GLOBAL PROPERTY INSIGHT FINANCIAL TIMES SPECIAL REPORT | Tuesday April 17 2012

www.ft.com/property-april2012 | twitter.com/ftreports Investors drive sustainability Ed Hammond notes uncertainty about when, or even whether, green technologies will pay back the money invested in them

hen the roof fell in on the international property industry in 2008, it would have Wbeen easy to suppose that envi- ronmental concerns would be put on the back burner. In reality, the relationship between the built environment and sustainability has flourished during the past four years. From landlords attempting to make their buildings as energy efficient as possible, to developers sourcing the most sustainable construction materials and fund managers retrofitting billions of dollars worth of buildings to attract an increasingly environ- mentally conscious investor base, sustainability is now an impor- tant concept in the property industry. And all this in spite of a down- turn that has crippled confidence and activity levels on both sides of the Atlantic. Legislators in Europe, the US developers or owners, is weighing whether this will happen at all. for many organisations, as they Analysts say that before the and Asia are already putting pres- up the benefits of fitting out Moreover, companies facing struggle to cut costs, maintain financial crisis, sustainability sure on owners to improve the buildings to be as environmen- spending cuts may see “green” operations and secure funding for often consisted only of token ges- environmental standards of their tally efficient as possible, against investment as a luxury and focus investment,” says Paul Brown, tures by property companies. buildings and this is expected to the capital needed to do it. instead on spending in areas that head of sustainability at DTZ, the While much is made of high-pro- grow. As sustainability is still a rela- will contribute to survival and property services group. file buildings now being built to Specialist consultancies and tively recent aspect to the indus- growth. For the managers of larger prop- the toughest environmental stand- boutique investment funds have try, there is a lot of uncertainty “In [this] economic climate, it is erty funds, however, the choice is ards, the real challenge for the sprung up to meet the retrofitting about how long it will take for probably fair to state that the being made for them by investors industry is to make existing stock needs. However, the difficulty for green technologies to “pay back” focus on improving sustainability more efficient. many smaller companies, whether the investment in them, or has fallen down the priority list Continued on Page 3 2 FINANCIAL TIMES TUESDAY APRIL 17 2012 FINANCIAL TIMES TUESDAY APRIL 17 2012 3 Global Property Insight Global Property Insight In This Issue Recycling just another Investors drive industry focus on sustainability Continued from Page 1 that the UK government has not methods to energy-saving retrofit- friendliness in exchange for low yet done enough to put coherent ting, becomes more widespread construction costs, now expect who want to know how their and workable environmental and less expensive. their properties to be built effi- money is being spent. Many pen- standards in place, to set parame- Technologies that were once ciently. eco-brick in the wall sion and insurance funds now ters for the property industry to considered “niche” and only for The appetite for sustainable have quotas for the amount of operate efficiently and to ensure those who were pre- materials has caused construction money they must allocate towards regulation promotes improve- pared to spend extra companies to invest bil- sustainable activities. ments. money to boost lions of dollars in Second cities attract IT outsourcing Construction “The gatekeepers of money Jean-François Le Teno, head of their environmen- adapting the basic SHARED SERVICES Jan Cienski says the Ed Hammond want to know that there is part of sustainable development at Axa tal creden- materials they use. quality of office space in central and eastern the investment process that Real Estate, the property arm of tials are F r o m reports on green explicitly deals with sustainabil- the French insurer, echoes Mr coming to a l o w - C O 2 Europe is increasing but still offers good ity. For many, it has become a Hughes and points out that being much wider cement to value, especially in smaller locations Page 4 initiatives in key qualification parameter for “green”, once more of a sales gim- market. hemp roof- buildings being considered for an invest- mick to lure environmentally con- At the ing insula- ment allocation. Currently, it is scious investors, is becoming the forefront of tion and The future of building is green necessary to show that the issue norm across the industry. the push is sustainably ENVIRONMENT In former communist here are few indus- of sustainability features some- “It has become a normal topic the construc- sourced tim- countries, Jan Cienski finds shoddy concrete tries so at odds with where in your thinking, rather and not just something for talking tion industry. ber, many the natural environ- than necessarily being able to shops: 18 months ago, it would Long estab- across the indus- being replaced Page 5 ment as construc- demonstrate a prescriptive have been a very different discus- lished as