Main Challenges
faced by the Palestinian construction sector
Despite what looks like a potential market for investment, according to recent economic studies conducted in Palestine, the construction sector ranked at only sixth place (from a list of eight) in the recently published study, “The initiative for the Palestinian Economy”. Conducted by the Office of the Quartet in East Jerusalem, the report was released in March 2014 and focuses on potential development opportunities.
In another study conducted by The Portland Trust, entitled “Beyond Aid”, the construction sector ranked at number four from a list of five on the list of important investment areas (report issued December 2013).
It is a fact that Palestine has an increasing household volume in recent years (5.4 in 2007 to 6.0 in 2013) and despite the potential for investment, construction is suffering from major challenges.
CHALLENGES IN RESIDENTIAL REAL ESTATEÂ
The residential real estate segment faces a number of challenges and opportunities where solutions are required for modern urban planning. While the informal sector is active (typically in smaller-scale projects), the absolute margins of projects by registered developers can be up to 15% .
Promoting wide-spread formalisation of the sector’s activities would ultimately raise profit margins and, at the same time, help to control the quality and security conditions of building developments. Project management skills are also said to be lacking, as measured by timelines and other market-based factors, or by use of modern construction technologies. These factors create inefficiencies, according to Portland Trust’s 2013 study. The same study alludes to the fact that part of the construction material is imported, in particular cement, which could be an area of future investment opportunity in Palestine in the near future. The report also mentioned opportunities in affordable housing. Further analysis and feasibility studies will be needed to determine the full scope for the construction sector as a whole.
Middle East Business met with Palestinian experts and engineers to hear their point of view:
Eng. Monif Treish, CEO of Amaar Group
“Most of the planning schemes in urban cities need to be upgraded to allow for vertical expansion, and there is an urgent requirement for our planning laws to be amended.
Investment by local government is required into improving and upgrading the infrastructure, so that it can serve the increase in construction within the existing urban area. There is a need to prepare master plans for the outskirts of urban areas so as to provide the market with low cost developed land that is suitable for construction.
Local government should also offer incentives to developers who provide housing units that are affordable to lower middle class families who are in need of housing.”
Hani Hassan, Award-winning ArchitectÂ
Rules & Regulations
“Architecture in Palestine faces many challenges; building regulations currently in place are not up to the required level, especially as the world has evolved considerably in this domain. These underdeveloped building regulations have limited to a significant level the creativity, sophistication and ability to build beautiful buildings.
To overcome these problems, relevant institutions such as the Ministry of Local Government and Municipalities should study comprehensive modern urban planning for Palestinian cities, which currently lack adequate street planning and enough public/green spaces and parks so that citizens can enjoy their city.
Unfortunately, opening new thoroughfares is still done in small stages, as there is no comprehensive urban planning for the coming twenty years. This is really catastrophic at the urban development level for Palestinian cities. It affects the public image of Palestinian cities, especially where there is no clear skyline or particular architectural style.
Cities have simply become piles of stone. Unfortunately, building regulations in Palestine are a copy of Jordan›s regulations from twenty or thirty years ago, and haven›t really been improved or updated since, except for some small elements. However, Jordan has since improved its construction regulations considerably”.
Dr. Samih Al Abed, Engineer specialising in urban planning, Head of the Housing Council, Advisor to PIF
“Restrictions on the building process in area C of the Palestinian territories is an Israeli policy. This policy is applied in order to give the Israelis a greater chance to build colonies, and thus to expand at the expense of Palestinian land owners. So, people are forced to build vertically within cities rather than horizontally (up not out), and this has caused rising land prices and further limited economic development in rural areas”.
Ms. Najah Osaily, Administrative & Financial Manager, Osaily Trading Contracting Company
“The main obstacle is the Occupation; our country is living with an insecure and unstable political situation that prevents us from implementing sustainable growth. Closures, restrictions on movement, lack of national currency, limited opportunities, and fierce competition are just some of the risks and challenges that contractors are experiencing.
But on the other hand succeeding in such an environment will yield crisis management experts, and skills in strategic, comprehensive and contingency planning. Palestinian contractors accomplish their work locally but following international standards”.
Read about: The construction in Palestine; ≈1billion dollar value.
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