By Parag Deulgaonkar
Core Savills says emirate’s residential segment lags in LEED certification race
Dubai is ranked third in the list of global cities with the highest number of green buildings, according to a new report.
Core Savills, in a report titled “Sustainability and Wellness in Dubai”, said the emirate has over 550 projects under LEED certification with London and New York leading the race with 2,600 and 900 buildings, respectively.
Dubai has the highest ratio of projects being certified with 81 percent of in-progress projects across global cities, which indicates a “burgeoning interest in sustainability”.
Overall, the UAE is ranked amongst the top 10 countries to hold LEED certification outside the United States. China heads the pack followed Canada and India, the report said.
Despite buildings being built as per LEED guidelines, headline rents in Dubai remain at par with other non-certified Grade A stock due to developers launching initial project phases at “attractive entry price point” to achieve critical mass for their future phases, and green developments containing to compete with established, centrally located non-certified Grade A stock.
While global corporate occupiers value sustainability, a larger section of officer occupiers are yet to quantify environmental and operational benefits over rental costs, the report said. In contrast, the residential segment lags far behind.
David Godchaux, chief executive officer, Core Savills, said: “This disparity represents a pocket of opportunity in the market for landlords to upgrade their assets to higher standards, by investing in refurbishments over and above their initial acquisition cost.
“However, there is a ceiling to how much a unit can be upgraded within a given location as owners risk reaching a point where the more they spend on upgrading their unit, the less additional return (rent or price) it will incur.”
The residential market is expected to start pricing sustainable increments only when they become a significant differentiating factor on their own, the report added.
Last year, Dubai Municipality made in mandatory for all existing and new buildings to implement green building standards to achieve a smart, sustainable city status for Dubai by 2021.