NEW FORMULA FOR R&D EFFICIENCY

Abu Dhabi 2019 | URBAN PLANNING, REAL ESTATE & CONSTRUCTION | FOCUS: IMKAN’S R&D

IMKAN's research strategy gives equal attention to each project's total gross contribution and rate of maturity.

The real estate industry has long been stagnant and in need of a new model capable of appealing to new demographics and technological breakthroughs; for too long, formulas such as capitalization rate and gross rent multipliers have set the tone on defining the worth of innovation in the industry. Rethinking traditional infrastructure assets is, thus, paramount to serve a new client base, an imperative for Walid El Hindi, CEO of IMKAN. El Hindi notes, “We now find ourselves in a situation where our traditional clientele has reached a point of saturation… thus, we must develop and advance if we seek to thrive."

Committed to developing “soulful places" that “enrich people's lives," the Abu Dhabi-based real estate developer places research at the core of its efforts to meet new market realities. Its outward, market-based approach strives for efficiency, factoring in potential benefits for both the investment and development sides of its business. It considers all the necessary elements of an efficient R&D productivity formula—one introduced by McKinsey & Co—that no longer relies on dividing revenue from products developed in the past by what is currently being spent on products for the future. The progress in digital technology and access to a wide variety of metrics and data allow companies to measure productivity, both at the project level and across the entire R&D organization. As such, the new method speaks to the whole company, by multiplying a project's total gross contribution by its rate of maturation and then dividing the result by the project's R&D cost.
IMKAN's holistic, outward-oriented research looks at trends and estimates from around the world and across industries to

ensure the developed assets bring economic value to customers, also known as the total gross contribution. Indeed, its team first looks at trends in food, fashion, sociology, psychology, physics, and other areas related to human behavior; then it integrates them at each stage of the development process. Using this multi-sector research increases the degree and scope of the first variable of the R&D productivity equation and has direct benefits on the investment side.

Maker's District, an 18ha masterplan development on Al Reem Island, for example, was based on a focus on building enriching communities designed for human interaction. Research has shown that design with people in mind is key to achieving long-term ROI. For example, research efforts led IMKAN to question the traditional profitability of a parking garage: people use their cars only 4% of their time and the advent of the sharing economy is likely to supplement this inefficiency. Developers aware of this trend should thus adapt flexible, cost-saving approaches within their developments.

Long-gone are the times of building a block and selling it; today product variations, functional requirements, and customization needs proliferate, increasing both the complexity and cost of R&D efforts. This complexity is, for the most part, conveyed on the timeframe aspect of the research efforts. The likelihood that a project will attain the projected gross contribution depends, in part, on the maturity of the product at the time of its market introduction, meaning how close it is to verifying and validating its technical and commercial requirements. IMKAN's approach, based on constantly questioning the validity of its new research findings, ensures any further efforts are both in line with the most updated trends and valid for a longer period at the moment the asset is launched. Naturally, this mindset places an equally important role on marketing.

As such, every project by IMKAN is underpinned by its long-term vision, with most the developments in the range of seven to 10 years, and heavy investments. In this sense, empowering clients becomes paramount, as it allows the company to share the weight of achieving both full maturity of an asset and returns on investments. Nudra Villas on Saadiyat Island, for example, offer clients the opportunity to design and build their own home, once again in the name of design flexibility within IMKAN's prescribed development controls. Assets will move toward maturity led by clients' needs, and its value will grow according to the needs of the customer.

In light of outdated game plans in the industry, IMKAN's integrated performance-management system is a fresh take on innovation.