Craig Sandison, TBH, on the value of DRBs
JLL’s Elaine O’Connor on sustainability and the bottom-line
finance: what it is and how it works
How
The Point of Singularity
AI will take over architectural design
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Threat & Risk Assessment
Gap Analysis
Security System Design
IT/AV Design
Master Planning & Development
Operational Requirements
Testing & Commissioning
Control Room Design
System Integration
Policies & Procedures
Site Surveys & Audits
Crisis Management
Close-up
“It’s crucial to look ahead”
ME Consultant spoke to Adam Smith, Managing Director, Polypipe Middle East, about effective infrastructure solutions and the quest for sustainable approaches to urban water management…
Close-up
ME Consultant speaks to the MERED’s CEO, Diana Nilipovscaia, about contemporary trends, the integration of mixed-use communities, and the Best Practice initiatives fostering residents’ physical and mental wellbeing…
Begin to imagine…
Drew Gilbert, Lead Design Architect, OBMI, describes the possibilities of a future where AI and Smart Tech create ‘The Architectural Singularity’a point of confluence where technology transforms architectural possibilities
The Boutique Advantage: voices from an SME
Focal Middle East’s founding partners, Louise Collins and James Esau, explain how small can be beautiful - and advantageous!
In Practice
Dispute Resolution Boards
Craig Sandison, Associate Director, TBH, examines the case for the more widespread use of Dispute Resolution Boards - proven internationally to be a powerful means of proactively delimiting delays and costs…
Sustainability
How ‘green’ is your finance?
At a time when the idea of Sustainability is top of every consultant’s agenda, we still hear relatively little about ‘Green Finance’. Here, Maria Eugenia Ortiz, from Deepki - publishers of the world-leading ESG Index - explains the topic in depth, looking at 10 key aspects...
Sustainability The sustainable asset advantage
Elaine O’Connor, Head of Project & Development Services Egypt & Africa, JLL, provides compelling reasons for the construction industry to embrace green building practices
Gearing up for Awards season
Here at Middle East Consultant, we’re getting ready for what promises to be the most exciting time of the year, with two key Awards events on the horizon.
Firstly, the ED&I Awards, which will take the shape of a formal, gala awards evening, following on from the much-awaited ED&I Summit earlier in the day (9th October). We’ve created these awards not just for the acknowledged titans and champions of ED&I (after all, for Fortune 500-style leaders, ED&I ranks alongside ESG as an accepted cost with concomitant returns). The awards are, in fact, for every style and size of business, and therefore they also recognise the companies just starting out on what can be a controversial and challenging journey. So, we’d be delighted to receive your own nomination; you can enter the ED&IAwards here - https://ediawards.com/
I’d also mention that we’re currently putting together a special editorial supplement to celebrate this event, and of course, warmly welcome your essays or
contributions about the ED&I initiatives you’ve put in place - or indeed, are trying to!
Then, the Middle East Consultant Awards take place on 14th November, in their usual glittering outdoor setting of the Ritz Carlton JBR. Last year, we received more than 300 nominations - and fully expect to exceed that total in 2024. Remember, there are 25 categories you can nominate for, and here’s the link to enter the awardshttps://meconsultantawards.com/
With the Middle East Consultant awards, our catchment demographic is very broad, and we’ve designed the award categories so that there is almost certainly going to be one that’s highly relevant to your business’ strengths and skillsets. As the 1980’s saying so clearly expresses, however, ‘you have to be in it to win it!’, so please don’t miss the opportunity!
Your entries for both sets of awards are greatly valued - and I can’t wait to see you all at these gala occasions.
Head of Content, ME Consultant
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Dubai redefines luxury living
INFRASTRUCTURE
Design revealed for Al Maktoum International Airport
The project is expected to begin the planning phase in 2024, with Phase I due to be delivered by 2032
ENERGY
New solar ‘mega project’ announced for Qatar
The new project will boost Qatar’s PV solar power production capacity to about 4,000MW
INDUSTRY
Trimble to host Connected Construction Conference
Some of the key topics include: data management in construction; future trends and emerging technologies; connected construction, and resilience and adaption challenges
PROPERTY
Meraas showpiece releases
200 new villas
Meraas is committed to achieving LEED Community certification for The Acres and the community is designed with this aspiration in mind
SUSTAINABILITY
JLL and Mashreq partner for LEED Zero Carbon status
The building’s Net Zero carbon status was realised through carbon emissions avoided or offset from the building’s annual operational energy and occupant transportation over a year
PROPERTY
Samana Developers debuts waterfront property
“It’s crucial
to look ahead”
What are the benefits to be accrued if developers and urban planners use modern, holistic approaches to water management?
Quite apart from better water storage and productive deployment of valuable supplies, there can be a favourable impact across a host of pressing environmental concerns. Middle East Consultant spoke to Adam Smith, Managing Director, Polypipe Middle East,
about effective infrastructure solutions and the quest for sustainable approaches to urban water management…
“One of the factors this indicates is how we have now moved on from simply considering the volumes of water in an urban environment, towards looking at contextual factors, such as the quality of that water.
“Part of this transition is the shift away from using conventional ‘legacy’ materials. For example, traditionally, large drainage infrastructure systems were built from concrete pipes, vitrified clay, and so forth, and these can provoke a host of issues, such as ‘in situ’ failures and water losses. As a result, today, we've seen a trend towards the use of more modern plastic alternatives, which can also use significantly less carbon in their production.
“Remember as well that these options mean less carbon consumption in the shipping and distribution processes, because they’re lighter and there’s less weight to carry in bulk. What’s more, not only are they cheaper to install, but the longevity of these systems is proven be - in many cases - more than twice as long as the ‘legacy’ materials.”
How does the GCC compare to other regions in its adoption of these new approaches?
“Realistically, the adoption process is something of a two-edged sword. In the GCC, we tend to experience two extremes when it comes to buying-in to new technologies.
