Australian Architects Look to Capitalise on Emerging Cities

Tuesday, November 3rd, 2015
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As the world’s emerging cities continue to grow, the opportunities for Australian architecture practices to expand into international markets cannot be understated.

By any stretch of the imagination, the potential is mind-boggling. By 2025, McKinsey estimates that 136 new cities will enter the top 600 in size – all from the developing world and around 100 of them in China alone. By that date, the research firm says the world’s 440 biggest emerging cities alone will need to add a whopping 85 per cent of building stock compared with 2012 levels and would need to expand water and port capacity by 80 billion cubic meters and a multiple of 2.5 respectively.

Not surprisingly, Australians are getting in on the action, and many larger practices have been working overseas for more than a decade. Indeed, in a number of areas, Australian practices are becoming world leaders. Building on experience gained through the Sydney Olympics, for example, Hassell, Cox Rayner Architects and PTW have all completed major venues internationally.

In education, a number of practices have built upon Australia’s relationship with Asian nations and have master planned and designed leading educational institutions in places like China, Malaysia and Hong Kong. In culture, Cox Rayner recently beat out a field of 80 of the world’s leading firms to bag the contract to design China’s National Maritime Museum in Tianjin.

All up, the 10 largest Australian practices are earning about $165 million of their roughly $550 million in annual fees from their offshore operations – a figure which indicates that healthy volumes of work are coming through but also that more can be done.

“Australians can’t just be Australian,” John Daubney, managing director of HDR Rice Daubney told Business Review Weekly in 2013. “They’ve got to be part of a global community.”

Leone Lorrimer, CEO of dwp|suters, which has around 450 people across 15 different locations, agrees. Lorrimer says Australian design firms have traditionally been most successful throughout Asia and the Middle East. The Asian market has offered similar time zones along with the opportunity to capitalise on networks developed through education linkages, while the Middle East has seen clients become more comfortable in working with Australian firms as Australian individuals have gained employment within their countries.

Obviously, however, there are challenges. While needs vary according to different locations, setting up overseas typically requires the establishment of permanent offices (or partnerships with local firms), development of important relationships and the management of a unique set of regulatory, climate, culture and language related challenges. All this requires not just financial investment but also a considerable of personal sacrifice.

Take, for example, Doha, where Lorrimer lived for two years while establishing dwp|suters’ operations in that country. In order to set up business, you have to maintain a registered office for the duration of your operations and have 10 per cent of your fee held in quarantine in a bond until a year after the project is deemed to be complete. Once a further 10 per cent in retentions is factored in, you essentially have 20 per cent of your cash flow tied-up. When leaving, unless you have a multi-entry visa, you cannot leave of your own free will and require a sponsor to acquire an exit visa. Added to that, you have to live for a period in a climate where average daily maximum temperatures exceed 38 degrees Celcius for six months of the year.

Given the magnitude of the potential involved, an important question arises as to how government can best help the sector capitalise on the opportunities available. Lorrimer says this can be done through assistance in terms of areas such as the provision of forecasts based on local intelligence, helping to connect Australian practices with prospective clients and projects and the publication of fact sheets on matters such as regulatory frameworks, business practices, culture and customs.

More broadly, she would like the Federal Government to recognise design as an export market and develop a comprehensive promotion methodology similar to what we have in tourism.

Lorrimer says the degree of opportunity cannot be understated.

“I think we’ve got a very big world to play in and I think what we can do is bring the attitude of ‘don’t tell me it can’t be done’ and of determination to deliver that complex problem solving around building a city,” Lorrimer said. “I think that’s the essence of what we can deliver.”

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