Doha: As sustainability issues take centre stage globally, environmental, social and governance (ESG) considerations are growing in importance according to Knight Frank, an independent UK real estate consultancy in Doha.
The study by the research firm titled “ The ESG Imperative - The View from The Middle East shows With 40 percent of global greenhouse gas emissions traced to the buildings people occupy, the imperative to go green has never been stronger.
Furthermore, ESG factors can have a significant impact on the attractiveness of commercial assets to occupiers, as well as investors , the report stated indicating clear evidence of rental premia for ESG rated assets, which are now being highly sought after, especially by international blue-chip businesses.
Most businesses, particularly those of an international variety are actively seeking prime Grade A space, with a strong preference for green rated buildings. Many have a global mandate to occupy green buildings, as being seeing to be actively responding to the climate emergency plays a significant role in attracting and retaining talent.
This occurs through offering world-class work environments that embrace ESG considerations.
While the ESG agenda remains a relatively nascent concept across the Middle East, there is evidence to suggest that the market is already responding to the global green reawakening.
As demand recovers across Dubai, office rents are on the rise and best-in-class space remains in short supply.
There has been a sharp return to rental growth for locations that have higher concentrations of new, or relatively modern stock. Submarkets such as Business Bay, the DIFC and the Dubai Design District have all seen rents surpass pre-COVID levels, while older parts of the city where there is a higher concentration of older, more secondary stock are still struggling to return pre-pandemic lease rates.
This is not necessarily due to a lack of demand in the market, but a lack of demand for older offices Clearly there are options to explore a change of use, or demolish and reconstruct older buildings; however, with green financing increasingly becoming the norm, developers and landlords may face challenges in the future, particularly when the carbon footprint to demolish and rebuild is higher than renovating an existing building.
