Building greener thinking into the Middle East’s real estate

 —  Article by Natasha Stokes
Dubai's marina and skyscrapers
Image credit: Shutterstock

Across the Middle East, it’s not just the glass skyscrapers glittering in the sunlight; growing numbers of buildings are incorporating renewable energy measures such as solar panels.

In Dubai, the five million square-foot Sustainability City features 500 villas with rooftop solar panels and car-free zones that encourage the 2,000 residents to walk or drive electric buggies. A second phase, currently under construction, will include an eco-friendly school and a hotel powered entirely by solar energy, with the city designed to run on renewable or clean energy upon completion.

“The drive for sustainability in real estate is definitely picking up steam,” says Chris Aird, Associate – Construction and Real Estate Project Management, for Projects in UAE, Saudi Arabia and Egypt at JLL. “Sustainable energy production measures are becoming more prevalent as regional governments set ambitious targets for reductions in waste generated and energy consumed.”

One major push has been for photovoltaic panels that take advantage of the region’s sun to generate clean energy, with a recent policy in Bahrain ensuring that all new buildings will be designed with solar panels in mind.

“Generating its own energy reduces a building’s demand for energy from the main grid, which additionally reduces electricity bills and service charges for tenants. In the Sustainability City, for example, residents are seeing the massive difference in utility costs which translates to a huge financial incentive,” Aird says.

Abu Dhabi is going a step further with its mandatory Estidama scheme which uses the Pearl rating system to ensure sustainable development practices. All buildings must achieve a minimum of a one Pearl rating while all government-funded buildings must reach the higher two Pearl rating.

Following the government example

With more than $200 billion of dollars worth of construction projects underway, the UAE has pledged to follow United Nations goals for sustainable development.  By 2030, the government aims to reduce energy use by 30 percent, with at least 25 percent generated by renewable sources including solar, nuclear and clean coal; by 2050, it has pledged to produce 44 percent of all energy by renewable sources and reduce its carbon emissions by 70 percent.

“There is a huge awareness at government level of the need to create alternate energy – and the last few years have seen big changes,” says David Pine-Coffin, National Director at JLL. Oil and gas subsidies were reduced a few a years ago to reduce usage and emissions, while the world’s largest solar park is currently under construction in Dubai. Within the city, more buildings have adopted the international LEED certification standards, including the headquarters of the Dubai Electricity and Water Authority and the first “green” mosque in the region.

Older buildings are also being retrofitted to become more energy efficient. Across the UAE around 3,000 government buildings a year are setting the green standards for the country, with plans to move on to privately owned buildings in the years to come. Retrofit tweaks can include the addition of building shading to reduce the impact of the sun, solar protection on the many glass-fronted buildings that are popular in the region, and eco-friendly paints.

“If we can retrofit a typical office, hotel or residential tower, with energy efficient solutions, we can minimize where possible the impact on end user demand for energy,” notes Aird.

For commercial real estate, these design changes coupled with a shift to renewable energy sources could also lead to reduced operational costs. “The service charge is a differentiator for commercial buildings – if tenants can save money, that building is likely to be easier to lease,” Pine-Coffin says.

Hurdles – and solutions – to being green

Driving awareness among landlords and developers of the benefits of sustainability is a critical point. “For many building owners, sustainability measures are an additional expense that they do not immediately see the benefit of. Owners want to get the buildings built as cost-efficiently as possible, as quickly as possible, and substantially occupied from day one,” Aird says.

“Education is required around the business case for sustainability measures: how they can decrease operating costs and enhance the experience for tenants – which can in turn allow landlords to charge a premium.”

Building management systems in many large developments are also a weak link, with many operating inefficiently due to a lack of proper commissioning and ongoing maintenance. In the hot, humid climate of the Middle East, this can drive up energy usage.

“A major source of energy consumption is air-conditioning. Particularly in the hot summer months the quantity of power needed for cooling interior spaces drives operational costs through the roof. To achieve sustainability targets, we need to find ways to reduce that demand,” Aird says.

The 2020 World Expo buildings in Dubai will showcase standards for reducing electricity, water and sustainable materials that promoters hope will be a template for future developments. Innovations include building designs that naturally provide shade to indoor and outdoor pathways to reduce the need for air-conditioning, while a 30,000-space carpark will be constructed using recycled tires.

The eco future

With rapid urbanization expected throughout the Middle East, high-tech planned cities like Masdar City in Abu Dhabi could point the way for sustainable building. Spearheaded by clean energy company Masdar, the city is a testing ground for building technologies that lower energy and water consumption and reduce waste. Its design promotes walking and zero-carbon public transport such as driverless, electric vehicles, with buildings that meet the local equivalent of the LEED Gold standard: Estidama three pearls.

“Generally, the key differentiators of a green building are that its structure would be more resilient over time, and offer a healthier atmosphere for tenants, which would make it easier to lease. However, it’s difficult to quantify the yield and the return on investment, which may detract for a Middle Eastern investor,” Pine-Coffin says. “In mature markets the key drivers for change have occurred after legislative changes at government level.”

This mindset could change as national governments across the Middle East are keen to reduce their reliance on oil and gas, with civic initiatives increasingly encouraging the development of clean energy sources and a reduction in energy consumption.

“The UAE is keen to become a zero-carbon economy, and though it may be a way off, I like to think that when it does, this will be a major draw for worldwide investors,” says Aird.

For now, however, the focus remains on turning its green ambitions into a reality, one development at a time. “This is becoming ever more apparent across the UAE both at government level and among developers and occupiers,” Pine-Coffin concludes.

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