“For example, the process of adopting new approaches can sometimes be very slow. Yet on the other hand, some of the procurement protocols here can also be extremely quick. While this speed in itself isn’t always a benefit - for instance, it can lead a tendency to avoid or delay innovation - it does mean that we can see a rapidly-evolving urban landscape.
dam, what are some of the key trends that we are currently seeing in the infrastructure and utilities sectors?
“Increasingly, leading developers and urban planners are making the quest for Sustainability a key priority, and there’s no doubt that we are seeing more interest in adopting a Sustainable Urban Design Strategy.
“We have all experienced the reality of the floods earlier this year and saw how they prompted a dialogue around integrating aspects such as health and well-being into future utilities and urban design. Part of this shift in mindset also involves initiatives to introduce stronger biodiversity - all of which reflects a greater awareness of the importance of the environment and the role that urban planners can play in making positive changes.
“Moreover, on the larger infrastructure schemes, it’s common to be dealing with one over-arching client; so, if the asset owner decides to switch, it happens immediately.
Adam Smith, Managing Director, Polypipe Middle East.
“There’s also no doubt that if we look at the wider global picture, the civil construction industry has always been quite slow to adapt to change.
“Plus, there is, understandably, a powerful commercial dynamic, too: if you look at some of the major clients now, there's not only an environmental need or a sustainability need, but there's also an ROI to factor in. When it comes to maximising that ROI, it’s important to keep in mind that there can be a cost benefit when it comes to committing to more advanced, holistic solutions - and there's nothing that gets people to the table quicker than reducing cost!”
The region is well-known for its huge pace of urban development. What particular challenges does this pose and how can they be tackled?
“When developers and urban planners want to do things quickly, there is always a danger of ‘short-termism’. This can lead to temporary solutions without a long-term strategy having been thought-through, with all the related risk that will involve. So, here at Polypipe Middle East, we always try to advise clients on what is ultimately the best medium and long-term solution, and that will necessitate adopting the most modern strategies for water management. These will better empower the client to overcome many of the challenges that come with rapid urban growth.
“For example, if you look at water - take storm water, for instance - dealing with all the water on the plot when you don't have a connection to a municipality pipe (or an outfall) is quite a challenge. But, if you have the right technology, experience and knowhow, you can identify highly effective ways of dealing with that challenge. I would also add that it doesn’t matter if the size of the plot is large or small. We have to overcome the misconception that water management has to be done at scalewhich is simply not true.
“There are many effective approaches to water management, whether you are
dealing with one villa, 1,000 villas, or for that matter, a substantial urban area that includes commercial buildings. These can all be broken down into smaller, workable pieces. And the more you do that, the easier it is to manage all those pieces, and arrive at a successful, complete outcome.
“One of the aspects we always emphasise is that, with rapid urbanisation, when a developer plans these solutions, it’s crucial to look ahead; to work out what the picture is going to be like in perhaps 30 years’ time, or even 50 years. It's not just for today.
“So, as an example, it’s not practical to be using rainfall data that is 30 years out of date. All too many developers are tempted to say: “We're going to design a system, but we're not putting extra capacity in the networks for climate change. We're not bothered about what additional urban areas are going to be using this infrastructure in 30 years’ time.” It’s obvious that this approach can involve a significant and altogether unwelcome pay-back.
“There obviously has to be substantial forethought in the design that is adopted, but repeatedly, we’re seeing systems that have been designed for temporary use. In reality, we have to help clients overcome that mindset and think - and act - proactively to provide for better future outcomes.”
The misconception is that, living in the desert, effective, ‘bigger picture’ water strategies aren’t that feasible - but they are very feasible if you look at water as a holistic need”
Adam Smith reminds us that highly effective approaches already exist for better and more sustainable water and utilities management.
Can you tell us how Polypipe Middle East helps ensure the best standards of public health, and a healthy indoor living environment for occupants? How do your sustainable climate and water management solutions help?
“We're one of the region's leading providers of climate and water management solutions. As we spend over 90% of our times indoors, we believe that it all starts within the building - and that effective climate management revolves around air quality.
“When developers are dealing with aspects such as water quality, water storage and drainage systems, it’s critical to remember that there’s no compromise when it comes to public health and people's lives. This is true whether you are planning workers’ accommodation or a 7-star luxury hotel - the principal simply doesn't change. So, one of our key approaches is to always look for an early engagement with the client; we use that perspective to assess the levels of compliance with the relevant standards and codes.
“Our strategy is to align with those best practices, offering innovative products which will help protect the people in the buildings. This protection of the built environment is the ultimate goal of the correct management system.
“Accordingly, we work with a number of consultancies in order to look at - first of all - the design element, and then we follow through seamlessly, working with the installation side as well. This ensures that the execution is just as good as the original design intention. Working like this, we follow projects transparently all way through from conception to delivery, making sure clients always have access to the best advice and the best products.”
Sustainable energy and water infrastructure is critical to the long-term success of urban development in the GCC; what is planned, what has been delivered, and what’s still needed?
“First things first. We're moving away from traditional drainage systems. We're increasingly starting to look at strategies such as source control - which means dealing with the water, where it falls, or where it's needed.
This means that it’s not only a question of capturing and releasing the water, but rather, considering how it can be re-used cyclically, and productively re-used on-plot. After all, water is a very valuable commodity.
“But it's not just storm water that’s at issue here. Look at the billions of liters of clean condensate recovery out of each building; there are air-conditioned buildings of every type in this city, and the by-product of air conditioning is very clean, condensate water. So, the reality is that there is this huge amount of water available - but then, we end up treating it as a waste product! The focus is always on getting it away from the building. But in 2024, we must move on from that old ‘drainage’ philosophy; it’s imperative that we change that strategy and instead, we should ask, “This is actually an important asset, so how do we use it most effectively?”
“That water can, of course, be used for cooling, or for irrigation. At present, the volume of potable clean water that still gets used for irrigation in the Middle East is quite significant - and we can change that.
“So, it's about looking holistically at these challenges; not just looking at single water sources and then trying to deal with them. The misconception is that, living in the desert, effective, ‘bigger picture’ water strategies aren’t that feasible - but they are very feasible if you look at water as a holistic need.”
