< Previous20 CONSTRUCTION WEEK MAY 2020 EDITOR’S LETTER WWW.CONSTRUCTIONWEEKONLINE.COM The COVID-19 pandemic and the plunge in oil prices are causing economic turmoil in the region, and amongst other sectors, the construction industry has bear the brunt. The UAE has arguably suffered most from the outbreak, with temporary discounts on projects being installed, more frequent delays expected to infuse disputes in contracts and now, the looming confirmation of the postponement from Expo. But what does the future hold for one of the other key GCC markets such as Saudi Arabia? The US-Saudi Arabian Business Council (USSABC) told Construction Week a few weeks back that the two biggest challenges facing Saudi Arabia’s built environment are disruptions in the supply chain and the limited mobility of people. But for the meantime, it seems that it is business as usual for some of the Public Investment Fund’s developments. Qiddiya confirmed that it has taken all necessary health and safety preventive measures in compliance with the Saudi Ministry of Health’s regulations to continue construction within a safe environment on site. Meanwhile, The Red Sea Development Company is also continuing ground development work on its Coastal Village project. As construction workers seem to remain committed, the optimism amongst the Saudis also seems to be high. In a study conducted by global firm APCO Worldwide, Saudi Arabia citizens have expressed confidence that the kingdom will recover from the global COVID-19 pandemic more quickly than other countries in the region. The research showed that more than 4 in 5 (81%) of Saudi Arabian citizens are confident that the kingdom will recover from the global COVID-19 pandemic more quickly than other countries in the region. A majority of respondents (76%) also indicated they believed the economic changes and reforms within the kingdom in recent years have put the country in a better position to recover quickly to the widespread impact of COVID-19 than other nations in the region. Actions taken by the government include closing malls, implementing curfews to limit gatherings and introducing a $34.4bn stimulus package to support the national economy. A recent Royal Decree by King Salman also announced an additional $2.4bn is already available to pay part of the wages of private-sector workers to deter companies from laying off staff during the pandemic. Saudi Arabia is putting in the right measures to ensure the future of its sector, but it’s up to the gigaprojects to deliver on its high promises. Why KSA’s gigaprojects matter more than ever? As the economy sinks from the impact of COVID-19, further pressure is expected to mount on Saudi Arabia’s gigaprojects to deliver on its high expectations “SAUDI ARABIA IS PUTTING IN THE RIGHT MEASURES TO ENSURE THE FUTURE OF ITS SECTOR, BUT ITS UP TO THE GIGAPROJECTS TO DELIVER ON ITS HIGH PROMISES” Ashley Williams EditorINTERVIEW MAY 2020 CONSTRUCTION WEEK 21WWW.CONSTRUCTIONWEEKONLINE.COM RGS IS DRIVING FORWARD KSA’S SCAFFOLDING INDUSTRY With health and safety, planning and scaffolding performance at the forefront of its operations, Saudi Arabia’s Resa Gulf Scaffolding (RGS) has worked towards increasing business revenues by 18.7% over the past 12 months, driven by a ‘Fit For Growth’ programme to increase market shares and generate higher revenue, Ash T. Arshad, the company’s general manager tells Construction Week. RGS has been part of major oil and gas construction projects in Saudi Arabia. Its onshore projects include multiple areas such as Wasit Gas Program, Jazan Integrated Gasi cation Combined Cycle Project, and Manifa Plant. Offshore, the company has worked on Karan gas eld and Abu Safa project, as well as Marjan facilities, in the Eastern province. In terms of petro-chemical projects, the company has been involved in Sadara chemical complex’s construction and maintenance and has contributed works towards Saudi Basic Industries Corporation (SABIC) af iates. Among the challenges the company faces, a major obstruction is EPC contractors’ preference for larger scaffolding companies, Arshad notes. “They are shortlisted without a check being conducted on their current performance. We often see large companies collapse or witness substantial declines in revenues. To overcome this ongoing challenge, the business is relying on building its reputation through performance.” Speaking about the company’s scaffolding performance, as well as its health and safety record, Arshad adds: “We have attained the highest number of certi ed Aramco supervisors in the kingdom per number of scaffolders. In addition, we have been awarded twice by Saudi Aramco; once for health and safety, and the second time for scaffolding performance.” In order to “aim for zero scaffolding accidents”, RGS crew members receive technical and safety training, he notes. “RGS’s robust engineering and design capabilities ensure all scaffolding built is in compliance with the best industry requirements. In addition, stringent quality and safety control helps ensure all residual risk is eliminated.” Acknowledging the impact of the ongoing COVID-19 outbreak on the company’s operations, Arshad notes that RGS felt the effects as well, with limited mobility of employees. This, in turn, he says, has hampered regular operational schedules as well as certain projects. “However, we developed a crisis management plan early on. Where possible, we camped our scaffolders in locations near work sites. In addition, we continually supply masks, carry out regular temperature and health ith health and safety, planning and scaffolding performance at the fff ii Saudi Arabia’s Resa Gulf Scaffolding’s general manager speaks with Construction Week about the company’s performance, its HSE initiatives and efforts to cope with the impact of COVID-19 checks of our personnel. We are taking steps to make sure that the scaffolders maintain social distancing in the buses as well. We also had arranged for our scaffolders to be located to different cities before the government-imposed travel bans were put in effect. “To date we have not had to lay off any scaffolders,” he adds. Speaking about the outlook for the company, Arshad says: “Prior to the outbreak of COVID-19, the business set itself a challenging target for 2020 by increasing its year-on-year revenue growth by 45%. This has not been revised downwards as Q1 results have surpassed Q1 budget expectations. The backlog remains strong for Q2. The challenge will occur if the government cuts back on planned works. We have carried out a scenario analysis, but remain optimistic that works will continue to be awarded going forward. The outlook beyond 2020 remains positive, as the pipeline for upcoming projects remains strong. Resa Gulf Contracting has been part of major oil and gas construction projects in the region Image: SuppliedINTERVIEW 22 CONSTRUCTION WEEK MAY 2020WWW.CONSTRUCTIONWEEKONLINE.COM The global outbreak of the novel coronavirus (COVID-19) pandemic has left an unprecedented impact on local and international stock markets and supply chains, as well as sectors including, construction, manufacturing, F&B, retail, and distribution. According to a report by World Health Organisation (WHO), as of 20 April 2020, globally the total number of confirmed COVID-19 cases reached 2,319,066, with 157,970 deaths. In Saudi Arabia, on the same day, confirmed cases totalled to 10,484, while deaths peaked at 103. This number has also been confirmed by the spokesperson US-Saudi Arabian Business Council’s economist, Albara’a Alwazir, tells Construction Week’s Ranju Warrier how the outbreak of COVID-19 has changed the face of the construction sector in the kingdom and how it intends to overcome the challange Albara’a Alwazir, economist, USSABC [Photo courtesy: USSABC] of the kingdom’s Ministry of Health, Dr. Muhammed Al-Abdel Ali on 20 April. In the Middle East, most countries have adopted a contingency plan, including implementing a complete lockdown, as well as 24-hour sterilisation programme. All this has shaken the economic position of countries, which has also affected the construction sector. Speaking exclusively to Construction Week on the impact of COVID-19 on the kingdom’s construction sector, Albara’a Alwazir, economist at US-Saudi Arabian Business Council (USSABC), says: “Given the impact COVID-19 and the drop in oil prices is having on global markets, we expect a downturn in Saudi Arabia’s economic activities at least for the first half of 2020.” “While the construction sector rebounded strongly in 2019, we expect to see a drop in economic growth for 2020. This drop is a result of lower oil revenues, which have a historical inclination to precede a drop in construction activities.” Alwazir explains that with the momentum shift in 2019, “the COVID-19 pandemic will impact the kingdom’s construction sector in 2020”, and adds that the issue isn’t specific to Saudi Arabia, “it is a global challenge”. “The construction sector is labour