one of try are finding Ttion. Creating the built approach,” says Bill Hughes, man- sion. But, in spite of the trouble in the world’s ways of reduc- environment has always aging director of property at Legal the property market, it has com- most polluting ing the “foot- EC Harris benefits from move east taken a hefty toll on the & General, the insurer. pletely changed in 2011. Within sectors, the print” they leave PROFILE The consultancy recognised the planet. “If you are a large real estate two or three years, it will be building compa- on the environment. opportunities of markets opening up after Today, the industry, long holder, sustainability in its widest ingrained,” Mr Le Teno says. nies that make up “Resource efficiency is unconcerned with its image sense is something you have to “If your portfolio is not green the backbone of the now embedded in the way years of neglect under socialism Page 5 as a serial polluter, is being think about all the time, in terms now, you are taking a chance for property market are many developers work and in forced to change its ways. of how you acquire, asset manage the future,” he adds. increasingly aware of what owners/occupiers want to Now it is not just the envi- and dispose of investments. In The challenge of having an the impact that use of see. When top-end profits shrink, ronment that suffers if future, it is inevitable that there environmentally efficient portfolio environmentally the bottom line becomes more builders shun sustainability will be significant negative issues is one that fund managers across friendly materials can There is great important,” says Aecom, the US in favour of higher profit if you hold property with poor the world are having to get to have on profits. demand for technical and management sup- margins. Customers, too, energy performance characteris- grips with. Customers who would energy- port services provider involved in expect companies to employ tics,” Mr Hughes adds. The task is being made easier as once have accepted little efficient some of the world’s largest con- the most environmentally However, he says he worries sustainability, from construction focus on environmental design struction projects. responsible techniques. If these are not met, order books will suffer. “Sustainable construction Housing will be main Games legacy is not just about minimis- OLYMPICS Delivering on promises to ing the CO2 emissions regenerate London’s east end and provide directly connected with a project,” explains Rachel affordable homes for local people will be Woolliscroft, sustainability hard, says Vanessa Kortekaas Page 6 director at Wates, the UK construction business. Sustainable construction: the UK recycles a large part of its building rubble Alamy “If we want to move Ripe for consolidation towards a more environ- property services group, rather than horizontal ated through the demolition THE GULF Developers in the UAE and mentally friendly construc- who points out that getting kilns, which require less process. neighbouring countries have been hit hard tion model, it is important the materials right in the energy to make the same At the forefront of this by the global downturn. Camilla Hall writes to source building materials construction process can amount of cement. charge is Keltbray, the UK’s in a way that can be sus- save fortunes down the line. However, the construc- largest demolition com- that mergers in this government-dominated tained and does not deplete “The technology is in tion sector doing the most pany. The London-based market may be inevitable Page 6 natural resources and habi- place to revolutionise build- to alter the industry’s group has turned its recy- tats,” Ms Woolliscroft adds. ings, in part by making image is not involved in cling into a standalone busi- The use of computer tech- them smarter – installing creating the new skylines ness. It closely follows the Sustainable shops nology known as building daylight sensors that dim or infrastructure projects scrap-metal markets and reduce costs information modelling artificial light when it’s not that provide the backbone sells off tonnes of copper, RETAIL SECTOR Walmart’s (BIM) has allowed compa- needed; installing wireless for an increasingly urban- steel and iron when prices nies to predict with much meters on equipment so the ised world. Instead, it is the are high. Charles Zimmerman says greater accuracy the type building knows when there companies charged with Keltbray also recently green initiatives do not and quantity of materials is a malfunction; [using] taking away and disposing took a novel approach to just appeal to consumers, needed to complete a software that can analyse of old buildings that are at disposing of the thousands they produce significant project, helping them to cut energy usage trends and of tonnes of earth, or spoil, savings as well, writes back on waste. either make adjustments or it removes each year. The “[It] is changing how the alert the facility staff,” says In the UK, group bought a golf-course Andrea Felsted Page 7 construction industry deliv- Mr Probst. construction reuses landscaping business and ers projects. It enables us to The push to move sus- has already started using simulate the building’s tainability up the agenda is 98 per cent of the the ground waste it takes Front page illustration MEESON operational phase, so