Knight Frank's second edition of its (Y)our Space report, which draws on responses from almost 400 businesses around the world, representing a combined headcount in excess of 10 million, providing a unique insight into
the workplace strategies and real estate needs of global companies, has found that without a major shift towards sustainable buildings, companies that have set a 2030 net-zero carbon target may struggle to achieve their objectives.
Faisal Durrani, Head of Middle East research at Knight Frank explained: “The climate crisis has spawned a global green reawakening and businesses in the Middle East are alive to the climate challenge. Three-quarters of businesses in the Middle East sample of the (Y)our Space global survey, which represents 7,800 staff, say that their real estate choices in the future will be influenced by their net-zero targets; however, the vast majority say that less than 25 per cent of their global portfolios are green or sustainable.
“The message to landlords is loud and clear: green credentials of buildings will become a key battleground in a post-Covid-19 economy, particularly as office footprints are likely to be revised downward as more businesses adopt hybrid working methods, factoring for greater remote working.”
The UAE is currently home to 869 green- rated buildings, the 14th highest national concentration globally and the only country in the region in the top 30. The US leads the league table with almost 81,000 green buildings and at the city level, London ranks first with 3,000 environmentally accredited buildings. Qatar ranks in 32nd place with 140 green-rated buildings, while Saudi Arabia (54th place) has 38 green-rated buildings. Kuwait and Oman have 12 green-accredited buildings each and rank 69th and 70th, respectively.
Durrani added, “The biggest challenge for businesses today is creating a safe and Covid-19-secure work environment, but one that also goes beyond being an email factory. Offices need to offer opportunities for true collaboration and being ‘greener’ will be a key differentiator as businesses adapt their occupational strategies to encourage more staff back into the workplace. For landlords across the region, the big question will be around weighing up the cost-benefits of greenifying their portfolios in order to cater to evolving business expectations. As investors and businesses are increasingly factoring the green credentials of a building in their decision making, it’s clear that the saleability and lettability of non-green-rated buildings will be negatively impacted over the medium to long-term.”
The report shows a growing desire for global businesses to be sustainable, with 40 per cent of firms having set a net-zero carbon target and, of those, 77 per cent are aiming to achieve this by 2030. Yet despite real estate accounting for as much as 40 per cent of global carbon emissions, and with growing pressure from the increasingly robust environmental, social and governance (ESG) agendas of investors, over 87 per cent of firms said that less than half of their current global real estate portfolios are either ‘green’ or ‘sustainable’. This suggests a real disconnect between real estate and wider corporate thinking on sustainability.
Almost 60 per cent of global respondents said that there is only a partial recognition from their wider business that occupying and utilising real estate differently will impact their ability to achieve net-zero carbon and wider sustainability targets, with a further 15 per cent arguing that there is no recognition at all.
Durrani concluded, “Developers and landlords in the Middle East have made great strides in delivering world-leading green buildings, incorporating stunning technologies, such as the condensation harvesting system on the Burj Khalifa, or the three integrated wind-turbines on the Bahrain World Trade Centre, but such technologies need to be adopted more widely if landlords are to compete on a level playing field for increasingly green-conscious businesses.”