intensive and requires a significant number of labourers. However, limiting the spread of COVID-19 is of paramount concern.” “This presents a considerable challenge to the construction sector, as recently announced orders by the government to refrain movement between cities in addition to longer curfew periods, especially for Riyadh, Jeddah, Makkah, and Madinah are taking place.” According to Alwazir, who is an economic expert with 17 years of experience, the two main challenges facing the construction sector are “disruptions in the supply chain and the limited mobility of people”. “Firstly, Saudi Arabia imports a majority of its machinery and equipment from China. This impact orders for new equipment for projects that are set to begin and for projects that are currently under implementation,” he explains. “While official figures regarding imports and exports are not yet available for the first “THE COVID-19 PANDEMIC WILL IMPACT SAUDI ARABIA'S CONSTRUCTION SECTOR IN 2020”MAY 2020 CONSTRUCTION WEEK 23 COVID-19 WWW.CONSTRUCTIONWEEKONLINE.COM However, according to USSABC, the construction sector’s contribution to the country’s GDP “rebounded into positive territory in 2019”, having witnessed a negative growth the last three years. This contribution grew by 4.6% compared to 2018, marking the highest growth rate since 2014, Alwazir — who earned an MBA from the Kogod School of Business at American University in Washington, DC with dual concentrations in finance and real estate — tells Construction Week. Alwazir explains: “The non-oil sector is still expected to grow compared to 2019, albeit not at the levels that was forecasted when the year began. “However, we have seen megaprojects that have been awarded during Q1 2020 such as the $2 billion King Salman Airbase construction project and Saudi Aramco’s continued investment in the oil & gas sector.” Saudi Arabia’s construction sector supported by gigaprojects such as The Red Sea Development Project, Qiddiya, Amaala, Riyadh Metro, and Diriyah among others has strengthened the value of awarded contracts in 2019, experiencing a massive 95% jump from 2018 to $56.2bn (SAR197.1bn). Alwazir concludes: “The kingdom’s drive to enhance both physical and social infrastructure capabilities through numerous Vision Realisation Programs (VRPs) was evident this past year.” “These positive developments, which came to fruition in 2019, are expected to expand in the coming years to achieve the kingdom’s medium to long-term Vision 2030 targets.” quarter of 2020, we expect a downturn in imports and exports of construction related goods.” From 23 March, the Saudi Arabian government has since imposed restrictions on the movement of people to limit the spread of the COVID-19, which according to Alwazir “will curtail productivity rates in the construction sector”. In April, The Custodian of the Two Holy Mosques King Salman bin Abdulaziz Al Saud further ordered an extension to the curfew strengthening the country’s move to combat the outbreak. “This will result in likely delays in the implementation and completion of projects.” Pointing at sectors that will bear the most impact of the pandemic, Alwazir explains: “If the pandemic extends beyond the summer and into the rest of 2020, we will likely see further suspensions and/ or cancellations of projects for specific sectors. While all sectors will face downside risks, it will be more considerable for the hospitality, transport, and retail real estate sectors, which are largely dependent on consumer demand. “Alternatively, the healthcare sector will likely witness an increase in projects as demand for healthcare — infrastructure, medical equipment, and personnel — will continue to increase.” Talking about various economic measures adopted by Saudi Arabia to overcome the void that has been created due to the outbreak, Alwazir, says: “While the kingdom announced a 5% reduction in its budget to offset these challenges, it is also injecting $32bn (SAR120bn) in financial support to combat COVID-19. Approximately $19bn (SAR70bn) includes direct support to the private sector, especially small and medium-sized enterprises (SMEs) and high-risk sectors such as hospitality and tourism, in addition to provisions allowing the postponement of value-added tax (VAT), excise tax, and income tax payments for a period of three months.” “The Saudi Arabian Monetary Authority’s (SAMA) $13bn (SAR50bn) stimulus package will support private businesses and include loan deferments for