we reshaping the basic build- materials created out of old buildings to build can model its energy con- ing blocks construction new holes at a golf course Contributors sumption or carbon emis- depends on. Even cement – through demolition in Hampshire. sions before a brick has historically, one of the most The construction industry Ed Hammond Andy Mears been laid, and minimise the energy-intensive and pollut- will always be behind some Property Correspondent Picture Editor carbon footprint of our ing materials to produce – the forefront of the push business sectors in improv- Jan Cienski projects,” says Ms Woollis- is being redesigned to towards sustainability. ing the environment, as Warsaw and Prague For advertising contact: croft. match the demand of an Demolition companies there are aspects to the Correspondent Lyn Thompson “BIM also allows us to increasingly environmen- now recycle the vast major- industry, such as the need +44 020 7873 4967 give customers better infor- tally aware end user. ity of the material they take to transport heavy goods Camilla Hall [email protected] Gulf Correspondent mation about their build- The cement industry, off site. and waste across large dis- or your usual ings at the end of a project, dominated by five multina- From old rubble, treated tances, that are likely to be Andrea Felsted representative which in turn means they tionals, is ploughing bil- and reused to provide foun- polluting. Senior Retail can manage them more effi- lions of dollars into creating dations for motorways, to But the industry will keep Correspondent FT Reports are on FT.com ciently to minimise CO2 technology that allows it to brass doorknobs being pol- changing to meet the needs Martin Brice at ft.com/reports emissions,” she says. produce the grey powder in ished up and sold on as of a customer base that is Jearelle Wolhuter Follow us on twitter at Commissioning Editors This view is echoed by ways that do the least dam- antique salvage, little goes becoming ever more con- twitter.com/ft.reports Dan Probst, chairman of age to the environment. to waste. cerned with not just how Steven Bird All editorial content in this energy and sustainability One simple but effective In the UK, the construc- efficient their buildings are, Designer supplement is produced services at Jones Lang change has seen the produc- tion sector reuses 98 per but how efficiently they by the FT. LaSalle, the international ers move to using vertical cent of the materials cre- were built. 4 FINANCIAL TIMES TUESDAY APRIL 17 2012 FINANCIAL TIMES TUESDAY APRIL 17 2012 5 Global Property Insight Global Property Insight Offices in smaller cities The future of building is green although they still make up Skanska is building a new The trend is spreading to Environment only a tiny percentage of office tower, Atrium 1, local companies, says overall central European which it plans to make the Ludovic Duplan, chief exec- Energy efficiency building stock. greenest building in Poland. utive of VCES, a Czech sub- attract IT outsourcing Prague, capital of the The move to green comes sidiary of Bouygues, the replaces communist wealthiest country in the from the market. While the French construction com- than in western Europe, The vast majority of this at Colliers, the property concrete, writes region, has about a third of European Commission does pany. Shared services and the growing availabil- is aimed at the BPO sector, company, estimates that Jan Cienski the 670,000 sq m of environ- set some standards, govern- After the end of commu- ity of modern office space. which places Kraków sec- about 80 per cent of the mentally certified office ments across central nism, the push across the Jan Cienski says “About 80 per cent of our ond to Warsaw in the office demand in Poland's buildings in central Europe. Europe have been slow to region was simply to build central Europe clients are shared service Polish office market. secondary cities comes CSOB, one of the Czech However, of the 510,000 sq enforce more stringent as quickly as possible to companies,” says Dorota The capital, with 3.6m sq from BPO investments. Republic's leading banks, m of green office stock environmental measures. provide affordable office, offers good value Turska, marketing officer m of office space, caters to This has put a premium has been a pioneer in an under construction in the Instead, the push for retail and residential space. at Buma, a Kraków devel- a much broader range of on designing flexible open- unexpected field – as the region, about 400,000 sq m green building has come in However, as central Europe oper. clients and is becoming too plan office space with rein- first occupier of a top-rated are planned for Warsaw, part from occupier tenants has become wealthier and oland’s medieval Some of the company's expensive, due to higher forced floors and ventila- “green” building in the which will make the Polish better integrated with west- capital is well recent projects have been labour costs (labour tion in order to accommo- country, marking the start capital the region’s leader Skanska’s ern Europe, that approach known as a tourist rented out to Capgemini, accounts for about 80 per date banks of servers and of a trend towards environ- in green buildings in the Waldemar no longer finds favour. magnet, but away the consultancy, and cent of the operational