By Megha S Anthony
Are people in the FM industry aware of FM Legislations? Or is it limited to only Law No 27/ Jointly Owned Property (JOP) Law? This was the big question at the recent ‘FM today’ roundtable discussion held in Dubai. Representatives from the FM industry, Strata, Owners Association and property developers came together and discussed the scope of FM laws, the current status of Law No 27 and the challenges each of the sectors face in this law.
The room in general agreed to the fact that there is more to FM laws than just the JOP, however due to lack of awareness about the other laws there is very little clarity about each of them in the industry. With no specific channel available wherein people can be made aware of the present regulations and the lack of clarity among the people who are responsible for enforcing the law, the reasons behind the lack of awareness are aplenty. And though it has been more than seven years since the Jointly Owned Property (JOP) law came into force in Dubai, just a cursory look at its status in the emirate today is enough to understand that there still is a lot to be desired. Noting how the JOP law has gone through many changes, Asif Siddique, Advisor- Strategy & Business Development – Deyaar, says, “It is generally understood that FM industry is new to Middle East. Although we must take into consideration that FM industry worldwide is not that old either. The recognition started from US some 30 odd years. Therefore the industry worldwide is evolving and Middle East is no exception. Laws are changing adapting to and adopting individual market demands and trends and UAE Law 27 has gone through similar changes since its inception. These continuous changes in laws reflect the way Real Estate Regulatory Agency (RERA) works and at the same time the way each Owners Association (OA) board works. Understanding and familiarizing with changing law is challenging to both board members as well as for RERA.” Jennifer L Peltenburg, Director Business Development and Marketing, Farnek – Total Facilities Management,
says, “When it comes to JOP there is still some work that needs to be done. However, there has been more clarity than what was there five or six years ago. I know that a lot of the Owners Associations are still a little bit frustrated in terms of being able to solidify accounts and other things with RERA and I am not sure how long that is going to take but in the meantime they are coming up with a solution and everybody seems to be in uniform in terms of how to deal with it. I think basically it still has a long way to go but at the same time people are building their own solutions and it seems to be a uniform one.”
However, Tim Leech, Group Director of Asset and Facilities Management, PRD Nationwide, explains that JOP is just a small part of the FM industry. “If you are talking about FM, you have to remember that JOP is only a small part of the FM industry, property and asset management property. We, in the industry and profession, all have to be aware of this and not to focus solely on jointly owned properties. I think JOP has a great foundation here. The basis of it is now understood much more. One of the biggest challenges in Dubai was not the JOP law itself as Strata is well established in other jurisdictions, but was as much to do with the nature of Dubai--people coming from such diverse backgrounds and in many cases having never experienced or having needed to understand the basis of JOP/ Strata,” he says.
Tim goes on to add, “Within the FM industry it is incumbent on everyone to do the right things at the right time, there are of course other laws and regulations in place that allow the Owners Associations to run properly. Many had said that the problems are also A – enforcement and B – the desire and commitment of all companies to do things professionally and right and then, as in all sectors, having to balance that with profit and returns.” The question still arises, are there more FM laws and why are many not aware of them? Tim clarifies that the laws are definitely there and in the last couple of years it has all started coming together.
“The laws are all there and across the region I have noticed particularly in the last couple of years or so, it seems to have started to come together. Whether by enforcement, focus of certain authorities or the market and clients themselves following rules and laws and others who choose not to start to struggle and fail. In Abu Dhabi, for example, there are more laws and regulations around health and safety which is fantastic, and an ongoing process of change and improvement. The challenge is not just the enforcement by authorities but also accountability by all concerned, moving away from acceptance and avoidance and just doing what is right,” he adds.
