Energy Retrofitting in the UAE – Chris Aird, Director, JLL

Improving the energy performance of existing buildings may not be the highest profile trend in the UAE real estate sector right now, but I would argue it is one of the most important.  Similarly, the work the Regulatory and Supervisory Bureau (RSB) is doing to create an operational energy rating system for existing buildings, may be one of Dubai’s best kept secrets.

There is a recognition that more needs to be done to improve the energy efficiency of buildings in the UAE.  It is estimated that around 40% of the world’s carbon emissions emanate from buildings (and construction thereof) and this figure would be higher in the UAE given its dependence upon air conditioning for much of the year. Recognizing the problem, the Dubai Supreme Council of Energy is targeting a 30% reduction in emissions from real estate by 2030.

While there has been much discussion on how to improve energy ratings in new buildings (e.g. Abu Dhabi’s Estidama program), there has to date been far less focus on improving the energy efficiency of existing buildings.  This gap is counterproductive given the fact that the vast majority of buildings in the UAE are existing and not new. With the exception of residential villas, we estimate there are around 30,000-35,000 existing buildings in the UAE, compared to just 3,500-4,000 that are added to the stock each year.  In other words, if the energy council targets are to have any chance of being met, far more attention needs to be given to the energy efficiency of existing buildings.

Against this background, it is good to see that RSB continues to make good progress behind the scenes in establishing an operational energy rating system for existing buildings.  The rating system analyses actual data from a range of existing residential, hospitality and commercial buildings, and assesses this against the most suitable benchmark data for that type, size and activity of building. It will then apply a rating to that building against preset criteria, allowing both owners and tenants to benchmark their space against their competitive set.

Owners of poorly ranked buildings will then be able to identify areas in which they need to invest to increase the efficiency of their assets to an acceptable level.  This may require modifications to the building’s energy infrastructure to bring it in line with current best practice standards.

Data has been collected on around 175 apartment buildings, 69 office buildings and 50 hotels across Dubai.  This data will allow the RSB to set rating thresholds (an essential starting point for the future rating system). The next stage of the process will involve the selection of a number of pilot buildings where the rating schemes and processes will be tested more fully, allowing any necessary modifications to be made to the initial rating assessment.

The launch of the pilot phase of the project is currently scheduled for Q4 2020, but this deadline looks unlikely to be met, due to additional modifications, tweaking and adjusting of the software taking longer than expected. We would envisage this assessment method being launched in its full capacity to the market in Q3 2021, with the results of the initial tests being available very soon afterwards.

The resulting energy assessment applications are likely to be one of the most important software tools available to existing building owners in the next ten years. To maximize the benefits of these tools (and reduce overall energy consumption) far more building owners must come to recognize the importance of improving the energy efficiency of existing building. There are multiple methods being applied to help owners tackle the inefficiencies of existing buildings, with some contractors offering to undertake energy retrofits for building owners with zero upfront investment required, on the basis of a shared savings scheme contract which typically last 5-7 years depending on the level of retro fit needed.

The benefit of the proposed energy efficiency improvements are not confined to meeting environmental targets. There are also clear financial benefits for individual building owners and tenants.  In an increasingly competitive and oversupplied market, where tenants are ever more concerned about energy efficiency (for both moral and financial reasons), owners run the risk of losing tenants to more energy efficient buildings.

The creation of a transparent and widely publicized operational energy rating system is an essential prerequisite for demonstrating that a building is more energy efficient than its competitors.  Owners should therefore be doing all they can to support the work of the RSB and ensure that the resulting operational energy rating system is completed and applied without further delays.

Tenants will also benefit from access to information on the energy efficiency of alternative premises.  Not only will this information help them reduce their energy bills but will also contribute to a more employee pleasing work environment, a major objective of most occupiers.