Written by: Maya Chdid and Chaya Maheshwari
Sustainability in real-estate has been a hot topic recently with the emergence of numerous pioneering technologies that might re-shape how we live in the near future.
As it tries to strengthen its non-oil sectors, the UAE is following through on its vision to become one of the leading countries in sustainability and it will definitely be interesting to see how the country’s regulations develop as the UAE tries to achieve its goal of 30% reduction in water and energy consumption by 2030.
With steady population growth and buildings consuming 80% of the energy in UAE, optimising energy consumption in the real-estate industry will definitely be on the country’s agenda. Both Abu Dhabi and Dubai are taking advantage of smart metering and demand side management to encourage efficient energy consumption. The Dubai Electricity and Water Authority has also launched successful campaigns to encourage efficient energy consumption; however, in order to achieve long-term sustainability, green buildings need to become the norm and having an integrated approach to sustainability in a country where regulations differ between emirates has proven to be challenging.
To that end, the UAE has formed the Emirates Green Building Council to promote sustainability across the region. The council has launched various efficiency programs across the country and encouraged industry participation by celebrating achievements through the MENA Green Building Awards.
By implementing certain high-level regulations and protocols, such as the Dubai Green Building Regulations and Estidama Framework, the UAE has managed to incorporate sustainability-related measures that impact the engineering, construction and operation of buildings, including:
- Promoting the procurement of material based on its life-cycle cost as compared with its initial procurement cost
- Simulating and optimising the expected energy consumption of a building during the design stage and prior to proceeding with the construction
- Implementing district cooling on a large-scale level where significant energy savings can be achieved especially considering that the cooling of buildings currently represents 70% of the peak electricity load in the GCC region.
Mubadala Development Company’s Masdar City in Abu Dhabi is one example of the many sustainability and green projects being undertaken in the region. Although it is not zero-carbon emissions and still has a long way to go in terms of completion, it is definitely a step in the right direction.
Another sustainable city concept by Diamond Developers within Dubai will include recycled greywater system, solar powered homes and modes of transport, and a net-zero energy hotel to be completed in 2018.
So, what are some of the challenges facing the UAE government in reaching their goals?
The UAE government will need to figure out a way to incentivize real estate developers and encourage them to use more efficient technologies and material as well as implement effective systems that would help them complete their projects while minimising wastes and emissions. And finally, in order to succeed in promoting the sustainability principles, the UAE needs to develop an integrated energy efficiency strategy by developing regulations and standards that address sustainability requirements across all emirates.
How will this affect the real-estate industry in the UAE?
The real estate industry in UAE will eventually have to commit to the principles of sustainability, whether as a result of mandatory regulations or as a result of consumers requesting a better quality of life.
Implementing regulations for smart technology for long-term sustainability might result in higher initial costs to real estate developers that will ultimately be passed on to the real-estate buyers. Considering that such higher property prices might result in a lower demand, it would be prudent for the government and real-estate developers to launch awareness campaigns to educate the residents of the country of the importance of these initiatives from environmental and long-term economic benefits.
With great technologies emerging in this field and the demand for facilities management expected to grow at a compounded annual rate of 9% from 2016 to 2021, there is a significant potential for real-estate developers to partner with businesses in that field in order to maximise the economic potential of these initiatives. For example, it is estimated that the sustainability initiatives will have a positive economic impact on the building retrofitting market considering that around 30,000 buildings in Dubai were identified to have a substantial energy saving potential if such building is retrofitted to comply with the impending regulations.
Concluding Statement.
In view of this, while the implementation of the sustainability principles in the UAE might force real estate developers to change their existing practices, investment decisions and cost structures, these principles are bound to benefit the country’s economy, residents and most importantly the environment. Therefore, the real-estate developers who embrace and implement these regulations are bound to gain a significant advantage in such a highly competitive industry.
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Resources:
- http://www.khaleejtimes.com/nation/abu-dhabi/80-energy-consumed-by-buildings
- https://www.strategyand.pwc.com/media/file/Energy-efficiency-in-the-UAE.pdf
- http://emiratesgbc.org
- http://gulfnews.com/business/property/need-of-the-hour-smart-facilities-management-1.1989735
- http://www.asiagreenbuildings.com/10182/advancing-green-building-and-environment-sustainability-emirates-gbc-saeed-al-abbar/
- http://www3.weforum.org/docs/GAC16/CRE_Sustainability.pdf
- http://www.constructionweekonline.com/article-37741-how-the-uae-is-addressing-sustainability/
so much potential… These countries could form JVs with leading cleantech/smart city providers and bring their technology to the world… if only they wanted to.
UAE is really at the frontier of applying new technology especially in the public sector.
Govt needs to come with a robust incentive structure for this to be a success
I see that there could be long term positive benefits for real estate developers who comply with foreseeable energy efficiency regulations. However, I wonder if there are first mover disadvantages associated with proactive action as alternative energy solutions are typically more costly than traditional solutions, an issue that is caused in part by the fact that economies of scale may not yet have been achieved in certain parts of the supply chain. Companies that wait longer to implement this strategies may thus capture a larger volume of customers with relatively lower willingness to pay for longer, and they will benefit from the innovations developed by others. The UAE seems to be doing a good job of foreseeing this potential challenge, and to developing regulation that incentivises environmentally friendly actions on the parts of governments and corporations.
Given that 80% of UAE residents are expacts with no long-term plans in the country, I think that it is extremely hard to justify higher retail prices due to long term environmental benefits. Therefore, I believe that it is the UAE government that needs to create the right financial incentives for the real estate developers to go green.