There is a lot of talk about ‘greening’ of urban centres in the GCC. How can Polypipe Middle East deliver an infrastructure that would help deliver these goals?
“When a developer is creating areas featuring urban trees and green landscaping, the water infrastructure needs to be considered in very cyclical terms, with the right strategies for how that water can be re-used. Planting urban trees is of course very advantageous, but in so many cases, all we do is water them in very basic ways - and hope they survive. Plus, so often, we see that incorrectly planted and watered trees end up cracking the infrastructure around them!
“Yet, there are many more successful approaches available; where we can create tree pits, for example, delivering water in, and then storing the water there. In other words, we can actively control water and what happens to it.
“All these initiatives can be used as firstline defences in stormwater management, for example. Properly applied, they mean that urban environments can actually absorb a great deal of water - even when there's a rare incident such as the one in 100year storm the region experienced recently. These approaches will discharge water as well, and the water can be cleaned and purified in the same managed environment, removing pollutants, fuel, and oils. Looked at in these ways, the landscaping - beautiful though it may be - is not the end goal; it’s actually the starting point for a holisticallymanaged environment.”
A remarkable stewardship: quality, elegance, wellness
Currently, one of the UAE’s most celebrated projects is the ICONIC Tower, providing a powerful and aesthetically stunning focal point within Dubai Internet City. Its developer, MERED, is also wellknown for a broad portfolio of innovative project work, and here, we speak to the company’s CEO, Diana Nilipovscaia, about contemporary trends, the integration of mixed-use communities, and the Best Practice initiatives fostering residents’ physical and mental wellbeing…
environments and market segments. In every project, we focus on creating spaces that resonate with their surroundings, ensuring that each development is both a reflection of its location and a benchmark for excellence in the real estate sector.
oes MERED have a distinctive, signature ‘house style’, or is each project unique and tackled on its own merits?
MERED's approach to design is characterised by a commitment to innovation and elegance, rather than a rigid ‘house style’. Each project is tailored to its specific location and purpose, reflecting the unique needs and aspirations of its stakeholders. For example, the ICONIC Tower in Dubai Internet City is specifically designed to meet the demands of the most vibrant business district in the Middle East, redefining urban living in a bustling environment. This project, while distinctive in its execution, embodies our dedication to adapting and evolving to align with the unique characteristics of different
We hear a great deal now about the role of Sustainability. Can you give us some examples of how sustainability protocols are integrated into your projects?
Sustainability is a cornerstone of MERED's development strategy. The ICONIC Tower, for instance, features dedicated parking spaces equipped with electric vehicle charging stations, aligning with the UAE's Green Agenda and exemplifying our commitment to creating sustainable, valuedriven communities. Additionally, the tower incorporates several eco-friendly measures to minimize its environmental impact. It boasts a high-performance façade system with double glazing for enhanced thermal insulation, energy-efficient HVAC systems, and continuous insulation to reduce energy consumption. Water-saving strategies are
also a key focus, with sub-metering and the use of native plants to minimise water usage. Moreover, a comprehensive recycling and waste management plan ensures that construction materials are effectively sorted and recycled. These practices not only meet stringent sustainability standards but also reinforce MERED's commitment to environmental stewardship.
What are the factors that make ICONIC TOWER something truly outstanding and world-class?
The ICONIC Tower stands out due to its exceptional blend of innovative design, luxury, and strategic location in Dubai Internet City. Soaring to a height of 286.4 meters, it’s set to become the tallest structure in the area, offering expansive views of Dubai’s landmarks.
Diana Nilipovscaia, CEO, MERED.
The tower features 310 luxury apartments, world-class amenities and is thoughtfully divided into two zones: a friends and family zone on the 6th floor and a relaxation zone for adults on the 40th floor, ensuring that residents’ diverse needs are met. Strategically situated just two minutes from Dubai Internet City Metro Station and with direct access to Sheikh Zayed Road, the ICONIC Tower is perfectly positioned near key areas such as Palm Jumeirah, Dubai Marina, Bluewaters Island, and Dubai Hills, as well as the Emirates Golf Club and Jumeirah's beautiful beaches. The tower's location within a bustling business hub provides modern infrastructure, public transportation, utilities, and proximity to major international companies and prestigious educational institutions.
This high-end residential sky-rise reflects the synergy between MERED’s forward-thinking real estate strategies and Pininfarina’s iconic design philosophy. The project represents MERED's global expertise, blending the best building skills and knowledge from around the world to create something extraordinary in the ultra-luxury development space.
There is a definite trend towards mixed-use developments; how do these currently figure in your own portfolio?
Mixed-use developments are increasingly central to our portfolio as we recognise the growing demand for integrated living and working spaces. Our recent acquisition of an 11,890 sq.m. prime waterfront plot on Al Reem Island in Abu Dhabi is a prime example of this approach. This development will blend residential and commercial spaces in a vibrant, wellconnected area known for its stunning waterfront views. The island, part of the key financial hub Abu Dhabi Global Market (ADGM), provides an ideal setting for MERED's next visionary project. By
combining innovative design, world-class amenities, and a strategic location, this project will not only enhance the quality of life for residents but also contribute to the economic and social vitality of the community.
Do you feel that the GCC has different priorities - and indeed market capacity - from what’s happening internationally?
The GCC market indeed has distinct priorities and capacities that set it apart from international markets. In the GCC, there is a strong focus on luxury, innovation, and sustainability, driven by
We focus on creating spaces that resonate with their surroundings, ensuring that each development is both a reflection of its location and a benchmark for excellence in the real estate sector”
rapid economic growth, high standards of living, and strategic government initiatives. For instance, developments like the ICONIC Tower in Dubai are designed to meet these regional demands by incorporating cutting-edge technology, premium amenities, and eco-friendly features that resonate with the local market's emphasis on high-end living and environmental stewardship.
