More room for refurbishment market to grow in the Middle East

Dimitri Papakonstantinou, managing director at Plafond Fitout, says that refurbishment market is not as buoyant as expected.

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Dimitri Papakonstantinou, managing director at Plafond Fitout.
Dimitri Papakonstantinou, managing director at Plafond Fitout.

Dimitri Papakonstantinou, managing director at Plafond Fitout, says that although there is a reasonable amount of work available in the market, conditions are still generally very competitive, and therefore, margins are strained. However, he says, “With the EXPO in the horizon, projects are varying in size and scope from works directly linked to the EXPO site to hotels, residential etc. We are currently working on several residential towers as well as commercial buildings.”

Papakonstantinou is disappointed though that the refurbishment market is not as buoyant as expected. He says: “I was personally expecting that refurbishments would be a significant portion of the works in the market considering that many of the hotels have been operational for several years now. This has not been the case however and new builds are still the main contributor of works. Many of the hotels are also opting for a lighter refurbishment of only FF&E, carpets, paint rather than stripping back to shell and core. Refurbishments can be challenging logistically as hotels generally remain operational during the works. However, if planned correctly and executed well by all parties including the client, these can be interesting projects.”

Last year, in an interview with MEP Middle East, Papakonstantinou said that the belief that a new property is better than a retrofitted one is a prominent theme in the Middle East. He explained: "In Europe, or in the States, you see more retrofitting [programmes planned for] buildings, and in fact, it’s even more desirable to have a classic 1920s building that has a history behind it. “However, here in the Middle East, and possibly also due to the aggressiveness of the environment, it [is often preferred] to knock things down rather than refurbish it.”

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The other concern that Papakonstantinou says is cash flows. He says: “I believe that cash and more equitable contract conditions still remain the main concern for most contractors irrespective of their size or sector in the industry. As a company, Plafond is focused on sustainable growth with clients and main contractors that we have a track history of a working relationship. We prepare various cash flow scenarios at tender stage and ensure that we are requesting advance payments that will keep the project cash positive throughout its lifespan. Variations are another common cause for draining a project’s cash as they’re usually assessed late. We have been adamant on reasonable terms with regards to VO (variation order) assessment and although we have not always succeeded, we have often had a positive response.”

Papakonstantinou says that the challenges in the MEP sector are the same as the rest of the construction industry. He explains: “These challenges are delays in projects due to redesign, inefficiency of labour and general coordination. As an industry, we’re definitely not the most efficient.  Very few revolutionary or disruptive methods of construction are appearing however as a company we are fixated on minimising the impact of these issues as much as possible. We have a PMO (project management office) office which is constantly measuring productivity, efficiencies and relooking at what we can do to improve. Every project has a weekly dashboard which measures progress, productivity, safety, quality etc. We have also recently established a modular facility for our MEP division and are seeing the benefits of prefabrication.”

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