The group agreed with Tim on the point that more laws are already in existence, but the reason why there has been confusion is partly due to the fact the industry is new and the speed at which the laws have been implemented out here. Many felt that there should be a need to increase awareness in the form of training sessions, brochures or more industry discussions. Agreeing with Tim on the fact that Facility Management (FM) regulations are largely in place, Ram Prabhakar Chitewale, Senior Manager-Quality Assurance, Asset Management Services and Solutions, Wasl Properties, states that the reason why there has been confusion is partly due to the fact that the FM industry is relatively new and has not evolved at the speed at which the laws have been implemented. “Ignorance of the law is not an excuse; the regulations should be made accessible to all in a central location. What needs to be done, as Tim rightly said, is to build awareness and have a focal point where in these laws, when implemented can be streamlined,” he says.
A point that was highlighted during the discussion was that on an international platform the FM industry in the UAE is comparatively new. Which is why, it is taking time for people to understand and follow the laws properly. Grey areas in the JOP laws like issues of the stay on subcontracting, board elections, confusion among board members and even misuse of laws were also discussed.
While the legislations are well documented, the group strongly felt that it boils down to how one interprets the law. As not everyone can understand the legal language most developers end up misusing the law, ultimately forcing RERA to come up with stays on subcontracting. “While the legislation is very well documented, various FM companies interpret it differently. Regulators such as RERA are forced to step in to curb the misuse by some companies,” Ram says and goes on to add, “The misuse that benefits some in the short term ends up hurting everyone in the long run. A case in point is the stay placed by the regulator on sub-contracting of specialised services under the umbrella of the main FM service provider. As Owners Association Manager, we now have to deal with eight to ten different contracts whereas we could have dealt with just one contract with the main FM service provider.”
Speaking about JOP, Tim informs that while there have been differences in the law there is a positive side to it as well. “One of the fundamental challenges has been the explosion and growth in Dubai over the last 20 years. It’s a fantastic thing and such a privilege to experience and be a part of; what we must be careful of is not to criticize that we built a whole series of towers in Dubai, in a timescale where anywhere else we will be lucky to put just a few towers up, but rather what can now be done better and how we can improve what we have. Developers understanding being a developer. There have been differences here. There have been developers who are not developers as, perhaps, we know it, they were funders, and some people are still mixing developers with construction contractors. In other parts of the world, the developers and the construction company is the same. Here it is usually separated. Many of them are, in reality, more sales and marketing companies and then they have found themselves with all kinds of challenges that they didn’t expect and certainly, therefore, don’t understand,” he says.
And Tim adds, “I still think we got to be careful in this room to remember that, actually, the bulk of the property in Dubai is not Jointly Owned Property. In UAE, you have got all of Abu Dhabi, Sharjah, RAK and the other Emirates. That’s actually the market and if we, in the FM industry, get our heads stuck in just JOP, we will have our own problems. Actually, I know that for most of the leading companies, JOP is actually not seen as the mainstay of the FM Market, indeed, other things being equal many would rather not be involved at all. That’s a challenge for the strata sector that needs to be considered and worked on together.”
Another major challenge is the ‘price war’ amongst FM companies. Says PR Vijayakumar, Managing Director, Pacific Owners Association Management Services, “One of the biggest challenges at the moment is the price war amongst FM companies. As association managers, we advised RERA to have a classification of FM companies. Right now, you call one of the leading companies and somebody on the board of directors says I know someone much cheaper. The problem is the boards that make the final decision.” Jennifer too agreed that the pricing exercise affected the FM industry. “When the (construction) boom began and developers started to build as quickly as possible which the developers are now taking responsibility for. It’s not necessarily the management of it; I think FM went through a huge downturn because of the pricing exercise.” To which many felt that authorities should consider the next set of regulations or changes to drive the qualification of board members. If not formal qualification it should be in the form of training and awareness. While all agreed that ignorance towards the law should not be an excuse, they each felt that every sector should take it upon themselves to be responsible for spreading the word.