businesses. These are the short-term quick turn-around solutions the kingdom has delivered since the outbreak,” Alwazir notes. “Given the impact COVID-19 and the drop in oil prices is having on global markets we expect a downturn in Saudi Arabia’s economic activities at least for the rst half of 2020” [Image: ITP Images/ Shutterstock] The two main challenges facing the construction sector are “disruptions in the supply chain and the limited mobility of people”[Image: ITP Images/ Shutterstock]COVER STORY WWW.CONSTRUCTIONWEEKONLINE.COM24 CONSTRUCTION WEEK MAY 2020 “AMAALA will disrupt the tourism sector and redefine the luxury resort experience” INTERVIEW BY ANUP OOMMEN | PHOTOGRAPHS COURTESY AMAALAINTERVIEW BY ANUP OOMMEN | PHOTOGRAPHS COURTESY AMAALA Nicholas NaplesNicholas Naples, the chief executive officer of Saudi Arabia’s ultra-luxury , the chief executive officer of Saudi Arabia’s ultra-luxury tourism and entertainment destination, AMAALA, speaks to tourism and entertainment destination, AMAALA, speaks to Construction WeekConstruction Week’s deputy editor ’s deputy editor Anup OommenAnup Oommen about how the gigaproject about how the gigaproject is on track for delivery ahead of the Kingdom’s Vision 2030, with a special focus is on track for delivery ahead of the Kingdom’s Vision 2030, with a special focus on achieving net-zero sustainability standards from the ground upon achieving net-zero sustainability standards from the ground upFOLLOW CONSTRUCTION WEEK @CWMIDDLEEAST COVER STORY WWW.CONSTRUCTIONWEEKONLINE.COMMAY 2020 CONSTRUCTION WEEK 25COVER STORY 26 CONSTRUCTION WEEK MAY 2020WWW.CONSTRUCTIONWEEKONLINE.COM “We conceived AMAALA as a natural extension of its environment, and its contemporary architectural language will ow and be inspired by Saudi Arabian cultural heritage and its natural surroundings” The developer is using post-tensioning concrete, which not only helps reduce cost but builds the structure ef ciently Saudi Arabia’s AMAALA gigaproject – led by Crown Prince HRH Mohammed bin Salman bin Abdulaziz Al Saud’s Public Investment Fund (PIF) – is taking shape in the northwestern coast of the kingdom. The gigaproject, which is currently in Phase 1 of development, covers 4,155km2 of unspoilt terrain across land and sea, and is located between the kingdom’s NEOM development and The Red Sea Project. Sharing progress details in an exclusive conversation with Construction Week, the chief executive officer of AMAALA, Nicholas Naples, says: “With the master plan approved by our board of directors, an extensive feasibility has just been completed, with contractors already on- the-ground conducting the necessary assessments and ground works.” AMAALA – an ultra-luxury resort destination, expected to be completed ahead of the realisation of the Saudi Vision 2030 – will feature a trio of communities, including Triple Bay, The Coastal Development, and The Island. Each community will offer different experiences to its visitors. Naples explains: “Triple Bay will be the world’s most comprehensive wellness retreat supported by top-tier luxury medical and integrative wellness resorts, as well as varied recreational activities. Triple Bay will also be home to a sports performance academy, an equestrian resort and polo academy, as well as world- class sports facilities including golf, tennis, equestrian, polo, camel, and falconry.” “The Coastal Development will be home to leading arts and cultural events, and feature a cultural district comprising a museum of contemporary art, a film festival venue, performing arts venues, and a biennale park,” he adds. “The Island will become one of the world’s most exclusive enclaves, offering exquisitely designed Arabic botanical gardens showcasing works of art, sculptures, and landscapes surrounding private residences.” AMAALA: An “extension of the environment” As part of Phase 1, AMAALA has appointed a number of partners who will bring the gigaproject to life over the coming years. London-headquartered architectural design and engineering firm Foster+Partners has been appointed as the executive architect for the masterplan and will bring to life innovative and sustainable design solutions across AMAALA’s hospitality, residential, and retail offerings. International design firm HKS Architects has been appointed as master planner for Triple Bay and The Coastal Development; while Denniston, led by multi-award-winning French-Belgian architect, Jean-Michel Gathy, will be master planners of The Island. Commenting