high-quality telecommuni- mental construction. near future, according to a Olbryk: “Today, if a developer in Pfrom the market square, Motorola, the US electron- costs of a BPO investment), cations links that allow Located in the Radlice report by Jones Lang the Czech Republic is look- clients prefer royal castle and gothic ics group. low unemployment and workers to connect with area of Prague on a former LaSalle, the property con- green ing to exit, they know that churches, the office parks Andrew Hallam, general office costs that are close to customers and head offices Growth industry: the office parks of suburban Kraków are home to one of the most dynamic shared services markets in the world industrial site, the bank's sultancy. buildings they are going to have an of suburban Kraków are secretary of Aspire, a €20 per sq m in the centre in other countries. 37,700 sq m headquarters The future also looks easier time with a certified home to one of the most Polish business process of the city, compared with “The demands of the of 7.8 per cent, according to executive at HP, the com- outsourcing business glo- “[Here] you can find effec- still the main hub for BPO was built by Skanska, the green in Budapest, where building,” says Mr Duplan. dynamic shared services outsourcing (BPO) organi- about €13 in Kraków. companies are often very DTZ, but that is expected puter maker, and head of a bally in 2010, says Tholons. tive rents for under €10 per investments, and has a construction group, and 100 per cent of the office or large international corpo- “It will be difficult to sell a markets in the world. sation, says that the sec- While Kraków has been high. IBM or Infosys [the IT to tighten to 5-6 per cent by Polish BPO lobby group. Although Prague contin- sq m, which is impossible vacancy rate of about 17 occupied in 2008. With buildings planned for 2013 rations that are imposing building in five years if it The sector provides more tor’s headcount is growing the most successful companies] cannot afford the end of the year; Wro- “There are cities beyond ues to attract new shared in Warsaw and increas- per cent. plant-covered roofs, effi- meet green standards. company-wide social does not meet these stand- than 25,000 jobs and compa- by about 25 per cent a year. regional magnet for BPO to rent a building that does claw has a vacancy rate of Wroclaw and Kraków that service centres, costs are ingly difficult in Kraków Although central Europe cient windows to reduce Waldemar Olbryk, Skan- responsibility standards. ards.” nies such as Lufthansa, Putting all those people investment – a recent rank- not meet their standards,” only 4 per cent. need a couple of bench- rising and more invest- and Wroclaw.” faces fierce competition heat loss, water manage- ska's managing director for Another driver has been Most new buildings will Shell, Google and HSBC behind computers in new ing of the top BPO centres says Waldemar Olbryk, Tighter property markets mark investments to make ments are beginning to The vacancy rate in from Indian and Chinese ment systems, heat pumps Poland, says: “When we investors, who have their be green, but that leaves an have set up back-office office parks is becoming a in the world by Tholons, managing director of Skan- as well as the hunt for the sector come alive,” he spring up in Czech cities Budapest hovers around 20 cities, the region has and other measures, it uses began talking about this own standards and who are enormous number of older operations in the city. driver of the local real the consultancy, put it in ska Property Poland. untapped labour markets is says. such as Brno and Ostrava. per cent, finds a new study advantages stemming from about a third less energy three or four years ago, peo- ever keener to buy build- buildings. However, many These businesses are estate market in Kraków. 11th place – this dynamic As investments have beginning to push inves- BPO also plays a huge “Capitals such as Sofia, by Jones Lang LaSalle, the its close geographic and than comparable non-green ple looked strangely at us. ings that meet high envi- of the ugly concrete build- attracted by the large Office stock in the city has has been repeated around grown, vacancy rates in the tors into cities such as Bia- role in the office markets of Budapest and Bucharest property company, and cultural proximity to west- offices. They said, ‘Green is nice in ronmental standards ings erected under commu- number of skilled and mul- reached 517,000 sq m, the country. most popular secondary cit- lystok and Rzeszow in other central European are not saturated with BPO new BPO entrants continue ern Europe, which should Environmentally friendly Sweden, but it won't work because they are easier to nism are being retrofitted tilingual local university according to DTZ, the prop- Hadley Dean, managing ies have begun to fall. Poland's undeveloped east, countries. The region cap- investments like Warsaw to arrive. allow shared service offices buildings have become here.’ However, that has rent and may have a better in order to make them more graduates, cheaper labour erty company. partner for central Europe Kraków has a vacancy rate says Jacek Levernes, an tured about a fifth of new and Prague,” Mr Dean says. In Romania, Bucharest is to continue to grow. increasingly popular, changed.” resale value. energy efficient.

