Embracing sustainable design for a brighter future

Real estate Insight from Steve Blandford, Head of Cost Management UAE, Project & Development Services

May 10, 2024

With buildings accounting for more than 60% of carbon emissions in cities, sustainability has emerged as a critical priority for businesses worldwide. Driven by factors such as tenant demand, regulatory pressures, and the escalating costs of unsustainable practices, companies are increasingly recognising the need to adopt sustainable strategies.

JLL's comprehensive research on “The commercial case for making buildings more sustainable” reveals a significant gap between demand and availability, presenting a valuable opportunity for owners and investors. Moreover, according to JLL's "Decarbonising the built environment" report, 63% of leading investors strongly agree that embracing green strategies can lead to higher occupancy rates, increased rental revenues, improved tenant retention, and enhanced property value. This demonstrates the clear business case for sustainable offices, encouraging stakeholders to invest in greener practices.

In the UAE, businesses recognise the urgency of reducing carbon emissions in the building sector. JLL’s “The green revolution: A call for sustainability in real estate” emphasises UAE’s transformative net zero plans. It further highlights how developers, corporations, and investors are taking proactive steps towards achieving their own net-zero targets. For instance, Aldar’s Haven project in Dubai aims to obtain LEED Gold and Fit-Well 3 Star ratings. From a commercial aspect, ICD Brookfield Place is one of the tallest and largest office buildings in the EMEA region, and it has achieved the LEED Platinum rating. With an occupancy rate of over 90%, it highlights the ongoing commitment of its investors and tenants towards achieving their sustainability goals.

Affordable sustainability

Contrary to common belief, sustainable design does not need to break the bank. Organisations can achieve quick wins without significant capital investment. Here are some cost-effective strategies:

  • Energy audits: Energy audits uncover simple fixes like lighting upgrades and heating/cooling adjustments. These yield immediate energy and cost savings.

  • Eco-conscious choices: Opt for sustainable materials and responsibly designed and sourced furniture. Repurposing existing furniture during office relocations is both environmentally friendly and cost-effective.

  • Low-energy appliances: Installing energy-efficient appliances reduces consumption and utility bills.

  • Renewable energy: Sourcing renewable energy contributes to long-term sustainability and saves costs through reduced energy bills, participation in feed-in tariff programmes, and net metering.
Navigating accreditation

While an increasing number of jurisdictions across MENA have developed their own local standards (most notably Estidama in Abu Dhabi), US-based LEED has gained prominence across the region, with LEED Silver widely regarded as the minimum standard for most markets.

Our experience suggests that LEED Silver is feasible without additional expenses. Upgrading to LEED Gold or Platinum may require a ‘sustainability uplift’ of 3%-5% per grade of capital expenditure based on a wide range of factors. For example passive design components like massing, orientation, structural form, floor plate depths and façade materiality and active components such as renewables (typically PV’s), smart power, lighting controls and leak detection systems.

Development advisory

Make the right strategic decisions to maximize long-term financial, social and environmental value of your real estate assets.

Role of cost managers

Cost managers play an important role in ensuring sustainable design goals are achieved within budget constraints. A central role of the cost manager for high sustainable projects, is the understanding of the ‘sustainable scorecard’ as created by the sustainability consultant and how the targeted credits affect cost. This scorecard comprises an ‘environmental cost benefit analysis’, setting out the costs and the potential benefits of alternative elements of sustainable design. By using the sustainable scorecard, the project team can make informed decisions and choose elements that provide the most cost-effective way to obtain the required number of credits, ensuring that the targeted accreditation rating is achieved.

Additionally, cost managers can develop a digital ‘life cycle cost analysis’ tool that evaluates the impact of alternative sustainable design features. This helps the design team decide which features will greatly affect the project's sustainability rating while managing expenses.

The way forward

The majority of expenditure for construction projects in the UAE is still predominantly focused on new builds. This will change over the next decade as the market continues to mature, with greater opportunities for the repositioning and redevelopment of existing assets. One thing that will remain constant is the focus on achieving improved sustainability.

As these emerging trends drive the real estate market, cost managers will face new challenges. The key to success in this evolving market will be their ability to provide clients with increased insight into the trade-off between sustainable design and project cost. They must identify and demonstrate the most cost-effective ways in both upfront and lifecycle costs to achieve the desired sustainable design and demonstrate the payback on sustainable implementation.

Looking for more insights? Never miss an update.

The latest news, insights and opportunities from global commercial real estate markets straight to your inbox.