In contrast, international markets may share some of these trends but often have different focal points influenced by varying economic conditions, regulatory environments, and cultural preferences. For example, while luxury is a common theme, the emphasis might be more on affordability or community-centric
ICONIC Tower will not only be the tallest structure in Dubai Internet City, but sets innovative standards of exterior design and aesthetics.
developments in other regions. The recent surge of interest from European buyers in Dubai’s real estate market, particularly from France, Germany, and the UK, highlights Dubai’s unique appeal. This is further evidenced by the recordbreaking $34bn in transactions in Q2 2024, showcasing the GCC's capacity to attract global investors seeking premium properties.
Tell us a little more about the role of integrating landscapes and a ‘greened’ environment into your lifestyle developments? Integrating landscapes and a ‘greened’ environment is a fundamental aspect of MERED's approach to lifestyle developments. We believe that the
An important element of MERED's development philosophy is to fully integrate landscaped surroundings with key lifestyle facilities.
inclusion of green spaces is not just about aesthetics but also about enhancing the quality of life for our residents. In the ICONIC Tower, for example, we've designed lush green areas that blend seamlessly with the urban environment, creating serene retreats within the bustling city.
These spaces are thoughtfully planned with native plant species that are both sustainable and low-maintenance, contributing to reduced water consumption and fostering biodiversity. Green roofs and terraces are strategically placed to offer residents private, natural havens where they can relax and unwind. This integration of greenery is part of our broader commitment to sustainability, ensuring that our developments not only meet high environmental standards but also promote the physical and mental wellbeing of those who live there.
How do you see the future for MERED; do you see yourselves working more broadly across an international portfolio?
Our future at MERED looks incredibly promising, building on the success of the ICONIC Tower. We have quickly established ourselves as a leading player in the UAE's luxury real estate market, thanks to our strategic vision. Our focus on innovation, quality, and strong partnerships sets us up for continued growth and expansion. In the coming years, we plan to leverage our expertise and solid market position to explore new opportunities across other Emirates and potentially international markets. We aim to develop projects that align with evolving market trends and consumer preferences, ensuring each development offers exceptional value and meets the highest standards of quality.
BEGIN TO IMAGINE…
Drew Gilbert, Lead Design Architect, OBMI, describes the possibilities of a future where AI and Smart Tech create ‘The Architectural Singularity’ - a point of confluence where, in effect, technology transforms our understanding of architectural possibilities and becomes the main progenitor of the structures around us. As we approach this new chapter, what are the ways in which AI can potentially revolutionise the built environment?
THE DAWN OF A NEW ARCHITECTURAL ERA
Architecture, the art and science of designing and constructing the built environment, has been the bedrock of human civilisation, reflecting our technological capabilities, cultural values, and aspirations. The evolution of architecture, from early structures to modern high-rises, has advanced alongside humanity’s progress. Today, we stand on the threshold of a new technological revolution - driven by artificial intelligence - that could fundamentally transform architectural practice. This potential transformation, which I will refer to as the ‘architectural singularity’, draws parallels with the broader concept of technological singularity. It envisions a future where AI not only assists architects but could potentially surpass them, redefining how we design, construct, and interact with our built environment.
This article explores the implications of AI as the primary architect, delving into the technological advancements that could lead to this reality, the profound effects on the profession and society, and the ethical considerations that must be addressed. As we embark on this exploration, we approach the subject with both excitement for the possibilities and a critical eye towards the challenges and potential pitfalls.
FROM PENCIL TO PIXEL
To understand the potential for an AIdriven architectural revolution, we must trace the trajectory of technological advancement in the field. The history of architecture is, in many ways, a history of tools and techniques; each new innovation expanding the possibilities of what could be conceived and constructed. The journey towards AI-driven architecture began with the shift from manual drawing
to Computer-aided Design (CAD) in the 1980’s. Traditionally, architects relied on manual drafting, where precision and craftsmanship were honed through years of apprenticeship. However, the introduction of CAD revolutionised the field, increasing efficiency and precision in architectural drawings. This transition, spearheaded by software like AutoCAD, allowed architects to experiment with forms and structures that were previously unimaginable. The rise of 3D modeling tools in the 1990s further expanded the possibilities, enabling architects to visualise complex geometries and anticipate construction challenges.
The real game-changer came with the advent of Building Information Modeling (BIM). Unlike CAD, which primarily focused on geometry, BIM introduced a holistic approach to design, integrating data about materials, costs, and construction processes. This shift facilitated interdisciplinary collaboration, lifecycle management, and advanced performance simulations, setting the stage for the next leap in architectural technology.
THE CURRENT STATE OF AI IN ARCHITECTURE
As we approach the potential architectural singularity, it is crucial to understand the current state of architecture in the field. While we have not yet reached a point of AI autonomously designing buildings, machine learning and AI technologies are already making steady advances. One of the most promising applications is generative design, where AI algorithms generate a multitude of design options based on predefined parameters. This allows for rapid iteration, multi-objective optimisation, and the discovery of novel solutions that human designers might not consider. For example, the MX3D Bridge in Amsterdam, designed using generative design and 3D
printing, created a highly optimised and lightweight structure, reducing material use by up to 30% compared to traditional methods, while also showcasing innovative architecture forms.
AI is also transforming the way architects analyse and optimise building performance. From energy modeling to structural analysis, AI tools are pushing the boundaries of what is possible. Google’s DeepMind AI, for in-stance, reduced data center cooling energy use by 40% through predictive analysis and control optimisation. These advancements demonstrate AI’s potential to enhance efficiency and sustainability in architectural design.
AI’S ROLE EXPANDING INTO
AUTOMATED CODE COMPLIANCE AND DESIGN EVALUATION
One of the most complex aspects of architectural practice is ensuring compliance with building codes, zoning laws, and accessibility requirements. AI is beginning to automate this process, reducing human error and providing real-time feedback on regulatory issues.
UpCodes AI, for example, offers a plugin that checks BIM models against building codes in real-time, ensuring compliance from the early stages of design. This automation not only streamlines the design process but also increases accuracy and reduces the likelihood of costly revisions.