Profile EC Harris reaps benefits of early move east

In the late 1980s, UK to include Prague and Maritimo shopping centre in property consulting Warsaw. The company had the Romanian port city of companies were looking to to adapt to doing business Constanta. spread abroad, with the in an environment where not As central Europe has most obvious destinations all the rules that applied to become wealthier, EC Harris being developed west a mature market such as has shifted away from European markets such as the UK were in play. project management and France, Germany and Spain. “The growth opportunities billable hours. It now However, intrigued by the that existed post 1989 were stresses more sophisticated rapid collapse of not to be found anywhere risk management techniques communism, EC Harris, a else,” says Mr Clare, who is for its clients, and is more built-asset consultancy, the recipient of this year's deeply involved in the decided to look a little Central and East European project planning process. further east, to countries Real Estate Quality Awards’ “Derisking a project is that were opening up after lifetime achievement honour much more interesting than years under socialism. for his contribution to the dealing with wall cladding,” “We knew we had to region's commercial sector. says Mr Clare. expand,” says Richard Clare, EC Harris opened up Closer integration with the consultancy's long-time to the wider range of western Europe means a chairman. “We saw the clients doing business in growing number of mature markets as a difficult ecologically friendly projects. play and we realised that The region is There is a push to make there would be a massive just reaching properties attractive to opportunity in central mature international investors, who Europe. We knew that a lot standards are often reluctant to put of our existing clients were money into developments in going to pile in there and Richard Clare this region, which had been that they were going to have regarded as dodgy before. to go in with a consultant.” frontier markets and it also “An awful lot of product EC Harris opened its first built local teams of was slung up in the boom central European office in consultants, relying less on times that was not thought Budapest in 1991, staffed by expats parachuted in from through,” says Mr Clare. a brash young consultant head office. “That was a huge mistake. who favoured red braces The consultancy has been No one wants to own a and a sports car – a bit of a involved in some of the project that does not meet shock to dour central more interesting property international investment Europeans, but a reflection projects in the region. standards.” of the property revolution Mr Clare points to That means that EC that was about to hit the contracts such as Stary Harris, now part of the region. Browar, the conversion of an larger Arcadis engineering Initially the company old brewery into a state-of- consultancy, should have a serviced clients building the the-art shopping centre in reasonably busy future. first modern retail and the western Polish city of “The region is only just residential properties in Poznan; the Intercontinental reaching mature standards,” Hungary, and quickly saw Hotel in Warsaw, one of the says Mr Clare. that it was going to have to more striking high-rises in expand its regional footprint the Polish capital; and the Jan Cienski 6 FINANCIAL TIMES TUESDAY APRIL 17 2012 FINANCIAL TIMES TUESDAY APRIL 17 2012 7 Global Property Insight Global Property Insight Housing will be main Games legacy Sustainable shops reduce running costs

is that we have built it for speedy completion of such a east Londoners, “a different says “energy was one of the areas Lucy Neville-Rolfe, corporate retailers are introducing more in South Korea is also zero car- Olympics legacy,” says Sir John large project. group of people” will move Retail sector where we were already well and legal affairs director at Tesco, sustainable features. bon. The solar roof of its Fresh & Armitt, chairman of the The village has been in. versed, which was good in some says one such store in Ramsey, Mr Zimmerman says: “If it Easy depot in California is one of Delivering pledges Olympic Delivery Author- praised for its quality and More than £1bn from the Andrea Felsted finds ways, but it was bad in others, UK, uses 66 per cent less energy starts in the US, we take it out- the biggest in the US. will be hard, says ity, which constructed the environmental credentials. £9.3bn public sector Olym- eco-initiatives make because we had already picked than a typical store of the same side the US. But in many cases, it Kingfisher has been opening so- Olympic park. It is the first large-scale, pic budget was spent on most of the low-hanging fruit.” size, because of energy-efficient starts in markets outside the US, called eco-stores to test new con- Vanessa Kortekaas “We didn’t build it specifi- high-density scheme of its building the village after economic sense Mr Zimmerman says that once design and the low-carbon tech- and we bring it to the US.” cepts in France and Spain, and is cally for the athletes, we kind to meet the govern- private funding for the an initiative or technology is nologies that heat and light it. He cites the