Abu Dhabi real estate pivots to green
29 November 2022
| This article is the second in a series that captures key highlights from the Abu Dhabi Real Estate Roundtable jointly held by MEED and Mashreq on 28 September, discussing the trends shaping the way forward for the emirate’s real estate sector. Participants at the closed-door event included government, business and financial stakeholders. |
Tapping into investor demand for sustainable property development could help Abu Dhabi propel its real estate sector to new heights, according to leading industry experts gathered at the Abu Dhabi Real Estate Roundtable.
“Globally, there is a growing call for ESG adoption and sustainable development,” said Anthony Taylor, senior executive officer at Masdar Green REIT, speaking during the high-level discussion organised by MEED and Mashreq on 28 September.
“Investors are increasingly looking for ‘responsible’ investment opportunities and evaluate companies based on specific ESG practices criteria. This highlights the rise in recognition of the climate crisis and how it must be addressed in the real estate industry.
“Now that there is the necessary awareness of the need for climate action, we must continue to take small steps that will have a big impact in the future,” said Taylor.
Growing demand
Stakeholders are already witnessing demand for properties that meet high environmental standards in the emirate.
“To give you an example, Siemens has a global mandate for their office buildings to meet a minimum LEED Gold certification and they chose to base their regional HQ in Masdar City, which is already home to one of the largest clusters of low-carbon buildings in the world,” said Francisco Galan, director at Masdar Green REIT and head of development and portfolio management at Masdar City.
The German multinational’s regional headquarters in Masdar City is the first LEED Platinum-certified office building in Abu Dhabi and one of the first assets acquired by Masdar Green REIT in 2020.
Major decisions, such as headquarter location, highlight again the investor and tenant appetite for sustainable real estate options. The Masdar Green REIT gives investors that option by investing in sustainable income-generating real estate assets, with a primary focus in Masdar City. This REIT also provides a vehicle through which third-party, sustainable developers can monetise their assets, attracting both real estate developers to Masdar City, and aspiring local and international sustainable investors
Francisco Galan, Masdar Green REIT
The demand and supply for sustainable products are interlinked. Demand will drive the creation of the product and vice versa.
“Unless there is change demanded for your product, you will continue to build things the same old way,” said a senior representative from a real estate development company. “It is indicative that people want a certain kind of lifestyle and will commit to projects that support this.”
In January 2022, Abu Dhabi developer Aldar announced The Sustainable City project, to be jointly developed with Diamond Developers at a value of AED1.8bn ($490m).
The community will comprise townhouses, apartments and retail spaces, spanning an area of 397,000 square metres on Yas Island. A core part of the development is its sustainability factor. It will be powered by renewable energy and incorporate practices around energy efficiency, recycling and indoor vertical farming.
Aldar is also the first real estate company in the Middle East and North Africa (Mena) to secure a sustainability-linked loan. In 2021, it signed a five-year AED300m facility with HSBC that connects interest rates payable to achieving sustainability targets.
READ: Key highlights from the first Abu Dhabi Real Estate Roundtable
Positive change
According to stakeholders at the roundtable, the relatively young responsible investing landscape is evolving rapidly. However, there are numerous challenges around the harmonisation and consistency of data, measurement and maintaining high standards in the real estate industry.
Organisations need to start somewhere, and the considerations made today by backing and introducing these priorities in key projects and developments can help create incremental positive change for the future.
Even as demand for sustainable products rises, issues such as upgrading existing properties and a hesitancy to embrace the shift still linger.
“One of the initiatives we have recently introduced in another Dubai property portfolio has been ARC reporting on all assets to highlight, to both tenants and shareholders, some of the lower levels of sustainability these assets are currently achieving,” said Masdar REIT’s Taylor.
He explained that the motivation behind this initiative is to emphasise the need for improvement at both the asset level and, in some cases, tenant behaviour as well.
Retrofitting is another tactic that the government and developers are turning towards as they seek to upgrade existing assets to higher standards.
In a recent announcement, Aldar said it would invest AED25m ($6.8m) to energy retrofit 13 of its residential communities. The investment will offset 19,000 tonnes of carbon dioxide emissions annually and reduce utility consumption by AED12m across the communities.
READ: Retrofit can be a realistic route to net zero
Abu Dhabi’s Mubadala Investment Company has placed responsible investing at the core of its business. Against the backdrop of climate action, the energy transition and the role of business in society, it is continuing to integrate principles of investing responsibly into its decision-making and asset management processes.
