UAE Pioneers Strategic Climate Intelligence Framework in Bold Response to Climate Change Challenges

By: Nabil Al Kindi, CEO of Dubai South Properties

The global climate change concern has extended to the real estate sector, causing the industry's primary stakeholders to be worried due to the contemporary challenges it poses, with less attention previously given to the issue of climate change in the sector. Therefore, this discourse analyses the UAE's use of climate intelligence initiatives to sustain the real estate industry despite the impact of climate change and extreme weather. The net-zero strategic initiatives, rolled out by the UAE government, are a response to climate change, comprising a reduction in CO2 emissions, regulation of energy consumption in buildings, limiting water wastage, as well as to limit the rise in global temperature back to 1.5C, ensuring energy efficiency, and other steps. All the measures are to sustain growth in real estate and protect investors' interests.?

Impact of climate change?

Climate change can affect the real estate industry, at the same time, present the sector with investment opportunities differently. Stakeholders now include climate risk in portfolio management due to its environmental impact. The World Green Building report predicts that by 2030, all new constructions, infrastructure, and refurbishments will incorporate a minimum 40% reduction in embodied carbon, focusing notably on substantial initial carbon reduction. Furthermore, it anticipates that all new buildings will achieve net zero carbon in their operations.

While the global implications of climate change pose significant challenges to the real estate sector, they simultaneously open up opportunities for industry growth. However, this growth depends on a focused strategy that tackles the core issues of these adversities while aligning with investor preferences and demands. This brings to the forefront the climate intelligence policy initiatives introduced by the UAE as a blueprint to help stakeholders across sectors and real estate in specific to achieve the projected goal of overcoming climate change challenges. For instance, in December 2022, the UAE government enacted a new building regulation to reduce water usage and energy consumption in buildings to 16% and 25%, respectively. The new building regulation aims to sanitise the construction industry to realise its net zero emission initiative by 2050.

Besides, global comparison in the real estate market indicates that some common factors determine the decisions of stakeholders because of climate change, irrespective of the country, like environmental regulation, shifts in demand patterns, and asset risk management to mitigate the impact of climate change. Thus, the UAE Net Zero by 2050 initiative demonstrates its commitment to the real estate industry as one of the leading sectors contributing immensely to the nation's economy in response to the danger climate change and extreme weather posed to the sector. All the UAE government initiatives are factors channelled towards developing a wave of sustainable investment in the sector and positioning its housing market on the global map.

ESG Framework to Appraise UAE's Sustainability Initiative in Real Estate Amid Climate Change

The core elements of the ESG framework are inherent in the UAE's net zero project designed as climate intelligence strategic planning to sustain the real estate sector. The real estate market considers the government response to climate change by addressing the environmental, social, and governance factors responsible as primary features included in the ESG framework as the framework is a veritable tool that allows stakeholders in the industry to be guided and informed about basic knowledge on climate and sustainability to comprehend the potential physical dangers to assets, not limited to public properties only, including private residential and commercial properties.

Environmental Approach

The core environmental climate intelligence of the UAE real estate initiative is anchored on providing environmental-friendly properties to encourage investment in the sector. The UAE real estate sector ensures modern environmental measures through direct and indirect greenhouse gas emissions, asset management's accountability over natural resources, and overall real estate resiliency against physical climate risks like climate change, flooding, and fires.

Social Approach

On the social aspect of the ESG framework, the property market in the UAE is strictly regulated by the government in line with international standard practice to ensure stakeholders in the industry follow approved construction and property management procedures. This process formed part of climate intelligence measures to tackle climate change's impact on the real estate sector in the UAE.

Government Approach

Nevertheless, governance is critical to efficient management in the real estate industry, and stakeholders are aware that corporate climate intelligence governance would improve the sector's knowledge of climate risk and its mitigation management to assure stakeholder expectations. The challenges posed by climate change have sparked innovation in the real estate industry in the UAE based on initiatives that provide investment opportunities presented by the development of green technology, such as smart building systems, energy storage, and renewable energy sources.

Conclusively, there is a consensus agreement on the impact of climate change on real estate globally. It is proved that the UAE has used climate intelligence planning to sustain real estate despite the impact of climate change on the sector through its net zero emission by 2050 initiative, which is making a difference in real estate globally. However, the challenges and opportunities to grow presented by climate change prompted the UAE to initiate a climate intelligence strategy plan to address climate-related issues within the ESG framework like environment, social, and governance. Therefore, the United Arab Emirates has set a model for the global real estate market with its net-zero climate intelligence plan to tackle climate-related risks, allow stakeholders to adapt to changing market dynamics proactively, and position themselves for long-term success while contributing to sustainability and resilience efforts.

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