The Middle East’s real estate industry is continuously evolving and the need for sustainability has become evident within the region as well as worldwide. Sustainable developments/buildings have gained popularity in recent years as the UAE government has put in place several initiatives and strategies to reduce energy consumption at an industrial and individual level.
According to the International Energy Agency, the world had its worst year for energy efficiency in a decade in 2020 as the pandemic shifted the focus of the economy away from services towards industry, the rate of improvement of global energy intensity was expected to recover to 1.9%. Global energy intensity indicates how efficiently the world’s economic activity uses energy.
The agency revealed in its Energy Efficiency 2021 report that global progress on energy efficiency recovered in 2021 to its pre-pandemic pace, but that it was less of what was needed to accomplish global net-zero emissions by 2050. The report concluded that the total annual investment in global energy efficiency needs to triple by 2030 so that the Net Zero by 2050 goal can be met.
In the UAE, due to rapid population growth, economic activity, and high consumption rates, energy efficiency is also a constant challenge. Over the last 6 years, the annual average of energy usage in the UAE has increased by 4%, with an expected increase to 5% through 2022. Energy consumption has more than doubled in the past decade, this elevated pace of growth is unsustainable over a long period.
The Dubai economy relies heavily on two sectors — tourism and real estate. These took a hit in the last two years but are back in almost full force with pandemic regulations slowly easing, on the back of stimulus packages worth Dh7.1 billion ($1.93bn).
Local sustainable outlook
The UAE has taken a structured approach to energy conservation. The UAE Energy Strategy 2050 aims to achieve an energy mix that combines renewable and clean energy sources to balance economic requirements and environmental goals. The country plans to make investments totalling Dh600 billion until mid-century to meet the rising energy demand and secure the sustainable growth of the economy. The eventual goals are to boost clean energy, reduce dependency on natural gas, cut CO2 emissions by 70% and improve energy efficiency by 40%. All this can result in Dh700 billion savings.
A study found that a 10% share of renewable energy in the total energy mix could result in annual savings of $1.9 billion by 2030. When accounting for health and environmental benefits an additional net annual savings of $1 billion to $3.7 billion by 2030 could be expected.
Along with this nationwide drive for sustainability comes the need for technologies to support it thereby creating a burgeoning segment in the real estate sector — smart buildings.
Buildings account for over 30% of global energy consumption. Of all building operating expenses, energy use is the single largest, at approximately one-third of normal operating budgets and is responsible for almost 20% of the nation’s annual greenhouse gas emissions. With such a staggering footprint, real estate holds immense economic, social and environmental impact.
The UAE ranked 14th globally for the number of sustainable buildings in a survey of 373 corporate real estate professionals undertaken by Knight Frank. It was also the only country from the GCC to feature in the top 30, with 869 green-rated buildings. Dubai and Abu Dhabi are two of the top-ranking smart cities for technology in the IESE Cities in Motion Index 2020.
Amid the Covid-19 pandemic, interest in smart buildings has surged. Consumers are keen on technologies that make their life smoother while benefiting the environment such as smart cooling and lighting systems, smart elevators, app-driven maintenance and more. A report by Technavio predicts that the global smart buildings market will increase 13% in annual value, reaching $19.17 billion by 2024.
The design of a building has a significant impact on its potential to use energy efficiently throughout its life. In line with the UAE’s energy conservation goals, strict building codes have been laid out for building design and construction. Those that comply receive a Green Certificate — a stamp of approval for sustainability.
Due to the regional climate, air conditioning systems are one of the top energy consumers at around 80-85% of the total building energy consumption. While it cannot be avoided, optimizing usage is key. For example, at Lootah Real Estate Development’s Loci Residences, each apartment’s air conditioning unit detects whether a person is present in a room. It learns the movements of the occupants too. If they usually arrive at 5:30 pm, the AC will switch on at 5:20 pm so the apartment is cool without wasteful energy consumption throughout the day. Some of the other stipulations include the use of light reflective walls, smart meters and speed control escalators with traffic detection capabilities, which are all part of the plan for Loci Residences.
The future of the way we live in and use our homes is set to be one thing: smart. The stakes for the UAE and the world are high as the uptake for innovative smart technologies, energy-efficient features and other eco-conscious practices are on the rise. With the UAE chasing sustainability, consumers are demanding a greener perspective and property developers need to grab the opportunity while it is ripe.