To help build fluency and institutionalise ESG, Mubadala has established a dedicated, responsible investing unit to support its business along this journey.
Implementing change is not easy, and getting people on board with green investment strategies can be challenging, given this is a relatively new investment landscape.
Yet industry players state that partnerships can help achieve sustainable value creation while delivering tangible change and positive impact. A call to action is needed and banks can be seen supporting such efforts by confirming their position to finance projects that meet responsible investing criteria.
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At a glance: Sustainable development in Abu Dhabi National targets For example, the Estidama building design certification system is geared at measuring the environmental performance of built structures from planning all the way through to the decommissioning stage. Within Estidama, the Pearl green building rating system provides minimum criteria that buildings and villas in the emirate must meet from a sustainability aspect. A dedicated Environment Vision 2030 defines five priority areas (climate change; clean air and noise pollution; water resources; biodiversity, habitats and cultural heritage; and waste management) to ensure integration among three key pillars: environmental, economic and social. Abu Dhabi Global Market Keeping in line with national and international demand for sustainability, ADGM has increasingly turned its focus towards green finance practices and supporting ESG-led investments. 2019 saw the launch of the Abu Dhabi Sustainable Finance Declaration by the ADGM. The declaration, supported by over 46 public and private sector entities, aims to increase the quality and depth of green financial products in the emirate, and to create a thriving, sustainable finance industry. In June 2021, Abu Dhabi was ranked fourth-highest in the Mena region and 50th globally on the Global Green Finance Index. Masdar City Masdar City is also home to the International Renewable Energy Agency (Irena) headquarters, a global intergovernmental organisation providing insights and consultancy support regarding energy transition. Stemming from efforts in Masdar City is a green real estate investment trust (REIT), the first of its kind in the region, which directs funds towards sustainable properties within the city. Launched in 2020, the Masdar Green REIT provides investors with responsible investment options. Earlier this year, the REIT signed a financing commitment of a $200m green loan with First Abu Dhabi Bank (FAB) to facilitate portfolio growth. As of December 2021, the REIT’s portfolio was valued at AED980m ($267m), marking a valuation gain of AED32m ($8.7m) over the year. |
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The consortium, which includes South Korea's Korea Electric Power Corporation (Kepco) and China's GD Power Development, submitted a levelised cost of electricity (LCOE) of hals 4.847 ($c 1.29) a kilowatt-hour for the contract to develop the scheme, which is located in Eastern Province.
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Saudi Power Procurement Company (SPPC) received six proposals from companies for the contracts to develop and operate four solar photovoltaic (PV) IPP projects in Saudi Arabia in August.
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According to SPPC the lowest and second-lowest bidders in the remaining schemes under NREP round five are:
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Saudi utility developer Acwa Power was not among the 23 companies that were prequalified to bid for the fifth round of NREP projects.
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The round five solar PV IPPs take the total capacity of publicly tendered renewable energy projects in Saudi Arabia to over 10,300MW. Solar PV IPPs account for 79%, or about 8,100MW, of the total capacity.
Four wind IPPs, one of which has yet to be awarded, account for the remaining capacity.
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The Saudi Energy Ministry recently said that the kingdom plans to procure 20,000MW of renewable energy capacity annually, starting this year and until 2030.
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Ashghal tenders sewerage works
21 October 2024
Qatar’s Public Works Authority (Ashghal) has issued a tender for the construction of the remaining works for two packages of the Al-Kheesa foul sewer network.
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MEED understands the project is located in the Al-Wajba area and is expected to be awarded in March 2025.
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Saudi Arabia to award 10.9GW of generation capacity
21 October 2024
Principal buyer Saudi Power Procurement Company (SPPC) is expected to award the contracts to develop four gas-fired power plants and four solar photovoltaic (PV) projects over the next few weeks.
MEED understands the intention is to announce the preferred and reserved bidders for each of the contracts, possibly by late October or early November.
SPPC received six proposals from companies for the contracts to develop and operate four solar PV independent power producer (IPP) projects, which have a total combined capacity of 3,700MW, in August.
The project contracts were tendered under the fifth procurement round of the kingdom's National Renewable Energy Programme (NREP).
According to industry sources, the companies that submitted bids for the four PV contracts include:
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Khazna expects to build more 100MW-scale data centres
21 October 2024
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The 100MW artificial intelligence (AI)-enhanced data centre being built in the UAE's northern emirate of Ajman is not the last for UAE-based data centre and cloud services provider Khazna Data Centres.
