"We must incorporate sustainability into how a building is used”
EXCLUSIVE: Prof Selma Carson, programme director for MSc Real Estate at The University of Manchester talks to CW
The changing nature of real estate in the Middle East and across the globe – spurred by megatrends such as urbanisation, climate change, resource scarcity, and technological development – has caused the industry to focus on the rising skills gap, the need for transparency, enhanced product quality, resilience, and sustainability.
Discussions on real estate are now moving to how well the sector will adapt to the changes ahead.
Commenting on shifting requirements within the capital markets in the context of mitigating climate change risks, Prof Selma Carson, the programme director for MSc Real Estate at The University of Manchester tells Construction Week: “In addition to physical deterioration, a building can suffer from functional or economic obsolescence. The world is changing fast and creating flexible buildings that have the capacity to be altered easily, thus having a long, economically successful life, is very important to ensure our real estate is sustainable.”
Despite uncertainty over the global economy, Carson points to increasing investment in real estate, which reached its highest global peak at $1.8tn (AED6.6tn) in 2018.
In fact, cross-border investment has increased in the Middle East, as well, with a broadening global investment base.
“A major issue for international investors is market transparency. Dubai and Abu Dhabi are certainly improving rapidly in terms of processes, availability of information, and the security of ownership, growing to 40 and 45 respectively on the latest global real estate transparency index,” Carson says.
“To attract international institutions, emerging destinations also need to offer a sufficient depth of investable stock for liquidity.”
With existing building stock dwarfing the amount of new stock, the spotlight is also turning to building sustainability.
In addition, advances in materials and construction techniques are enabling buildings to achieve higher environmental rating standards.
Carson adds: “There is also increasing interest in the way in which our buildings contribute to the health and well-being of its occupants, which is linked to productivity.”
Consumers expect convenience, immediacy, and personalisation and this is driving the move towards ‘space as a service’ across real estate sectors.
“To achieve a high rating under the WELL standard, tenant fit-out needs to be integrated at an early stage with the developer’s works,” the professor states.
She alludes to significant gaps between designed and actual energy consumption in buildings, stating that understanding user behaviour is essential to improving the performance of buildings in the Middle East region.
Product quality is also closely tied to the buzzword of sustainability, which is gaining ground in the Middle East.
Foreign and local investors have embraced responsible investment principles and are using industry indicators such as the Global Real Estate Sustainability Benchmark.
“If developers want to attract funds such as Blackstone, they should expect to be questioned on their approach to sustainable development,” Carson explains.
“Within the 17 UN Sustainable Development Goals, creating local employment and affordable housing are important, which is a major issue today across many countries and perhaps one where investors and developers should be working more closely,”
However, it is equally important for real estate stakeholders focused on sustainability to go beyond merely creating and operating buildings that are energy-efficient. There is a need to consider occupiers, as well.
“Rating standards such as BREEAM and LEED have helped to raise awareness and standards, but there is a danger that these can become merely a green badge; the industry needs to think more broadly about the buildings and connections with surrounding land and communities,” Carson explains.
Sustainable real estate is also achieved when occupiers are made part of the decision-making process, and when buildings are plugged into smart cities.
“We need to look beyond the technology and what goes into the design of the building, to incorporate sustainability in how it’s used and how we facilitate a community within the building.”
Commenting on the importance of involving occupiers to boost the vitality of buildings, Carson adds: “The income component of total return remains relatively consistent across the property cycle unlike the capital element which is volatile.
“If there is no occupier for the building, then it is contributing nothing to the vitality of the area and sense of place.”
There is no doubt that in order to attract and retain occupiers, their requirements should be at the forefront of the design, development, and management processes.
“Without understanding the user, we will never achieve a truly sustainable built environment,” Carson concludes.
“The best way to ensure sustainability of real estate is to think about the life cycle of the building at the outset: design and develop for the long-term and consider all stakeholders, especially those who will use the building.”