Central Business District (CBD), a one-mile strip in the heart of Muscat, was once decorated with headquarters of the largest financial institutions in the Sultanate. It provided an easy doorway to the shopping centre of Ruwi and the largest schools in Oman still lie within a 5-mile radius of the district. Needless to say, CBD was a real estate developer’s paradise and apart from new constructions, there was little for builders to do.

Fast forward to 2016, oil prices crashed. Rents dropped by a quarter and occupancy rate was at an all time low as institutions began major expenditure rationalisation. Jobs were lost and while the government could retain Omani workers, expats who made up a major chunk of residential tenants, had to go back home. Like many other areas in Oman, the formidable CBD was suddenly no more a developer’s paradise.

The real estate market that had remained stale in offerings to tenants for years, now, required something new to fight the crippling demand free fall and fierce competition due to overcapacity. But how could developers stay competitive in times of low demand?

Facilities like play area, gym, security gates and cleaning services are all suggestions to stand out in the crowd but is that enough? Or is it time for a technology revolution in the real estate sector? I asked Faisal Durrani, Head of Research at Cluttons.



“Aside from the usual lease incentives, examples of forward thinking may well include more energy efficient, or technologically sophisticated buildings, especially if it delivers savings to residential tenants, or commercial occupiers. This could become the key to unlocking demand once Value Added Tax (VAT) becomes a key consideration for households and businesses in Oman,” Durrani was spot on.

To be competitive, developers need to offer the right mix of efficiency, cost savings, and comfort. In such economic situations, tenants have less to spend so providing them a space that has financial benefits as well as comfort could beat any competition. Such offerings don't cost a fortune but only a thorough effort from the developer.

“We have to remember that only 20 per cent of a building’s costs are related to its construction; the remaining 80 per cent are operating costs. So being able to control and optimise all the functions in a building – from heating, ventilation, lighting and shading to room automation, energy management and fire safety, as well as security disciplines, has clear financial, safety and environmental benefits,” Markus Strohmeier, CEO of Siemens in Oman rightly points out.

Temperatures in Oman reach nearly 50 degrees during the summer and ACs run throughout the year but surprisingly, few developers in Oman have actually looked at eco-buildings that incorporate sustainable materials and smart technology to reduce use of electricity. Something as simple as using a double paned windows can reduce heat gains by more than 50 per cent during the day but that’s just the start.

Smart building technology that use building management systems to monitor and allocate resources efficiently can reduce utility bills significantly. For instance, take Siemens Desigo CC, a building management platform that is able to integrate, control and optimise all functions of a building’s heating, ventilation, lighting, energy management, fire safety, and security through a single system.

Siemens HQ in Munich.


The system can create a perfect interplay between heating, ventilation, air-conditioning, and lighting. So during the time of the day you can have window blinds slightly opened to let the natural lighting illuminate the room instead of using artificial lights while reducing glare and heat gains. With Oman receiving strong sunshine most hours of a working day, commercial tenants may find this as a major power saver. Moreover, depending on the time of the day, year and working hours, the system has the ability to turn ACs on and off. Energy is distributed only when a room is actually occupied, so no more of wastage of electricity on lighting and cooling empty rooms. All of this while allowing users to access the interface and find out the different variables such as temperature, humidity and CO2 concentration that affect their electricity consumption, thereby helping to minimise energy requirements. In global installations, the Desigo CC has reduced operating costs by up to 20 per cent.

Moreover, Oman plans to launch the residential PV programme early next year where occupants can slash electricity bills by half if they have rooftop solar panels installed. Experts estimate that nearly 50 per cent of the houses in Muscat will have rooftop solar panels installed over the next five years. These panels can also be integrated with products like the Desigo CC to provide further cost savings and efficiency.

“We are now looking at the next evolution, which is, how the Internet of Things (IoT) will further enhance the potential of technology for smart buildings,” Strohmeier says about IoT that defines what facilities of next generation will look like.

In an IoT world, everything from cars, phones to kitchen devices and building gates will be connected. So instead of holding a card out of car window to activate building gates, the system will be alerted about your return home and gates will automatically open once your car closes in. You will be directed to the nearest parking spot and a keyless entry awaits you on reaching your home door. Real time monitoring of energy use; when occupants require maximum cooling, ambient lighting depending on tasks being performed, water allocation for routine tasks such as laundry or shower and saving electricity wasted due to human error are all in the domain of IoT that will use sensors and analytics to make decisions. Kitchen furniture such as refrigerator will soon be able to alert you on food required for cooking breakfast, lunch or dinner. The list is never ending.

Why not leverage the use of renewables and analytics now as Oman gets back into growth momentum? The prices of materials are at a historic low and tech companies are fighting for market share by dropping prices of products. There will be an influx of locals and expats in cities like Muscat and Sohar in the future as business develops and urbanisation accelerates. Institutions, especially SMEs who struggle to offer staff incentives like larger corporations, can provide efficient, healthier and more technologically advanced office spaces. Residential tenants are already shifting to developments that offer atleast some cost saving and comfort features. ITC developments that incorporate such facilities can further drive the property market with foreign investments. It is only a matter of time when people will demand tech savvy buildings and a veteran developer will hold the edge over new players that will arise then.

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