"In the near future, we will be announcing other projects on the same scale or larger than the Ajman data centre," Gregory Jasmin, the firm's senior director of business development strategy, tells MEED.
The executive says the 100MW data centre, once completed, makes Khazna Data Centres "by far the largest data centre developer and operator in the entire Gulf region".
MEED previously reported that London-headquartered construction firm Laing O'Rourke had started construction on Khazna's latest data centre project in Ajman.
The new facility is expected to cost about AED1bn ($272m) and be completed within 15 months. Etihad Water & Electricity Company will supply power to the Ajman data centre.
Jasmin says the company exceeded its capacity target of 300MW by the end of 2023, up from 126MW in early 2022.
The firm has grown significantly since 2020, when it had a capacity of just 40MW, following the 2021 merger of the data centre divisions of Khazna’s parent firm G42 and telecommunications firm e&, previously known as Etisalat.
The company is also expanding its presence in other markets, including Saudi Arabia, Egypt and Kenya.
"By the end of this year and the start of Q1 next year, we will be in many [more] geographies," says Jasmin.
Asked about the top driver for the company's future expansion, the executive says: "AI, AI and more AI."
He adds: "This is based on what the [UAE] leadership wants, which is to have the UAE at the forefront of the AI revolution and with G42, we sit at the core of the infrastructure that is needed for AI.
"For many years, we were always looking to the West to see what we can do, but now we want to take the lead in building the infrastructure that is powering AI here in the UAE as well as globally," says Jasmin.
As things stand, the government's AI push has increased interest in building data centre capacity, if not changed the landscape entirely for Khazna.
In June 2022, the firm's CEO Hassan Al-Naqbi told MEED that increased digitalisation by government entities and enterprises, as well as the adoption of school- and work-from-home practices, mean that the Middle East region will continue to drive double-digit growth in demand for data centre services.
In addition, the general mandate for regional governments to retain data within their national jurisdictions is also a major driver for the growth of data centre services in the region, which was nearly double the global average at the time.
Green data centre
Known for being a major energy consumer, there is a growing awareness of how data centres can be made more sustainable or greener, particularly due to the cooling requirements, which are especially crucial in the Gulf region.
Jasmin says in some countries, such as Kenya, a 100% renewable energy powered data centre is now feasible.
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Dubai Municipality seeks Tasreef partner
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Dubai Municipality has issued a tender notice for a delivery partner to develop and implement a model tailored to the needs of the Tasreef programme, Dubai's planned AED30bn ($8.16bn) rainwater drainage network project.
MEED understands that the request for proposals targets technical and engineering advisory companies.
Dubai Municipality expects to receive bids by 7 November, Fahad Al-Awadhi, director of drainage system and recycled water projects department, Dubai Municipality, said in a recent social media post.
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Al-Awadhi added: "The proposed stormwater tunnels, links and terminal pump stations aim to enhance the stormwater network’s capacity by 700% to handle up to 65 millimetres of rainfall per day. This programme represents the largest rainwater collection project in a single system within the region."
An early study is under way for Tasreef, which Sheikh Mohammed Bin Rashid Al-Maktoum, UAE Vice President and Prime Minister and Ruler of Dubai, approved in June.
A source familiar with the project said that Dubai Municipality is inclined to consider a public-private partnership (PPP) procurement model for the project.
Sheikh Mohammed's approval of Tasreef came two months after a storm in April inundated Dubai, causing widespread flooding and damage to infrastructure and property in certain areas.
The project will raise the emirate-wide drainage network’s capacity to more than 20 million cubic metres of water a day. It is hoped that it will meet Dubai's needs for the next 100 years.
The project is a continuation of drainage projects launched by Dubai in 2019, covering the Expo Dubai area, Al-Maktoum International Airport City and Jebel Ali.
The rainwater drainage capacity through tunnels will reach 20 million cubic metres a day, with a flow capacity of 230 cubic metres a second.
According to data from regional projects tracker MEED Projects, the Dubai Municipality Deep Tunnel Storm Water System (DTSWS) was first announced in 2014.
It has several components, and the first two packages covering Jebel Ali were awarded in 2017 and 2018 and completed in 2022.
The remaining packages of the master plan were on hold before the government's announcement on 24 June.
The DTSWS project is separate from the Dubai Strategic Sewage Tunnels project, which is being developed under a PPP contracting model.
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