Corporate businesses are noting an increasing disconnect between their net-zero ambitions and the sustainability standards of their office buildings, says latest report by property consultant Knight Frank.

Vast majority of Middle East businesses surveyed by Knight Frank for the second edition of its (Y)our Space report say that less than 25 per cent of their global portfolios are green or sustainable, despite three-quarters saying that their future real estate choices will be influenced by their net-zero targets.

Global studies have found that the building and construction sector contributes to about 40 per cent of worldwide carbon dioxide emissions. 

Source: Knight Frank (Y)our Space report

The report, which draws on responses from almost 400 businesses around the world, has found that without a major shift towards sustainable buildings, companies that have set a 2030 net zero carbon target may struggle to achieve their objectives.

“The message to landlords is loud and clear," says Faisal Durrani, head of Middle East research at Knight Frank. "Green credentials of buildings will become a key battleground in post-Covid economy, particularly as office footprints are likely to be revised downward as more businesses adopt hybrid working methods, factoring for greater remote working”. 

The UAE is currently home to 869 green-rated buildings, the 14th highest national concentration globally and only country in the region in the top 30.

The US leads the league table with almost 81,000 green buildings and a city level, London ranks first with 3,000 environmentally accredited buildings. 

Qatar ranks in 32nd place with 140 green-rated buildings, while Saudi Arabia (54th place) has 38 green-rated buildings. Kuwait and Oman have 12 green-accredited buildings each and rank 69th and 70th, respectively. 

“For landlords across the region, the big question will be around weighing up the cost-benefits of greenifying their portfolios in order to cater to evolving business expectations," says Durrani. "As investors and businesses are increasingly factoring the green credentials of a building in their decision making, it’s clear that the saleability and lettability of non-green-rated buildings will be negatively impacted over the medium to long-term."

Desire dampened by capacity

The Knight Frank report shows a growing desire for global businesses to be sustainable, with 40 per cent of firms having set a net zero carbon target and, of those, 77 per cent aiming to achieve this by 2030. 

Yet despite real estate's contributor to global carbon emissions, and with growing pressure from the increasingly robust environmental, social and governance (ESG) agendas of investors, over 87 per cent of firms said that less than half of their current global real estate portfolios are either ‘green’ or ‘sustainable’.

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“The biggest challenge for businesses today is creating a safe and Covid-secure work environment, but one that also goes beyond being an email factory," says Durrani. "Offices need to offer opportunities for true collaboration and being ‘greener’ will be a key differentiator as businesses adapt their occupational strategies to encourage more staff back into the workplace."

Durrani concludes: “Developers and landlords in the Middle East have made great strides in delivering world-leading green buildings, incorporating stunning technologies, such as the condensation harvesting system on the Burj Khalifa, or the three integrated wind-turbines on the Bahrain World Trade Centre, but such technologies need to be adopted more widely if landlords are to compete on a level playing field for increasingly green conscious businesses.”