Talent development key to maintaining Middle East real estate developers’ health

Ambition, always a vital quality in real estate, seems to abound across the Middle East as we enter the second half of 2023. At the same time, interviews with more than 30 industry leaders across the region highlighted challenges in securing the talent necessary to realise major projects, and the need for more deliberate long-term talent development and succession planning.

Mega and giga projects underway in Saudi Arabia such as Neom and within it The Line, an eco-friendly 170km-long city expected to comprise two parallel mirrored skyscrapers, are challenging neighbouring markets to increase the scale of their own vision.

For example, Chris Calvert, CEO of real estate development company Edamah, notes that Bahrain is “redefining developments to attract tourism, and has a prime opportunity to leverage strong cultural attributes to outperform other markets”.

Less visible yet also significant, the investment of tens of millions of dollars in property technology (PropTech) by individual development companies in markets such as the United Arab Emirates (UAE) points to a growing appetite to digitally transform the way the industry operates.

Green transformation is also on the horizon. While clean energy is a defining feature of Neom, Red Sea Global and Sports Boulevard Foundation, it is not yet a widespread feature of Middle East real estate development. Galvanising figures such as Mohammed bin Salman Al Saud, Crown Prince and Prime Minister of Saudi Arabia, are among those pushing for change that will ultimately forge the way towards carbon neutrality in building.

Commendable – and even thrilling – as many of these visions are, there are numerous obstacles to realising them. First, logistics: post-pandemic, supply chain disruption continues to limit the availability of building materials. Contractors are in short supply, with capacity seen shifting to one market – Saudi Arabia. Yet even there, developers are finding them hard to secure. And the teetering global economy casts a shadow over the future of foreign real estate investment into the region.

Then there is the issue of talent, much of which is also moving to Saudi Arabia, motivated by the opportunity to build careers on projects of unprecedented scale with corresponding levels of compensation. The pandemic also saw an exodus of expats from the Middle East region, many of whom have not returned.

Big picture operators wanted

Complaints around talent scarcity may be nothing new, but there is also a growing imbalance in terms of skills.

“Fewer people understand the big picture of how the real estate business works,” adds the CEO of one of the UAE’s largest developers. “Driven by money, many are moving out of the technical side of real estate and into brokerage where they are less exposed to valuable learning opportunities.”

Imad Dana, CEO of Al Zorah Development Company in the UAE Emirate of Ajman, agrees that generalists are hard to find. “Project managers can do the job, but is it enough?” he asks. “Can they solve problems and think strategically?”

Another CEO of a leading UAE-based developer makes a point to look for “big-scale operations people with more of a product rather than project mindset”. He and other leaders I spoke to note that creative talent is also particularly hard to find.

Part of the reason that the Middle East comes up short in terms of development expertise is down to the fact that the development process has typically been more straightforward here than in many other advanced economies.

“Plots are already established and you just build on them rather than considering the bigger picture and coordinating across multiple functions,” explains one leader who asked to remain anonymous. Far-reaching undertakings like Neom, and any other endeavours involving the adoption of innovative technology and carbon-neutral building techniques, call for much more than a traditional project director mindset.

Fostering talent growth

Inevitably, experienced expats have an important role to play in building this expertise, and deregulation across the Gulf Cooperation Council (GCC) region is making relocation easier.

In Saudi Arabia, expats oversee a number of major projects, with the goal of transferring skills and knowledge to local successors as part of the government’s Saudisation policy.

David Henry, CEO of the Misk Foundation’s Mohammed bin Salman Nonprofit City, used to run a large real estate investment firm in Vietnam. It is now entirely locally led, suggesting the transition is entirely possible within a relatively short timeframe.

Specific skill sets aside, agility is a key personal quality to bringing the Middle East’s imagined future to life, and they are as important – and rare – in leaders as in the general workforce.

In our work with senior leaders, Heidrick & Struggles has found that agility requires four skills: adaptability, resilience, learning and foresight.

To adapt to the current market reality, leaders need to take a longer, more holistic view of talent development. They must also be able to communicate their visions in a way that inspires and motivates people beyond simply doing what is necessary as part of their job.

Time and capital-intensive as it is, the real estate business is typically focused on quick wins – or at least minimising the path to returns. This is understandable given the scale of financial investment needed to bring a project to fruition, but it means that talent development is often given short shrift, and that staff turnover is high: switching employers in the space of less than two years is common, which is unsurprising given that most companies do not appear to invest decisively in nurturing talent.

There are exceptions. An entertainment-focused developer in Abu Dhabi prides itself on the fact that the bulk of its staff have been at the company for at least six years. The CEO sees developing existing talent and shaping successors as one of the company’s most important investments.

Inspirational leadership over financial incentivisation

The opportunity to work on high-profile projects and draw high compensation will always be an important factor in attracting talent but is rarely the only consideration, especially when it comes to retention. Henry urges prospective talent to choose their employers carefully based on the existence of a clear career path.

Too often this is absent across the region: talent is hired to perform a specific task without consideration for what happens when a project reaches completion. The most capable talent is also putting increasing emphasis on overall workplace culture, with the expectation that they will be valued as individuals, listened to, and given a good degree of autonomy in the way that they work.

According to a survey by Heidrick & Struggles, leaders who their teams rate as most inclusive are also held in higher esteem than others by their managers. There are three areas in which inclusive leaders do particularly well: they build deep purpose and engagement, create a deep sense of belonging, and value individuality.

As a leader, it is easy to let the drive to realise dreams outweigh communication skills, empathy, and the need for succession planning. This calls for a recalibration. Ultimately, real estate is a people business that needs people skills to effectively articulate a vision and engage with a wide range of stakeholders.

As Magued Sherif, the former head of SODIC puts it: “Being a leader is very different to being a boss”. It means understanding how people think, empowering them to succeed — and giving the due recognition that will help to retain them as a valuable and evolving part of the organisation.