AI-POWERED CLIENT INTERACTION
Natural Language Processing is another emerging area where AI is beginning to impact architecture. By analysing client interviews and documents, AI can generate comprehensive design briefs, extracting preferences and needs to inform the design process. While still in its infancy, this technology has the potential to revolutionise the client-architect relationship, enabling more personalised and responsive design solutions. However, challenges remain, particularly in understanding nuanced communication and cultural context, which are critical in interpreting client needs accurately.
Drew Gilbert, Lead Design Architect, OBMI.
THE
PATH TO AI
DOMINANCE –ADVANCES IN MACHINE LEARNING AND NEURAL NETWORKS
The potential for an architectural singularity represents both an exciting frontier of possibility and a profound challenge to our current understanding of architecture ”
The future of AI in architecture will likely be shaped by advancements in machine learning and neural networks. These technologies enable AI to process and understand complex architectural information, learning from trial and error, and apply knowledge across different design challenges. As AI systems become more sophisticated, they could begin to develop architectural styles, contextaware designs, and innovative solutions that go beyond current human capabilities. This transition is likely to occur gradually, with AI systems taking on increasingly complex and autonomous roles in the design process.
INTEGRATION OF BIG DATA AND IOT
The proliferation of sensors and Internet of Things (IoT) devices is generating vast amounts of data about how buildings and cities function. By integrating this data into the design process, AI could achieve hyper-local optimisation, tailoring designs to specific microclimates and usage patterns. This could lead to adaptive buildings that could respond to changing needs, predictive maintenance, and urbanscale optimisation that enhances overall efficiency and sustainability.
QUANTUM COMPUTING: A QUANTUM LEAP IN DESIGN
Quantum computing represents another potential breakthrough in AI’s architectural capabilities. Unlike classical computers, quantum computers can process vast amounts of data simultaneously, making them ideal for solving complex design problems with numerous variables. This could enable real-time simulations of entire cities, multi-dimensional optimisation of design parameters, and the discovery of new materials and construction techniques. As quantum computing becomes more accessible, it could drive AI to new heights, allowing for unprecedented innovation in architecture.
The development of quantum-powered AI handling increasingly complex architectural problems will depend on the advancements in computational power.
THE IMPLICATIONS OF AIDOMINATED ARCHITECTURE AND THE TRANSFORMATION OF THE DESIGN PROCESS
As AI becomes more integrated into the architectural practice, the design process itself will undergo a transformation. AI’s ability to generate and evaluate design options instantaneously will allow for continuous optimisation, with real-time data informing design decisions at every stage. This could lead to highly efficient buildings, adaptive architecture that evolves with its users, and radical new
forms and spatial organisations that push the boundaries of traditional design.
THE
EVOLVING ROLE OF THE ARCHITECT
The rise of AI in architecture does not necessarily signal the end of the human architect. Instead, it may lead to a redefinition of the architect’s role, shifting towards creative direction and ethical oversight. While some tasks may be automated, the need for human expertise in areas like client relations, cultural
sensitivity, and ethical design-making will remain critical. Moreover, new skills in data science, AI Management, and interdisciplinary collaboration will become increasingly valuable as architects adapt to this new technological landscape.
NAVIGATING THE ETHICAL AND REGULATORY LANDSCAPE
As AI takes on a more significant role in architecture, several ethical questions must be addressed. Who owns the authorship of AI-generated designs? How do we ensure that AI systems are free from bias, and how do we preserve the human touch and cultural sensitivity in architectural practice? These questions require careful consideration to ensure that AI enhances rather than diminishes the human experience of the built environment.
REGULATORY CHALLENGES
The integration of AI in architecture will also necessitate new regulatory frameworks. These frameworks must address issues of liability and responsibility for AI-designed buildings, ensuring that AI systems adhere to ethical standards and serve the public interest. As AI continues to evolve, ongoing dialogue between architects, regulators, and society will be essential in shaping the future where AI and human creativity coexist harmoniously.
EMBRACING THE FUTURE
The potential for an architectural singularity represents both an exciting frontier of possibility and a profound challenge to our current understanding of architecture. As AI capabilities continue to advance, the future of architecture lies not in a competition between human and artificial intelligence but in finding a symbiosis that leverages the strength of both. By embracing this technology thoroughly and setting clear ethical guidelines, we can ensure a future where human creativity and AI work together to enhance our built environment in ways we can only begin to imagine.
Future perfect - or not? Drew Gilbert explains how the dynamics of AI can introduce scenarios and environments quite unlike anything we are prepared for.
THE BOUTIQUE ADVANTAGE: VOICES FROM AN SME
The Middle East has become a magnet for global corporates, with major players from around the world increasingly establishing or procuring companies in the region. Yet, there’s undeniably room not only for the international, household names, but for the more niched, SME players with highly dedicated expertise.
Focal Middle East is one such example, and here, the firm’s founding partners, Louise Collins and James Esau, explain how small can be beautiful - and advantageous!
PERSONALISED AND AGILE SOLUTIONS WITH INTEGRATED IMPACTS
Louise and James, isn’t it the case that as global corporates expand their footprint in the Middle East, they bring with them standardised solutions that leverage their vast experience and resources? What’s more, these solutions are critical for large-scale projects that require extensive infrastructure and comprehensive management. Sowhere can SMEs fit into the picture?
“SMEs don’t necessarily compete directly with these global corporates. Instead, they focus on smaller, niche projects where their ability to offer specialized services, localized insights, and customized solutions is most valuable. While global corporates handle the vast, resource-intensive tasks, SMEs carve out their space by addressing the unique needs of smaller-scale initiatives that require greater adaptability and a tailored approach. This differentiation allows SMEs to thrive in areas where large corporates might not be as flexible or responsive to specific local demands, ensuring that both large corporates and SMEs can coexist by serving different segments of the market effectively.
Is it, though, the case that ‘boutique’ companies like Focal Middle East excel in providing a personal touch, or the ability to quickly adapt to changing client needs, market conditions, and technological advancements?
