In the first half of this year, Abu Dhabi demonstrated the UAE’s market resilience, by recording $6.1 billion worth of real estate transactions. In July, Dubai reaffirmed this by registering $2.9bn transactions in a single week.
Despite month-on-month prices falling for the first time this year in June, they remained over 10 per cent higher compared with June 2021. This recent slowdown should be read as a welcome sign, as it indicates that the market is healthy and can maintain a sustainable pace.
Real estate activities generate about 5.5 per cent of the UAE’s overall gross domestic product and this is likely to continue, especially as the UAE remains focused on economic diversification. The use of solar roof technologies and other sustainable development practices will also contribute to the country’s goals.
The UAE’s real estate rebound from the Covid-19 pandemic has been due to numerous factors. One is flexibility; maintaining an adaptable mindset has served the UAE well in its pursuit of a green future. The country’s rapid growth over the past 50 years has rightly been attributed to pioneering leadership and a willingness to innovate. The real estate sector is no exception and the Dubai 2040 Urban Master Plan, for example, is set to maximise the country’s resources. One of the goals in the master plan is to grow green areas by over 100 per cent. Meeting this goal would also greatly contribute to UAE's goal of Net Zero 2050.
Property developers can contribute by integrating “clean” infrastructure and technologies within their developments – such as adding solar panels, that alone could save up to 28 per cent in energy output, and electric car charging stations. Developers providing such facilities promotes eco-friendly habits among residents and can foster collective collaboration towards the country’s green agenda.
Research by a global real estate services company shows that 63 per cent of leading investors strongly agree that green strategies can drive higher occupancy rates, higher rent prices, and higher tenant retention. If Dubai 2040 is a resounding success, it will drive overall higher value for property developments.
Property developers who exhibit a sustainable mindset will be better off for it. For instance, introducing vast areas of greenery in the design of the development, can be beneficial. It would reduce the area of hard surfaces and thereby decrease heat absorption. In a country like the UAE, where summer temperatures can rise fast, this is highly beneficial and can save long-term energy expenditures and associated costs.
Solar panels can save property developments up to 28 per cent in energy output. This trend has not gone unnoticed in the UAE. To encourage the use of solar panels, the country offers the lowest tariffs and Power Purchase Agreements (PPA) in the world.
The price of solar PV systems in the UAE has dropped by more than 76 per cent in recent years and this has spearheaded a number of projects, including in Abu Dhabi's Al Dhafra region; approximately 1.6 million houses in the UAE will be provided electricity while tariffs of $13.50 per megawatt-hour will make it one of the lowest solar PPA costs in the world.
With solar benefits becoming increasingly realised, the UAE is projected to hit a Compound Annual Growth Rate of more than 15 per cent by 2027. Property developers who strategically implement solar infrastructure will have much to gain.
Whether it be through architectural design, construction practices, waste management, there are several ways for developers to implement sustainability and reap the benefits.
In the same way that the UAE is addressing the growing concern of climate change, while simultaneously spurring real estate growth, it has also shaped regulatory frameworks around modern needs. Dubai recently having introduced property law is one prime example. The Dubai Land Department has mandated the appointment of approved and independent Real Estate Regulatory Agency appraisers to attract more foreign capital and ensure greater transparency. The city's real estate market has attracted new foreign investment of more than $27bn in 2021. Considering this, the new law will serve to maintain investors' interest and retain the UAE’s standing as a global destination for real estate investment.
The new brokerage law that was introduced in August also illustrates the UAE’s forward-thinking mindset. It will also ensure that brokers report all cash deals worth Dh55,000 and above.
A combination of these factors has led to a string of record-breaking transactions in 2022, as the UAE strives toward a greener, more secure and sustainable future.