2015 GIS: Building Economic Cities
Panel Discussion On Competitiveness In Building Economic Cities
Mr. Fahd Al-Rasheed, Group CEO and Managing Director of the King Abdullah Economic City (host for the conference)
Mr. Samih Barbir, Chairman of Abdali Investment & Development PSC. Oman
Mr. Paul Scialla, CEO of Delos Living, New York City
Moderated by The Honourable Deborah Wince-Smith, President of the GFCC
“It’s very important to leverage academia as part of building a city and also by the way art and culture. It’s not always about concrete; it’s about creating vibrancy. Most of governments who have built cities top-down, have built cities without spirits.”
“Abdali is becoming one of the landmarks in Jordan.”
Deborah Wince-Smith: It would be great to hear from the three leading innovators who are actually designing, building, creating sustainable, creative cities of the future. Cities are at the very core of the continuum of human civilization starting some 4,000 years BC. Cities begin to aggregate people coming together to live in communities, to create, to communicate and to really develop the cultures and the civilization that have characterized us as human beings. So cities are the very cell of life and they’re the caldrons of creativity and we’re going to hear about real innovations in cities and how we’re going to live, work and create value on many levels.
Fahd Al-Rasheed: There are 400 cities in Saudi Arabia when you take towns into it. We have 246,000 cities, the most competitive space in the world and 246,000 products that are unique. They are all competing for people, companies and their funds. So to be successful, we really need to have a clear value proposition, a supportive government with clear regulations that actually fit the value proposition that you require. Further you need a developer, a government or private sector that is capable & competent and lastly the right resources. In fact, governments are so excited about Special Economic Zones that they’ve launched 4,000 of them and most of them are not successful.
What we did in Saudi Arabia is quite a mammoth undertaking. Firstly, we wanted to launch a city that was the size of Washington D.C. from scratch, enough for 2 million people. The idea of the late King Abdullah was that in the future the government would not be able to fund everything hence we wanted to launch a city that was fully developed by the private sector. During this process there was a lot of learning. Firstly, it’s not only about building houses but also creating jobs. Secondly, one has to be successful in every sector. For eg. Ports are essential, the industry in a commercial set up should have the best value proposition, laying of Smart cities, knowing technology, how to operate schools to attract students etc. A city is the amalgamation of all of these sectors. By providing the right value proposition, right strategy and commitment behind execution, we can develop the cities.
Deborah Wince-Smith: Would be great to hear the views form Mr. Samih Barbir. He was a part of the team of building the first new sustainable city of Abdali, built in the heart of Amman, Jordan.
Samih Barbir: When Abdali started it was a PPP partnership (50-50 joint venture) between Horizon Group (owned by Sheikh Bahaa Al-Hariri) and a public company called MAWARED. The Hariri Group are very well known to have participated a lot in the regeneration of the Beirut downtown Solidere. MAWARED was the government side, giving all the support that such a project would need. It was started about 10 years ago, there were some delays such as the 2008 crisis, but officially launched in June 2014. This project went through various stages. First stage was the master planning of the project and the land usage, followed by the infrastructure stage whereby everything was set up. The marketing and sales phase, especially for the Phase 1 of the project, is already up and running.
Deborah Wince-Smith: So, Paul tell us about the WELL Building Standard.
Paul Scialla: The WELL Building Standard is a combination of about five years of research looking to best understand how any built environment is impacting us as people. We think of green building and all the focus on environmental impact, which makes perfect sense. It’s time to have a complement and also look at biological impact and understand biological sustainability in the built environment. The WELL Building Standard was introduced, on our behalf, by former President Bill Clinton at the Clinton Global Initiative a few years ago. There are over 200 projects deploying this certification program around the world in 12 countries. This is again how to understand, how to infuse preventative medical intentions into the way we design spaces. Even this room right now is having an impact on our cardiovascular health, respiratory health, the lighting we are receiving right now is going to impact the way we sleep tonight.
The doctors from the Mayo Clinic, Harvard Medicine, Cleveland Clinic were assembled and finally got them to speak to architects. So a five-year effort of academic, medical, political betting led to the culmination of a process called WELL certification, which is being administered by the US Green Building Council as a complement to LEED certification and we believe it to be the next step in sustainable building practices.