“The reason we set up Focal Middle East was to have a more agile approach and
Louise Collins and James Esau explain how SMEs - by virtue of adaptability, niche expertise and a bespoke client interfacecompliment the broader project mix.
increase responsiveness to our clients' needs. Boutique companies like Focal Middle East excel in providing a personal touch and the ability to quickly adapt to changing client needs, market conditions, and technological advancements. This agility allows us to tailor our services closely to individual client requirements whilst leveraging quicker decision-making and greater flexibility, allowing us to pivot rapidly in response to market shifts or emerging technologies. This adaptability is especially crucial in dynamic regions like the Middle East, where client demands and market conditions can change swiftly.
“Of course, we understand, too, that construction solutions must consider broader impacts, including cost and environmental sustainability. At Focal Middle East, these considerations are deeply embedded in every project we undertake. This holistic approach aligns with the growing demand for responsible and forward-thinking construction practices in the Middle East, and it’s a perspective that both global and local companies can share and promote.”
Macro-scale projects, including advanced urban planning, can involve a significant raft of consultants, from household-name corporates, to smaller businesses working on specific aspects of conception and project delivery.
CREATING EFFICIENCIES THROUGH
DIGITAL SOLUTIONS FROM DAY ONE
We hear a great deal about the role of AI and Smart tech. How do these play a key tole as differentiators in a crowded marketplace, or as tools for offering highly expert, tailored services? In other words, how do these play a role in building the USPs of your own business?
“We believe that by embedding digital tools and methodologies from Day One, we create efficiencies and establish standards that are inherently part of the project’s DNA. This approach enhances collaboration and ensures that every aspect of the project is optimised for both performance and sustainability.
At Focal Middle East, we take pride in fostering a work culture where every team member’s voice is heard, and where they can actively contribute to the company’s direction and success”
“There’s no doubt that global corporates, with their extensive resources, are also leading the way in digital transformation, investing heavily in technologies that drive efficiency and innovation. The combined efforts of both global and local companies in embracing digital solutions contribute to a more streamlined and advanced construction industry in the region.”
There is no doubt that global corporates are leading the way in technology and digitization, and this trend will continue to transform how we deliver business and projects in the coming years. However, one of the great advantages of being an SME like Focal Middle East is our ability to tap into a wide array of technologies across various global companies. Our smaller size and agility make it significantly easier to incorporate digital solutions both within our own business and in the services we provide to our clients. This flexibility allows us to stay at the forefront of
technological advancements, offering our clients cutting-edge, customized solutions that are both efficient and responsive to their specific needs.
A SHIFTING MARKET: LONGTERM COMMITMENT AND EMPLOYEE ENGAGEMENT
Surely, though, as the Middle East market matures, industry professionals are increasingly seeking long-term engagements and deeper involvement in the companies they work for. Is it the case that both SMEs and large corporates have roles to play in fostering this commitment?
“SMEs offer a work environment where personal involvement and influence are highly valued, while corporates provide extensive career development opportunities and the stability that comes with being part of a large organisation.
This variety ensures that professionals in the region can find fulfilling careers that align with their personal and professional aspirations.
“At Focal Middle East, we take pride in fostering a work culture where every team member’s voice is heard, and where they can actively contribute to the company’s direction and success. This level of personal investment and engagement is becoming increasingly important as professionals in the region seek not just a job, but a career they can truly be a part of. We look forward to bringing on board additional, experienced partners, and expanding our team to redefine how we serve the industry.
“It’s important to remember, too, that as Founding partners, we bring over 45 years’ combined experience from leading local and international companies across Europe and the Middle East. We've gained
invaluable insights into the best practices and pitfalls, and we're channeling that knowledge to strategically drive this enterprise forward."
THE PIVOTAL ROLE OF BOTH GLOBAL AND LOCAL COMPANIES
Tell us more about how you see the large corporates and the SMEs playing complementary roles, and how this can ultimately be of benefit to clients and project delivery alike?
“It’s a truism that both global corporates and local SMEs play crucial roles in the construction industry. Globally, SMEs make up 90% of the companies in the construction sector, driving innovation and providing specialised services that are tailored to specific client needs. In the Middle East, the coexistence of global corporates and local SMEs ensures that a broad range of client needs - from large-
scale infrastructure to bespoke projects - are effectively met. This collaborative approach strengthens the industry as a whole and contributes to the region's continued growth.”
THE SHIFT TOWARD BOUTIQUE SERVICE
At a time when competitive edge is everything, do you feel that there’s actually a growing appreciation for personalised service and the role it plays in boosting speed and fluency?
“Yes. Fundamentally its about the team, Clients in the Middle East increasingly value the ability to work with partners who understand their specific needs and offer bespoke solutions. Both global corporates and local boutique companies are adapting to this shift, ensuring that clients receive the best of both worldsscale and expertise, along with tailored, high-touch service.”
OPPORTUNITIES
To what extent do you feel that the influx of global corporates into the Middle East - and the resonance and scale of enterprise they tend to embody - presents significant opportunities for both large-scale operators and local SMEs alike? In other words, companies like Focal Middle East?
“Global corporates bring scale, resources, and international expertise, while boutique companies offer personalised, agile service that integrates both cost and environmental impacts into every solution. As market demands evolve, there is room for both global and local players to succeed, each contributing their unique strengths to the region's dynamic construction landscape. At Focal Middle East, we are committed to leading the charge in offering bespoke, high-touch service, ensuring that our projects are as sustainable as they are successful. Together, global and local companies will help shape the future of construction in the Middle East.”
DISPUTE RESOLUTION BOARDS IN THE MIDDLE EAST
At a time when ever-larger construction projects across the GCC are leading to more complex and time-consuming disputes, Craig Sandison, Associate Director, TBH, examines the case for the more widespread use of Dispute Resolution Boards - proven internationally to be a powerful means of proactively delimiting delays and costs…
onstruction disputes can be difficult to resolve at the best of times - which is precisely why ensuring contracts contain an appropriate dispute resolution clause is one of the best ways to manage and resolve conflicts in the early stages.
