Aldar’s green retrofits lead to ‘phenomenal payback’, says CEO

• Values up 10%, expenses cut
• $40m to retrofit UAE estate 
• Solar power deal signed

Aldar Properties has increased the value of buildings in its portfolio by up to 10 percent through green retrofits, its group chief executive said.

The Abu Dhabi developer has seen “phenomenal” payback, Talal Al Dhiyebi told AGBI, after investing around $40 million to improve the energy efficiency of residential and other real estate.

“We’ve done retrofits across more than two-thirds of our sites and it’s been one of the best returns on investment we’ve ever made,” he said. 

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The retrofits have “cut our operating expenses by 5-10 percent” in terms of servicing the properties, he added, and “resulted in an immediate 5-10 percent increase in the value of the building.

“From an investment perspective, this is phenomenal payback – better than building a new mall or office.” 

When it comes to real estate, he added, sustainability is no longer “just part of a wishlist – it’s make or break. It’s essential for good business”. 

As well as the retrofitting programme due for completion this year, Aldar is working to embed energy-saving features into new-build properties.

Last month it signed a partnership with Dubai-based renewable energy provider Yellow Door Energy to bring solar power to 45 retail, education and hospitality assets across the UAE. 

“Today, customers are more aware and are asking to see a property’s sustainability credentials,” Al Dhiyebi said. 

“An environmentally friendly building means less outflow for end users in terms of electricity bills, water bills and so on – and for investors, the properties are more sellable.” 

Demand for green buildings is rising in the Middle East and Africa. Sustainability was cited as key for 51 percent of occupiers and investors in the Royal Institution of Chartered Surveyors’ 2023 global sustainability report in December – ahead of the global average of 44 percent. 

The top priorities were buildings that minimise water consumption (for 40 percent of the region’s respondents), provide a good indoor environmental quality (37 percent) and are energy efficient (40 percent). 

However, lack of knowledge about green real estate and concerns about high initial costs are preventing the region from reaching its potential for greening infrastructure, the report found. The built environment contributes 39 percent of global carbon emissions, according to the World Green Building Council. 

Buying assets and upgrading their sustainability potential is a key plank of Aldar’s growth strategy as it looks to expand overseas. 

“Sustainable living will be a big theme within future real estate markets,” Al Dhiyebi said.