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However, not many know about how serious Dubai is in going the green and sustainable way when it comes to new real estate projects. It is pleasantly surprising that Dubai has travelled a great deal in the journey of ESG (Environment Social and Governance) compliances. 

How has it positively impacted the real estate industry? In many ways, experts say. Here are some of the important points:

1.       New Regulations: The Dubai Government has been proactive in promoting sustainability and environment conservation through many regulatory initiatives over the years. ESG compliances are increasingly becoming a prerequisite for obtaining building permits, certifications, and licenses. They are also incentivizing developers who incorporate such values in their projects

2.      Certifications: ESG principles encourage sustainable development practices which include energy efficiency, water conservation, and waste management. Real estate developers are increasingly incorporating green building standards like LEED, BREEAM, Energy Star, Green Guard, etc.

3.      Buyers’ awareness: The awareness among buyers in this region about sustainability and energy saving is also increasing. As per a study done by Knight Frank in 2021, 50% of home buyers want their homes to be energy efficient, with factors such as proximity to green space and good air quality also gaining significance for buyers.

4.      Rising investments: ESG compliance is attracting huge investments in the real estate sector in Dubai. One of the best examples is that Majid Al Futtaim signed an AED 5.5 Billion loan which is sustainability-linked and that made them the first privately owned developer to borrow such a facility. In July 2021, we saw Aldar becoming the first real estate company in the MENA region to secure an AED 300 million facility through HSBC which links the interest margin payable directly to the achievement of sustainability targets

In conclusion, Dubai is well on its way to becoming the beacon of light in the journey of ESG compliance. When a city plants 500 trees a year (In 2023, Dubai planted 185,000 trees) it is clear that it takes protecting the environment as a priority. When a city is developing the largest solar park in the world, we know we are in the right direction. The real estate industry is one of the key pillars of growth for the city. Compliances to ESG become mandatory to showcase to the world that Dubai is just not about the glitter and glamour.

Additional useful reads:

1.      Knight Frank study on sustainability in Dubai real estate: https://www.knightfrank.ae/the-esg-imperative-series/dubai-the-green-agenda-2023-cop-28-edtion

2.      Dubai Government link to know more about Green Building Certification: https://www.dm.gov.ae/municipality-business/green-building-certification/

3.      Middle East Economy report on how Technology can support ESG in construction: https://economymiddleeast.com/news/technology-can-support-delivery-of-esg-in-construction/