Green projects 'must show multi-stage value to overcome cost barrier'
DUBAI, December 6, 2023
There is currently an almost equal rise in demand for green sustainable buildings from occupiers, and the number of investors in the Middle East and Africa (MEA) ahead of the global average (44%). However, the combination of a lack of knowledge about green real estate amongst investors and concerns about high initial costs is preventing the region’s green infrastructure from reaching it’s net zero targets, according to The Royal Institute of Chartered Surveyors (RICS).
Although demand is growing at 51% in the MEA region, the green and sustainable buildings must demonstrate multi-stage value to overcome the cost barrier, stated RICS in its global sustainability report for 2023 published today (December 6).
The publication outlines the state of the world’s green and sustainable real estate and investor interest in acquiring and developing it.
The report states that across the MEA around three-fifths of contributors believe that investor demand for green buildings has risen to some extent in the past year.
This appetite could be commercially driven as a quarter of the investors believed that the green credentials of a building has significant impact on the capital value of a property, while one fifth believed that green features also substantially affect rental value.
The requirements for green buildings from the MEA respondents differ from those of other regions due to its nuanced combination of environmental factors, such as 40% of contributors stating that minimising water consumption is essential, matched by the importance of energy efficiency (40%), while the need for a good indoor environment (37%) is also a priority.
Interestingly, just over a third of regional contributors report that effective waste management and waste minimisation are vital features of green buildings for occupiers and investors. This is significantly higher than the global average of around 16%, stated the RICS in its report.
Regardless of the requirements, more than half of the professionals in the MEA state that lack of knowledge and expertise among investors is a critical problem. Although one major solution to this would be clearer legislation as a substantial share of contributors across the region believe government regulations and policies around carbon pricing could help support decarbonisation across the sector.
Continuing this business-first approach around 40% of contributors in the region, which is above the global average, assert that carbon price regulations can be highly effective in reducing emissions and managing climate risks.
Although both occupier and investor demand is rising, all sources agree that they are still seeing a lack of measurement. Like the 2022 and 2021 reports, construction sector professionals were asked to give insights around embodied carbon assessment across projects.
The 2023 results show that around 43% of respondents globally do not conduct any measurement of embodied carbon on projects. In the MEA, this figure of those not making any assessments stands at 48%.
Even if carbon is being assessed, there is little evidence to suggest that it is having an impact on the choice of materials and components. To achieve targets, measurement must become common practice.
Tina Paillet, President Elect at RICS, said: "The latest RICS global sustainability report reveals that the MEA is among the leading regions for positive sentiment in sustainable real estate, ahead of both the Asia Pacific and the Americas."
"However, the research indicates that several bottlenecks such as the high initial costs, lack of evidence of a return and uncertainty around benefits are significantly hindering progress," noted Paillet.
"The built environment contributes 40% of the world’s carbon emissions. We cannot tackle global emissions without substantially reducing embodied and operational emissions from buildings and infrastructure. Because of this, RICS continues to develop its green standards for the sector, such as the recently developed Whole Life Carbon Assessment (WLCA) to guide the industry in a direction that supports greater sustainability and decarbonisation."
"What we can measure, we can then manage –understanding the scale and scope of emissions is a key first step. Sustainability is much wider than carbon emissions, and RICS will continue to support professionals through our range of standards, existing and in development," she added.-TradeArabia News Service