Given the significant growth in the size and value of construction projects in the Middle East, alternative methods of dispute resolution such as Dispute Resolution Boards (DRBs) are an option that may prove extremely useful in resolving disputes. Where parties are unable to avoid or resolve a dispute, DRBs can be used to achieve settlement without going headto-head in a confrontational arena, such as arbitration or court action.
However, while this more flexible alternative to arbitration will hopefully be adopted in more forms of contract in the Middle East in the near future, the difficulty right now is their enforceability (or rather, their lack of it).
What is a DRB?
As the title suggests, a DRB is a panel of individuals appointed to resolve disputes in construction and engineering contracts.
When a dispute arises, a DRB may be established as a requirement stipulated by the provisions of the contract or by agreement of the contracting parties on an ad-hoc basis. The Contracting parties may agree to the DRB dispute clause as part of the terms and conditions of the contract as an alternative or precedence to arbitration or court proceedings.
While other dispute resolution processes such as mediation and arbitration usually only occur when a dispute arises between the parties, a DRB seeks to help parties avoid litigation and seek a ‘best-forproject’ resolution rather than just provide a dispute resolution alternative.
The contracting parties may favour the implementation of a DRB to resolve disputes in order to avoid the lengthy and costly process of formal dispute resolution such as arbitration or litigation.
It should be said that some may consider the informal and fast-paced approach of DRB dispute resolution more likely to result in incorrect determinations and decisions, when compared to the formal dispute processes. However, data from the Dispute Resolution Board Foundation indicates that 98% of construction projects that used DRBs for conflict resolution since the late 1980s were completed in-house, without progressing to arbitration or litigation.
How did DRBs come about?
The first practical application of a DRB was back in 1975 during the con-struction of the second bore of the Eisenhower Tunnel in Colorado.
The concept went on to gain further traction in 1989 when the American Society of Civil Engineers promoted DRBs in their manual "Avoiding and Resolving Disputes During Construction.”
International institutes such as the World Bank recognised the value of DRBs in 1995 by including a three-person DRB option in its standard bid-ding document
Craig
A big step towards making DRBs more widespread in the region would be to establish them as a legal requirement in contracts”
"Procurement of Works" for contracts exceeding $50 million; and DRBs are now mandatory for large World Bank contracts, following this move.
What is the Ideal Composition of a DRB?
DRBs are usually composed of a panel of neutral third-party experts, often three members, who may be nominated by the contracting parties at the outset of the contract.
The board should ideally comprise individuals with a blend of experience and skills relevant to construction disputes and may include professionals with technical expertise, commercial contracting and financial knowledge or with professional legal experience relevant to the industry.
This mix of experience ensures that the board can address different aspects of disputes while providing balanced and informed recommendations.
The board functions in a similar way to a law court or arbitral hearing, but will generally conduct proceedings in a more informal manner. Unlike litigation where a judge or panel of judges will be appointed by the courts, in a DRB the parties will be able to select and nominate the members of the board.
How would DRBs Benefit the Industry in the Middle East?
Construction-related claims in the Middle East tend to be substantial and often complex, and as a result of this, parties often prefer arbitration and sometimes court determination to resolve disputes.
Often arbitration and litigation result in a lengthy and costly process, which can be harmful to both parties both financially and in terms of reputation.
Where construction contracts present a commercial risk of uncertain or costly dispute resolution procedures, contractors may price this risk within tenders or may elect not to consider the contract at all.
The inclusion of an option to resolve potential disputes by means of DRB, may provide contractors with more confidence to bid for the work.
Can DRB Procedures be Made a Part of Contract Documents?
Many construction contracts include a clause establishing a DRB. The procedures for the DRB are often integrated into the contract's general or supplementary conditions.
However, on occasion, such clauses are deliberately crossed out from standard
Sandison, Associate Director, TBH.
contracts due to a culture that believes that prolonging disputes and eliminating DRB provisions will discourage harmed parties from seeking formal resolution of its claims, and provide an advantage to the other side in negotiations.
Documents like invitations to bid or requests for proposals should also mention the planned formation of a DRB to align with other dispute resolution methods outlined in the contract.
What is the case for incorporating Dispute Resolution Boards (DRBs) into construction contracts in the Middle East?
Given the continued growth of construction in the Middle East - and the ever-increasing size of projects - it appears likely that claims and disputes will not go away, and, if anything, they are just going to become more prolific.
By using DRBs, parties can avoid costly contractual disputes.
To ensure the future viability of the industry, it is increasingly necessary for stakeholders to consider alternative methods of dispute resolution, to avoid the increased and additional cost that is often a biproduct of arbitration and litigation.
This will not only reassure and encourage those contractors currently operating in the region, it will also encourage new entrants from other international regions. The expansion of DRB resolution also demonstrates a commitment to improvement and advancement of the industry within the region.
Overall, DRBs are a valuable tool for managing disputes in construction projects, as they can help avoid formal dispute resolution processes - which is particularly important in the everexpanding Middle Eastern market.
A big step towards making DRBs more widespread in the region would be to establish them as a legal requirement in contracts. The UK Construction Industry, for example, has benefited from the introduction of adjudication in construction contracts as a statutory requirement.
Such a legal requirement will mandate parties to use this form of alternative resolution, rather than simply opt in or agree to using it. I consider the implementation of this action would significantly contribute in reducing the confrontational and adversarial scenarios often witnessed in the GCC.
The openness of typical Construction contracts stands to benefit significantly from the legal inclusion of DRB protocols.
HOW ‘GREEN’ IS YOUR FINANCE?
At a time when the idea of Sustainability is top of every consultant’s agenda, we still hear relatively little about ‘Green Finance’. It’s an area fraught with confusion and urban myths, so - just to clarify - Green Finance involves two key principles: sustainable modes of investment linked to projects that are in themselves sustainable. Here, Maria Eugenia Ortiz, from Deepki - publishers of the worldleading ESG Index - explains the topic in depth, looking at 10 key aspects...
ustainable finance encompasses various financial activities and practices, which each consider environmental, social, and governance (ESG) factors. It includes investment, lending, borrowing, insurance, and other financial services.