example of sales- working on a sustainable store in built it as housing that ment’s code for sustainable project dried up in 2009. proven, it is Walmart’s goal to roll Tesco has a goal of becoming a floor lighting in China, where for Russia, expected to be completed ondon’s pledge to could be used afterwards,” homes level 4 (out of 6), and About two-thirds of the cost From charging for carrier bags to it out across the store base. zero-carbon business by 2050, with the past two years LEDs have in 2013 or 2014. deliver a “new he adds. boasts of being 83 per cent was recouped when the vil- installing less harmful refrigera- “There are lots of people who an intermediate target of halving been used in all new Walmart Marks and Spencer, the British piece of city” on The village is at the cen- more energy efficient than lage was sold. tion systems, retailers are improv- will build a ‘green store’ or a emissions per square foot in both stores retailer, has been making strides the back of hosting tre of London’s newest dis- current UK building regula- Katie Kopec, director of ing their green credentials to showcase store and then that is new and existing stores by 2020. “We have used China as the test with its 180 environmental com- Lthe Olympics was one of trict, E20, and will adopt tions require. development consultancy at appeal to ever more environmen- one store out of thousands that It is making good progress, says location to perfect that technol- mitments known as “Plan A”. many promises that helped the trendy “East Village” But there are some Jones Lang LaSalle, the tally aware consumers. they operate. We have typically ogy. We are just now starting to As the high street stalwart it beat Paris in its bid to moniker after the games. doubts about longevity, and property group, says that An important route to sustaina- taken the approach that we will Charles roll it out into other markets,” he expands outside its home market, host this year’s games. Of the 2,818 apartments, whether the village will ensuring local people bility is the buildings that house do an experimental store where Zimmerman of says, adding that this technology it is also extending its commit- It said it would turn a 1,379 will become affordable benefit people from the five remain in the area is vital. supermarkets and other stores. we try some things that are very Walmart says has recently been used in stores ment to being green. It has incor- patch of contaminated housing, managed by Tria- boroughs surrounding the “A fundamental measure Retailers have focused on using unproven,” he says. green initiatives in the US and Mexico. porated a number of sustainable industrial land in London’s thlon Homes. 600-acre Olympic park in of our Olympic legacy is resources more efficiently, as this But then, “everything that gets have produced Similarly, although LED light- features into stores in China, and east end into a cluster of A consortium of Qatari Stratford. how well it fills the gap [in is a way to be more sustainable proven in these experimental significant ing for store car parks was devel- has opened two “sustainable vibrant communities – mak- Diar, the property branch of “The jury is out,” says Dr housing] and provides the and to cut costs. stores [we] very quickly roll out savings oped in the US with General Elec- learning” stores in India, to pro- ing housing a key measure Qatar’s sovereign wealth Penny Bernstock, senior ‘stickiness’ that keeps those According to Charles Zimmer- to the entire portfolio.” tric, the US industrial group, it vide insight into sustainable on which the city’s Olympic fund, and Delancey, the lecturer in sociology at the working locally also living man, vice-president of interna- He cites the example of LED Ms Neville-Rolfe. The process has was introduced in Puerto Rico, building practices. legacy will be judged. investment group, owns the University of East London. locally,” she says. tional design and construction at lighting in refrigerated cabinets, also helped Tesco make gross sav- where utility rates are three times Munish Datta, head of property Four months before the rest of the units and plans She says maintenance will The London Legacy Walmart, the US retailer: “Long which was trialled at a store in ings of about £200m a year by that of the US. It was rolled out in Plan A at M&S, says there are opening ceremony has seen to let out the majority of be crucial for the village to Development Corporation before any of us anywhere in the McKinney, Texas in 2005. Even using less energy and water. 