It has taken many years but the international real estate industry is at last taking seriously the issue of sustainability. This week’s MIPIM international conference, an annual real estate talk-fest at Cannes in the south of France, saw the first ever ‘sustainability forum’.
It involved German, Swiss, British, Swedish, Canadian and Australian property spokesmen discussing how the industry should approach climate change. Old hat? You would have thought so.
After all, Al Gore’s An Inconvenient Truth was in cinemas two years ago, the European Union’s first legislation to improve energy efficiency in commercial and residential units emerged in 2000 and wind-farms have been part of the landscape in some countries since the 1980s.
But developers and realtors are only just catching up.
They have missed a trick, because in almost every country across the world they have simply waited for national governments to insist on targets when in reality the real estate industry itself could have led the way years before.
In the UK, for example, local planning departments can insist that 10 per cent of a new commercial or residential development’s energy needs are produced on-site from renewable sources like solar panels and wind-turbines. The result is builders are now taking the issue seriously, for the first time, for fear of not being allowed to construct. But they complain that the new regulations are too bureaucratic and restrictive – while forgetting that they themselves could have integrated energy efficiency into their designs and systems over a decade ago if they had so wished.
Dubai has followed a similar pattern, although with what looks like a better result. I was astounded when I last visited Dubai just a year ago to be told by one developer that solar energy was not a high priority; problems such as ‘films’ of sand forming on solar panels and destroying their heat-absorption qualities were too difficult to overcome, I was told. So I was not surprised to hear, a few months later, that Dubai’s five star hotels allegedly used 225 per cent more energy than European rivals, according to research by a facilities management firm.
As with other countries, it has taken the government to lead the way.
The Dubai Strategic Plan, a blueprint for development until 2015, and official announcements late last year insisting on stringent new energy requirements in new buildings, have already pushed developers into creating more innovative schemes.
A good starting point is the proposed 68-storey Burj Al Taqa, which will produce its entire electricity needs from a 60-metre diameter, roof-mounted wind turbine and 15,000 square metres of solar panels. Another 17,000 square metres of solar panels will be located on a nearby artificial island visible from the tower. Any excess electricity generated will be used to extract hydrogen from sea water by electrolysis which will then generate electricity at night through hydrogen fuel cells.
But buildings like the Burj Al Taqa are not designed merely to help save the planet. They are the way forward for far-thinking investors, too.
Look at it like this. ‘Old’ real estate markets – and by that term I mean almost all of Europe, north and south America, and parts of Asia, too – have much older buildings that are notoriously hard to retro-fit with anything other than the most basic energy-efficient facilities.
The result is that to keep up with national government targets on energy use and emissions there are many very expensive conversions under way. What remains to be seen is whether the end result – modernised older buildings – makes more sense than companies looking for brand new ‘green’ buildings in other locations.
Those other locations could be the ‘emerging’ markets that have the opportunity to integrate state-of-the-art energy efficiency into brand new buildings. That applies to Dubai and other developing property locations in the Gulf and elsewhere around the world. Now the International Energy Agency has predicted that what it calls an “alarming” rise in energy demand will speed up climate change, threaten global energy security and possibly create a supply crunch that will send already-high prices soaring further.
So with global fears on that scale, these emerging property markets – if they take the lead on energy efficient systems – will use less energy themselves and as a bonus have an appropriately ‘green’ infrastructure with which to attract corporate tenants. In a world where countries and cities compete with each other for the siting of global headquarters, this could provide a vital advantage to Dubai and similar locations.
Meanwhile Europe, the US and the like are still struggling to modernise their buildings. And, of course, are still taking at events like MIPIM… while other parts of the world are actually doing something.
- Graham Norwood is property correspondent for The Observer
The grass is greener on our side