Corporations are starting to understand and design homes, offices and schools that work on 7 standard categories like air, light, water, nourishment, fitness, comfort and mind. They are putting 1% premium to original or normal construction costs. Also the green building and LEED certification, which has been implemented into over 12 billion square feet in the world in 156 countries, also administers WELL Certification. This has created the International WELL Building Institute in a partnership with the US Green Building Council. We are deploying WELL Certification as the next step in building practices.
It is a very scalable and shareable formula. The WELL Building Standard was about a five-year effort combining the private sector IQ and the medical IQ. 200 projects have signed up encompassing about 50 million square feet, commercial office spaces, residences, home etc. WELL Community Standard is the next level. The City of Tampa, Florida will become the first WELL Certified City District in the world and there’s a pilot program now looking to assemble 10 to 15 more cities to join and become the handful of first WELL Certified Districts in the world.
Deborah Wince-Smith: Why do we need to invest and go to the next level? What is actually the cost structure for both refitting and moving to a WELL Certified building? Is this something that is exorbitant? Is this something developers and owners want to say, we don’t need that now? Or how do you get it going?
Paul Scialla: In fact people at the end of the day should be most concerned with their own health and well-being. If they are aware that they can buy homes and that their children are breathing purified air or having circadian appropriate lighting which is balancing their sleep-wake cycle, purified water, posture supportive flooring, it would make sense. But at a 1% premium, this is an extraordinary economic opportunity. We are taking $180 trillion of real estate (largest asset class in the world) and infusing it with the fastest-growing and most important industry in the world, health and wellness, ($3 trillion a year annual spend). Putting these two industries together is a massive economic potential.
Deborah Wince-Smith: What is the significance of King Economic City being close to KAUST? Do you see that as a powerful anchor for this generic growth that’s occurring now that you have the infrastructure well underway?
Fahd Al-Rasheed: The formula for building a great city is quite simple. Establishing a great university and wait 200 years. We don’t have 200 years, so we already have a great university and that will help us a lot. So it’s very important to leverage academia as part of building the city and also by the way art and culture. It’s not always about concrete, it’s about creating vibrancy. Most of governments who have built cities top-down, have built cities without spirits, because they focused on the top-down, getting the architect, the master plan and start building. They start building the massive beautiful buildings, but forget little things that make our life so wonderful. Beautiful walkways, place for the food trucks to go are some of the things which should be kept in mind to make a city interactive. These are all sort of bottom-up and entrepreneurship areas that the population should participate in, building the city and making it a vibrant place where people want to live.
Deborah Wince-Smith: In Abdali the whole concept of infusing arts, music, creativity and design was there from the very beginning of the concept. Are you seeing now the attraction of this artistic community that wants to come in to Abdali? Is that going to be a premium as you move forward on the next phase?
Samih Barbir: Till now we haven’t seen that attraction on the ground. We’ve heard a lot of interest being expressed but we’re going through a very tough phase of injecting life into a new downtown, bringing in the retailers, attracting offices, multinational high-quality international companies etc. The restaurants would be waiting for the offices to fill up, hotels are waiting for the clients to come in and vice versa. Things have been quite slow. I would have preferred to be on a much higher percentage in tenants and occupancy, etc. Slowly by word-of-mouth, by all our activities and promotional efforts, Abdali is becoming one of the landmarks in Jordan. It’s also now on the map but on the art side, its still not there yet.
Deborah Wince-Smith: In the case of King Abdullah Economic City (KAEC), so many companies are coming in to create their headquarters. What was the turning point that enabled you to have a serious growth? Was it sui generis or was there something you did to stimulate it and start that investment of people and new infrastructure that’s coming from the private sector?