on the gigaprojects design plans, Naples says: “We conceived AMAALA as a natural extension of its environment, and its contemporary architectural language will flow and be inspired by Saudi Arabian cultural heritage and its natural surroundings. Our trio of communities – Triple Bay, The Coastal Development, and the Island – will be distinct in purpose as well as design.” He adds: “The AMAALA advisory board is made up of titans, experts, and leaders from diverse industry sectors, all of whom will be instrumental in designing the AMAALA experience.” In accordance with the advisory board’s charter, industry experts and leaders will meet two to four times per year to review progress and discuss the gigaproject’s vision on sustainability, conservation, hospitality, health and wellness, as well as art. AMAALA’s hospitality segment will be guided by heads of hospitality, including the president of AGC Consulting, Antoine Corinthios; the CEO of Six Senses Hotels Resorts Spas, Neil Jacobs; the general manager of Beverly Hills Hotel, Dorchester Collection, Edward Mady; and the general manager of the Saint-Tropez Tourist Office, Claude Maniscalco; the director and owner of Rafael Group SAM, Georg R. Rafael; and the chairman emeritus of Capella Hotels, Horst Schulze. COVER STORY MAY 2020 CONSTRUCTION WEEK 27WWW.CONSTRUCTIONWEEKONLINE.COM Once developed, AMAALA is expected to include 2,500 hotel rooms, and more than 800 residential villas, apartments, and estate homes, in addition to 200 fashion and retail brands. The vice president of Pontiac Land, and owner of the Capella Hotel Group, Evan Kwee; and the chairman and CEO of Starwood Capital Group, Barry Sternlicht, are on the Advisory Board to guide the gigaproject’s real estate and financing. “In addition, Solenne Blanc, the deputy CEO of Beaux Arts & Cie, and senior advisor for EY on media and cultural industries; as well as Thomas Krens, the chairman and CEO of Global Cultural Asset Management will guide us on the arts and culture front,” Naples adds. Sustainability: “The heart of AMAALA” Nestled within a natural reserve, AMAALA will also set an example for sustainability and eco-conservation in the region. “The goal of being net carbon neutral has been in play from day one of our operations” “Triple Bay will be the world’s most comprehensive wellness retreat supported by top-tier luxury medical and integrative wellness resorts”COVER STORY 28 CONSTRUCTION WEEK MAY 2020WWW.CONSTRUCTIONWEEKONLINE.COM Naples says: “The dean of science and professor of marine, ecology, and ecotoxicology at UNSW Sydney, Emma Johnston, will counsel us on the advisory board of our sustainability initiatives.” In addition, the gigaproject has inked a partnership agreement with The Prince Albert II of Monaco Foundation to work on oceanographic and marine life research. As part of the deal, joint conservation initiatives will be explored to benefit the world’s oceans through the effective management of coral reefs; protection of iconic species; enforcement of Marine Protected Areas (MPA); as well as preventing plastic pollution. “Sustainability is at the heart of AMAALA. The goal of being net carbon neutral has been in play from day one of our operations,” Naples adds. “Sustainability has never been undertaken and embraced on a project of this scale before – existing properties’ sustainability aspirations largely involve playing catch-up to balance offsets, but AMAALA will be meeting these standards from the ground up, creating a coastal oasis that elevates the role of responsible tourism globally.” AMAALA is carrying out its design and development in line with the highest global standards, and is working with its partners to meet the highest levels of sustainability throughout the design, build, and operation phases. “We have identified more than 15 key criteria for sustainability standards, covering everything from the use of full solar fields to waste management and recycling,” Naples explains. For instance, AMAALA’s water production plans include a dedicated desalination plant that has zero impact on the coral reefs. “All wastewater will be treated and reused in agriculture, while all organic waste will be used in agriculture, including Triple Bay’s organic farm. Only biodegradable materials will be used within the resort, while energy requirements will be met by using “SUSTAINABILITY HAS NEVER BEEN UNDERTAKEN AND EMBRACED ON A PROJECT OF THIS SCALE BEFORE – EXISTING PROPERTIES’ SUSTAINABILITY ASPIRATIONS LARGELY