300-400 stores, helping drive down some significant differences when the completion of the first them. retain its value. “If it is (LLDC) is the body charged world knew what sustainability before the two-year testing pro- The B&Q store of Kingfisher, the cost of the technology to the it comes to sustainable building in of several tower blocks that, Sir John says the legacy managed well, that will cost with the long-term manage- meant, we were very focused at gramme was completed, Walmart the DIY retailer, in New Malden point where it made economic India and China. In the UK, it is when fitted out, will serve of the village is that it pro- quite a lot of money itself ment of the Olympic Park Walmart on energy efficiency. could see the benefits, and was employs ground-source heat sense in the US. embedded in legislation, and there as the athletes’ village dur- vides a “very significant and affect its viability as and with integrating it into Just simply from the fact it’s our soon installing the technology in pumps to heat and cool the store Consequently, every new Wal- is a more established green supply ing the games and as a mix uplift in the availability of low-cost housing.” the surrounding areas. number two or number three more than 500 stores a year. with geothermal energy taken mart store in the US is now built chain for design and construction. of private and affordable housing” in one of London’s She says one of her main It plans to develop up to operating expense in every mar- Energy efficiency has also been from the earth via 108 bore holes with this in place. However, this is beginning to housing when the Olympic poorest areas. He adds that concerns is that, if the 11,000 dwellings in the park Home sweet home: a representation of the athletes’ village ket where we are in the world.” a key part of the zero-carbon store 100 metres deep. Tesco has zero-carbon stores in change, and he expects the focus circus leaves town. the immovable deadline of affordable housing provi- and says the Olympic hous- When Walmart began its sus- programme at Tesco, the UK But it is not just in developed Ireland, the Czech Republic and on sustainable construction to “The key thing, of course, the Olympics enabled the sion is not affordable to ing offering should be set up a legacy body so far ens after the 2004 Games. tainability initiatives in 2005, he supermarket group. markets or home territories that Thailand. Its leadership academy grow internationally. judged as a whole. in advance of the event. Dr Bernstock says Lon- “Our offer across the Barcelona is often cited as don’s housing legacy “looks whole park is predomi- a model for using the Olym- better on paper” than that nantly family housing and pics to regenerate the city, of previous hosts, but it is that’s what London needs,” but Dr Bernstock points out early days yet. says Lady Margaret Ford, that London is different: The LLDC hopes to avoid chair of the LLDC. “This is a unique Olympic what she fears, that “E20 is A third of the homes are project. It’s got very clearly going to sit in a very differ- intended as affordable hous- stated objectives.” ent place from the rest of ing and 40 per cent will be London is aiming to Stratford. I can’t see how family homes. avoid the “white elephant” the old is going to be inte- London is the first city to syndrome that plagued Ath- grated into the new.”

The Gulf Ripe for consolidation

As house prices began their rapid decline in In both Abu Dhabi and Dubai, government- the United Arab Emirates at the onset of related companies drove the building spree the financial crisis, onlookers concluded of the past decade. Outlandish projects such consolidation in the government-dominated as artificial islands shaped like palm trees property market seemed inevitable. grabbed headlines, but also loaded state The merging of developers to help developers with heavy debts and increased manage their debt burden is starting to the industry’s vulnerability. take place, with the winners of the process Historically, Dubai, which suffered a more set to become national champions and the severe property crash than the capital, has developers of choice for government experienced mixed fortunes as it has tried projects. to consolidate its multiple government- Abu Dhabi, the UAE capital, has set to backed developers and financing ventures. work reinforcing its property sector, Mohammed Kamal, partner at Berwin announcing the two biggest state-backed Leighton Paisner, the property law firm, developers are considering a merger. says: “Dubai has more developers [than Abu Analysts say the need for consolidation Dhabi], both public and private. There’s has been more acute in the UAE than in more opportunity there for mergers.” other parts of the Gulf, particularly given the But with these tie-ups, there is the risk of government’s relatively hands-off approach ruining a strong company with the bad debt to intervention in the market. The of another. authorities in nearby Qatar bought the “In Dubai, there was clearly a reluctance troubled property portfolios of the country’s to encumber good developers with some banks, while Saudi Arabia has promised to schemes and debts and liabilities of some of build hundreds of thousands of homes as the entities they might have been merged part of its $130bn stimulus plan. with,” says Paul Foster, head of asset Abu Dhabi’s merger plans came after the performance at EC Harris, the real estate emirate’s government completed a wide- consultancy, in Dubai. ranging spending review and announced a “If you look at some of the entities, renewed commitment to multibillion-dollar they’re still there to hold the liabilities away infrastructure projects, including three high- from the phoenix organisations that are profile museums designed by star architects. coming out of the crisis.” However, contractors say the pace of building remains slow in the emirate. Camilla Hall 8 FINANCIAL TIMES TUESDAY APRIL 17 2012