Building a pathway to green real estate in the UAE

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Published Date
Nov 23, 2023
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The UAE is leading the way in the Middle East in incorporating sustainability and environmental standards in construction and real estate. Ian Bevan and Ejiro Otu discuss that there is still more to be done to incentivize green building solutions.

Where sustainability is concerned, the UAE is no stranger to firsts.

By way of example, the UAE was the first Gulf country to ratify the Paris Climate Accord, and the first in the region to commit to reducing emissions in all economic sectors by 2030, while it also took the lead in committing to achieving Net Zero by 2050.

Now we are progressively seeing the country applying sustainability and environmental standards in its booming construction and real estate sector, adopting regulations that, in some areas, are increasingly compatible with – if not identical to – some of the world’s most exacting building standards.

In addition, we are seeing some exciting city-scale developments take shape which set a high bar for sustainability, livability, and environmental design.

The UAE has created a strong base on which to build further, and we fully expect to see real estate and construction regulation continue to develop as the country looks for ways to develop sustainably.

The federal context

Regulatory action on the environment has been taken at both the federal level and within individual Emirates.

At the federal level there has been a focus on laws and regulations to promote energy and water conservation, the roll out of renewables and other measures to reduce greenhouse gas emissions, many of which have been in place for some time.

A Federal Law on the Protection and Development of the Environment has been in place since 1999. This establishes the general principles and obligations for protecting the environment, giving the Ministry of Climate Change and Environment powers to issue regulations around such things as energy efficiency and conservation.

The UAE Vision 2021 and UAE Green Agenda 2015-2030 include national goals for environmental protection, energy efficiency, renewable energy and low-carbon development. 

Forward looking targets on reducing CO2, diversifying energy sources, increasing the share of clean power in the overall energy mix, and enhancing the country’s resilience to climate change impacts are also included in both the Energy Strategy 2050 and the UAE Climate Change Plan 2017-2050.

Where construction is concerned the UAE Cabinet approved Green Building and Sustainable Building standards to be applied country-wide, as early as 2010. In 2022 the Cabinet approved further measures under a new set of National Building Regulations and Standards, with a target to cut energy use in buildings by 25% and water consumption by 16%.

Action at Emirate level

We are seeing the most decisive action on real estate regulation and standards within individual Emirates, notably Abu Dhabi and Dubai, which have both developed their own standards for green construction and energy efficiency in the building sector.

Abu Dhabi’s Estidama is a sustainability framework that includes a rating system for the built environment.

Launched in 2010 by the Abu Dhabi Urban Planning Council, it requires all new buildings and developments to meet and comply with standards in four key areas – environmental, economic, social and cultural. Developments must achieve at least one pearl rating to achieve accreditation, although government buildings must achieve two pearls.

The standards also apply to all existing buildings that are being renovated or redeveloped but do not apply to other existing buildings. Estidama also provides guidelines on the design, construction, operation and maintenance of sustainable buildings and communities.

Dubai launched its Al Safat building rating system in 2016 and it is now the most important standard in the Emirate rating developments based on four categories – ecology and planning; building vitality, energy efficiency, and water; materials; and waste management.

Under Al Safat, all new buildings and developments must at a minimum achieve the Silver Sa’fa rating, although developers can opt to aim for the higher Gold or Platinum rating by meeting more stringent requirements.

The standard puts an emphasis not just on environmental performance but also on innovation in key areas such as use of green technologies and efficient electrical and mechanical systems, all with the aim of reducing energy consumption and cutting carbon emissions.

Standards in action

A number of high profile and large-scale developments in the UAE, involving both government-backed and private developers, show how work to create a greener real estate sector is progressing.

The Masdar City project, started in 2006 and set for completion in 2025, includes a range of academic, commercial, and residential developments where the Estidama Pearl Rating system has been applied. It also includes a number of buildings that meet stringent international building standards. The Siemens regional headquarters building, for instance, was the first LEED Platinum certified office project in Abu Dhabi and is now setting the pace for sustainability standards in the country.

Dubai’s Sustainable City – a project led by the private sector group, Diamond Developers – is the region’s first community designed to achieve Net Zero. It is built around an integrated sustainability plan covering all aspects of street, housing and amenity design, winning Diamond Developer of the Year at the Smart Build Environment Awards 2022.

The Abu Dhabi Global Market (ADGM) on Al Maryah Island, the first international financial center to achieve carbon neutrality, includes a four-tower development offering some 200,000 square meters of office space built to exacting international standards. It was the first development in Abu Dhabi to be awarded the prestigious LEED Core rating and Shell Gold Pre-Certification by the U.S. Green Building Council.

International comparisons

While the UAE has made good progress in implementing sustainability standards for real estate and construction, there are some key differences with other markets.

Regulations in the UK are largely mandatory, including building regulations that are enforced by local authorities and energy performance regulations requiring all buildings to have an Energy Performance Certificate when they are built, sold or rented. These mandatory regulations are backed by BREEAM, a voluntary scheme to assess and rate the environmental performance of buildings and covering aspects such as energy, water, materials, waste and pollution. 

By contrast most standards and rating schemes in the UAE are voluntary. However, they often closely reflect other international systems, notably BREEAM and the U.S. LEED rating systems, while being tailored to the climate and environmental conditions in the region. For instance, water and energy performance in the Estidama Pearl rating system are given the highest priority and weighting to reflect local environmental pressures. Both Estidama and Al Safat do in most respects compare with the UK’s building regulations in terms of the scope and criteria.

In all these jurisdictions regulations and standards are to a large extent dictated by the building stock in the different markets. The UK, for instance, has a mature and diverse building stock and policy therefore focuses on both new and existing buildings, both of which must meet regulations such as the requirement for Energy Performance Certificates.

The UAE’s stock is relatively young, so policy focuses mostly on new developments, renovation and redevelopment. It currently lacks any minimum standards for existing stock that is not being redeveloped.

Challenges to overcome, opportunities to grasp

The UAE has come further and faster than other countries in the region in devising and applying sustainability and environmental standards in its fast-growing real estate sector.

But there are clearly challenges to be overcome.

One obvious area that needs addressing is in applying standards to existing building stock, which is being neither refurbished nor redeveloped. Despite the pace of new development in the country, there still remains a large stock of older buildings and houses that would benefit from more rigorous standards. Greening these buildings will be an important part of the UAE’s journey to greater sustainability.

Perhaps the biggest challenge – and therefore the area of greatest opportunity – is around the development of financial incentives and mechanisms to encourage green development. The lack of these is undoubtedly acting as a barrier to sustainable development, blocking developers, owners and occupiers from making greater progress.

The UAE has the chance to develop a range of incentives – including grants, loans, guarantees, tax credits and rebates – which would greatly increase the availability and affordability of green building solutions, including access to innovative technologies.

Unlocking these financial incentives will help to dispel a belief that has sometimes been apparent in the region, as elsewhere, that the cost of transitioning to green construction is too high even though it would propel the country even further and faster on the road to sustainable development.

We fully expect to see such incentives being devised in the years to come and for that transition to accelerate further.

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