INVOLVE PLAYING CATCH-UP TO BALANCE OFFSETS” “Lack of infrastructure has prevented the growth of luxury yachting for domestic and international visitors in the past, but with AMAALA’s comprehensive yachting portfolio, this will change” Nicholas Naples AMAALA CEOCOVER STORY MAY 2020 CONSTRUCTION WEEK 29WWW.CONSTRUCTIONWEEKONLINE.COM offer covered onshore storage, with year- round yacht protection. In addition, “events docks” in the regatta marina will offer facilities for international races and regattas. Naples adds: “Diving and submarine experiences will be a natural extension of land offerings at AMAALA. The Red Sea is one of the most unexplored bodies of water in the world. Its natural combination of abundant sea waters and year-round breezes offer the perfect environment for marine sports. “This is one of the world’s last thriving marine habitats – with nearly 20% of the fish living in the Red Sea – such a vibrant ecosystem cannot be found anywhere else. The diving and submarine experiences will immerse guests in the crystalline domain of whales, turtles, and healthy coral reefs.” In addition, AMAALA is also making strides to develop a vibrant society in the kingdom through a range of regional and international partnerships within the arts, sports, and entertainment sectors. “We are in discussion with several luxury providers and brands, and we look forward to revealing select partners soon. We are also looking at establishing our own hotel and resort brands. “We also have experts and consultants on board to help with our health and wellness programmes, including global polo star Ignacio (Nacho) Figueras, who will play an active role in shaping the world-class polo facilities at AMAALA.” “This is one of the world’s last thriving marine habitats – with nearly 20% of the sh living in the Red Sea – such a vibrant ecosystem cannot be found anywhere else” renewable sources, with the entire AMAALA development having a zero- carbon footprint.” AMAALA is being developed in line with the Saudi Vision 2030’s sustainability goals and the preservation of heritage sites; the UN 2030 Agenda; and the UN Sustainable Development Goals (SDGs). These goals will not only be met within the development of the gigaproject, but will also set standards for future research. “Through the Marine Life Institute at AMAALA, alongside our partners, we will integrate local and international marine life conservation, research, and education, developing oceanographic and marine life research and conservation initiatives, which can then be applied to Saudi Arabia’s waters, and the world’s seas,” Naples says. Shining the spotlight on arts, sports, and entertainment AMAALA is also developing yachting facilities and amenities to leverage its prime location along the Red Sea. “Lack of infrastructure has prevented the growth of luxury yachting for domestic and international visitors in the past, but with AMAALA’s comprehensive yachting portfolio, this will change,” Naples explains. AMAALA will offer yachting havens, inspired by iconic international harbours, and will offer private membership yacht clubs and carefully designed marinas with floating docks. The destination will also Figueras is joined on the board by sports industry veteran Simon Brooks-Ward, the chairman and chief executive of The HPower Group; Susan Harmsworth, the ESPA International founder; and Ingo Schweder, the founder and CEO of GOCO Hospitality. A paradigm of “personalisation” AMAALA will be serviced by its own dedicated airport, which will provide individually-crafted guest experiences from the moment visitors arrive at the destination. The facility will initially serve private jet and charter flights, but will expand to receive commercial airlines, given its proximity to major tourist destinations within the region, and further afield. “AMAALA will be a disruptor in its sector and will redefine the luxury resort experience, and the tourism experience in its entirety. It will set the standards for personalised service, with each guest crafting their own journey through the pillars that tie AMAALA together.” Naples concludes: “Dubbed the heart of the Middle East, AMAALA takes inspiration from the arts, wellness, and the natural wonders of the Red Sea. It will be a key driver of economic growth and Saudi Arabia’s Vision 2030’s objectives, cultivating new investment opportunities, supporting economic growth with a focus on the development of new sectors, driving employment, and upskilling talent.” Next >