“The challenge is education/training, implementation, and management responsibility of the FM industry to actually say to our clients ‘No, I am not going to do that, it’s wrong. My responsibility as a company is to keep you safe and legal.’ If you want to have a three-star building around areas of cleaning and maintenance, that’s your decision. But it must be legal and statutory compliant. Because it’s not actually our role to stop a client from doing what he wants to do,” says Tim. Jennifer agrees. “I think now FM can contribute in terms of having a much more consolidated approach by bringing in what we feel can be applied in here in terms of our own regulations. I think it is maturing and it stems back to what you said by saying no and wants to work with only like-minded individuals who understand the methodology. Here we have got the best in the world, the tallest, the biggest, the largest, yet they treat FM as an entity that is insignificant,” she adds. But when the question came to changing the law and adapting it to the local requirements many had different opinions. To support his view on laws undergoing a change, Vijaykumar cited an example of the Australian Building Laws. “Building laws in Australia, were made in the early 70’s and 10 to 12 years later they completely changed the law. Hundred and eighty degrees almost, after they experimented and found out what is right and wrong. Similarly Dubai has to undergo a testing period like this and I believe a new law is in the pipeline if it comes, I believe a lot of issues would be corrected. The fact is board members’ control over buildings, who can turn the way the building is, from good to bad and bad to good. It deals with all the issues spoken here today about standards to maintain, and AMs refusing to do it etc. AMs liability is to every owner of the building and five board members shouldn’t change the image of the building. But similar things have to be done with FM, either through RERA, the department or other bodies,” he says.
But few felt that changing the law can lead to curbing creativity and flexibility. By letting the creativity and challenges come in, is when we witness new skill sets coming into the market and it keeps the others on the edge. Says Tim, “Do they need to change with regard to FM or FM in regards to JOP? It should not control the whole industry based on one segment or sector, too much regulation that narrows things down doesn’t allow creativity or flexibility. Having said that, it is important that there are laws and regulations capable of making sure that minimum standards and procedures are met; this naturally leads to systems of audit, checking and reporting. What has happened so far has allowed good turnkey, multi-service, professional FM companies to grow and develop in the region, what we now need is more enforcement, supported by developing laws and regulations that make sure each sector is operating to relevant and best standards. There must also be consistency in review and enforcement.
One of the other good things to come out of JOP regulations is the requirement for providers of any service to actually have the appropriate skills and licenses; owners, developers, and contractors cannot be appointed to carry out works for which they are not approved. In other sectors, this still occurs to an extent but I think this is also changing. FM is being recognized as a professional industry but perhaps more regulations are needed outside of JOP to drive this.” Ram too strongly believes that enforcement of laws is the crux; however, he notes that different entities like RERA, Dubai Municipality etc. have different approaches to enforcing them. “There needs to be uniformity in the way one enforces the laws. To make laws effective, all factors have to be reviewed and customised to local requirements,” he says.
At the end of the discussion one realised that while it was easy to point out the loopholes and the challenges in the existing laws, it also gave us the time to actually reflect on how these laws actually helped the market mature at such a short span of time. “I think UAE is in a unique position to lead the world in the FM industry in the near future. It depends, if we within the FM industry pave the way for laws, norms, and standards to merge in such a manner that it is beneficial to the end user and sustainable for the FM industry. Generally speaking, I think we are in the right direction,” says Asif.
While Tim sums up on a positive note, “As Dubai grew up in the 90s and we started adopting ‘Best Practice’ from around the World. Where we are now is actually building a UAE and Emirate e.g. Dubai “Best Practice” and supported by Laws, Regulations and Guidelines. I see the time coming when many parts of these will be adopted in other areas of the world. I think we have to look at Dubai in a much bigger context, Dubai has rapidly grown from a relatively small patch around the creek to a place instantly recognized, known and admired internationally. It has new zones with commercial, residential, leisure and industrial suburbs all developed in a very short time and with some of the most awe-inspiring, iconic and creative buildings. At the same time the standards and methodologies we have talked about today also have had to grow and change, this will continue. We in FM have a unique opportunity not only to change and improve but also be creative. We have the talent and desire to do that. Those companies and people who don’t will be left behind, and that what we achieve will be adopted by others.”