Fahd Al-Rasheed: We develop bespoke solutions for every company. Each company has a global competitive landscape, and needs to worry about so many aspects. At KAEC there would be a revolution in the way we operate cities. We are separating the development and the ownership from the operation. So we’re actually creating an operating entity. Every company that owns something in the city gets a stock in the new company of operation. We have an annual assembly, they elect a board, that board then appoints an executive, that executive then has to publish financial statements. The company does not self-perform anything, on operation, it always bids them out. So one gets the best cost, one start paying fees, one is aware on what is happening and if we don’t like it then the board/executive could be changed. This feedback loop that is created through a more private sector approach to it, is a very interesting way of optimizing city operations.
Deborah Wince-Smith: You are describing a first ever-new model for the governance of a new city.
Fahd Al-Rasheed: It is new and it is a bit old, i.e. apartment buildings have ownership councils. It is very well regulated around the world. And so offering that same model to a city operation, it’s an operational executive execution area and you have to create KPIs and we are actually giving city operation back to the residents. We’re creating an app right now that allows the resident to supervise everything in the city. They will send us a picture of the pothole that they just saw or an area that’s not clean etc. so, we know exactly when it’s cleaned because we have to report back on them. So we know who is not doing their job. So we are talking about a governance type of approach, a new model that is adopted from other models that are already working.
Deborah Wince-Smith: I think the university education space, as well as hospitals are huge also for the WELL Standard.
Paul Scialla: Humongous. As a practical example, we are not built to be inside. For thousands of years, we’ve lived outside and then we started building these boxes around ourselves and spending 90% of our time indoors. Indoor air quality is worse than outdoor air quality. Air gets stagnant, people think they’re inside and they’re protected from pollution. Lighting is fascinating. This type of lighting right now is entering your circadian optic nerve, it’s regulating your entire sleep-wake cycle, it’s got nothing to do with vision, this circadian optic nerve takes in light. We are not supposed to be getting this kind of light. We’re supposed to be getting a very rich, bright, bluish type of light called the sky. And that boosts our elements and hormones for productivity and mental acuity and it suppresses things like melatonin. And then when it gets dark, the optic nerve tells us to start creating melatonin, reduce those other hormones and we start preparing for sleep, that’s our natural circadian rhythm. The WELL Building Standard researches and provides protocols that are effectively costless to have appropriate lighting indoors. With LED technology we can choose any color, lux, hue, temperature of light. And we have doctors telling us what’s appropriate lighting, so we’re not put to sleep during the day. So we then need to overcompensate with coffee and sugars leading to type II diabetes and obesity. It’s all about light, light is medicine and the WELL Building Standard is finally a document that demonstrates in a very shareable, scalable way to developers, contractors and architects how to consider what’s happening to our bodies when we’re inside.
Deborah Wince-Smith: If we were able to go to a WELL Certified Building hotel, do you think none of us would have jetlag?
Paul Scialla: I think we can do a lot to consider how to eliminate jetlag within about an hour with the appropriate circadian lighting, scientifically proven by the way and we’re putting this programming into hotel rooms. The good news is, this works for new building and also existing buildings. About 30% of that 50 million square foot pipeline is actually taking existing occupied buildings and getting them to become WELL Certified without a major renovation. These are minor adjustments structurally and operationally that can make a huge difference.
Deborah Wince-Smith: Anything that you want to say about the lessons learned or a message to all of us as we look forward in the next few years? And why is this really at the heart of competitiveness?
Paul Scialla: So briefly when considering how to differentiate, how to build a product that people are going to want, whether it’s an office space or a home, marble or granite or design, but health and wellness is probably the ultimate luxury. If you can educate people on how they can work on their own health, well-being and prospects for longevity for themselves, their employees, that’s a huge differentiator. From a competitive standpoint, if we can keep people healthy and productive, we can compete and that’s just a clear line.
Deborah Wince-Smith: The innovation model is something that is always dynamic and you’re improvizing and changing and adapting and being very resilient of how the future is going to unfold.
Samih Barbir: Well, I believe out of experience, we had to show our partners and developers that we are with them, standing by them. Even though they went through some tough times during the past four years, we never implemented any penalties, we just stood by them, showed them that we’re in there for the long term, it’s really a marathon, not a sprint that we’re looking for and they are really appreciating that and repaying us in many different ways. So I think this is the way to go. We are looking for a long-term commitment.