The primary goal of sustainable finance is to align financial decisions with sustainable and responsible outcomes. For instance, banks offering loans to eco-friendly projects or companies incorporating ESG criteria into their risk assessments are examples of sustainable finance.
In real estate, this particular financing balances monetary objectives with beneficial societal and environmental effects. It encourages stakeholders, developers, and investors to make wellinformed choices that produce financial gains and advance society and the environment.
This process may entail tactics like eco-friendly building certification, socially conscious investing, and incorporating ESG considerations into financial choices.
There is no doubt that, as a way to balance financial goals with ESG factors, sustainable financing has been increasingly popular in the real estate industry in recent years. Let’s take a look at how the sector is being impacted.
1. GREEN BUILDING INITIATIVES
Sustainable financing has ignited green building efforts in real estate. Developers and investors increasingly prioritise eco-friendly design and construction methods to conserve energy, water, and reduce waste. This not only enhances property value but also makes properties more attractive to tenants. Consequently, certifications like LEED and BREEAM are gaining popularity.
A developer’s intention to meet - and sometimes surpass - these requirements can open many doors to green, ‘alternative’ finance options, and indeed, many developers come pre-armed with the financial resources from these types of funding.
2. REGULATORY COMPLIANCE
Sustainable finance aligns with evolving regulatory frameworks that underline openness and ESG disclosure. Companies in the real estate industry are required to report on their sustainability initiatives, risk evaluations, and mitigation techniques. Part of meeting these protocols will often involve full disclosure of the sources and styles of funding, putting proactive pressure on the developer to search for - and deploy - green finance providers (who will themselves be subject to the same scrutiny).
3.
VALUE CREATION
Higher financial returns for investors are frequently achieved by high-performing sustainable assets because they command premium rents, draw excellent tenants, and have lower vacancy rates.
It's important to understand that the phrase 'green finance' is a catch-all term embracing diverse and often complex instruments.
Sustainable financing has ignited green building efforts in real estate. Developers and investors increasingly prioritise ecofriendly design and construction methods to conserve energy, water, and reduce waste”
4.
RESILIENCE
While investments in climate adaptation and disaster resilience measures help preserve property value, energy-efficient buildings can minimise operational costs over time. This is a powerful factor in their ability to attract better finance options from the get-go.
5. TENANT DEMAND
More and more tenants are looking for environmentally friendly residences that support their ideology and enhance their quality of life. The need to provide environmentally sensitive workplaces that promote occupant health, comfort, and productivity is thus recognised by real estate developers and landlords. The built environments that meet these requirements often cannot, therefore, be funded by conventional investment vehicles and ‘dirty’ or unethical forms of financial gain.
6. ESG INTEGRATION
Real estate investors recognise that assets with strong ESG performance exhibit lower risk profiles, higher resilience to
market changes, and increased long-term value. ESG considerations encompass energy efficiency, carbon footprint, tenant satisfaction, community impact, and governance practices. Therefore, players are integrating ESG factors into investment decisions more and more.
7. INNOVATIVE FINANCING MECHANISMS
Sustainable finance has introduced innovative financing tools for real estate projects. Examples are –
• Green & social bonds
• Sustainability-linked loans
Instruments like these enable real estate developers to access capital while exhibiting their commitment to ESG goals. Such financial tools often have advantageous terms for projects that meet specific sustainability targets.
8. IMPACT INVESTING
Investors categorically and increasingly look for initiatives that produce favorable social and environmental results and financial gains. This strategy supports programmes with a positive social impact, such as affordable housing and community development.
9. DATA AND TECHNOLOGY
Sustainable financing is a factor in adopting data-driven technologies that monitor and optimise resource use in real estate. Data analytics through ESG platforms, IoT devices, and intelligent building systems help reduce operational
costs and improve energy efficiency. Since they will often involve open, third-party access (or certain strict reporting criteria), they can also categorically ‘prove’ that funds are being used appropriately - or in-deed, clearly show if they are not.
10. STAKEHOLDER ENGAGEMENT
Stakeholder involvement within the real estate ecosystem is encouraged by sustainable finance. A comprehensive strategy for sustainable development is fostered through cooperation between developers, investors, tenants, local communities, and governing entities.
In conclusion, sustainable, green finance transforms the real estate sector by incorporating ESG factors into financial decisions, promoting innovation, and assisting in producing long-term value while addressing more significant societal and environmental issues.
Green finance doesn't exist in isolation from the sustainable and authentic developments it helps create.
reen bonds, sustainability-linked bonds and other debt instruments geared toward sustainability are becoming increasingly important financial instruments. More and more, investors look to align their portfolios with their financial goals and internationally-recognised sustainability goals such as The Paris Agreement or UN Sustainable Development Goals (SDG).
But before we explain further, it’s important to clarify the differences between certain types of product available on the market.
So-called ‘green’ bonds are not one and the same as sustainability-linked bonds, for example. Green bonds are proceedslinked, and differ from social, sustainability and sustainability-linked bonds. So:
• Proceeds-based bonds, as the name suggests, fund projects with dedicated environmental and/or social benefits.
• Whereas, Sustainability-linked bonds do not finance particular projects but rather finance the general functioning of an issuer that has explicit sustainability targets that are linked to the financing conditions of the bond.
THE FINANCIAL MECHANISMS DRIVING SUSTAINABILITY
As more and more developers strive to conceive and deliver a Sustainable built environment, they increasingly look to ‘green finance’ options. At the heart of these financial tools are instruments such as green bonds and sustainability-linked bonds. But how exactly do these work, and what are the real benefits? Here, we speak to California-based investment strategists, PIMCO, for their inside-track
GREEN BONDS: CLOSE-UP
These bonds are devoted to financing new and existing projects or activities with positive environmental impacts. We believe impactful green bonds should be issued in line with the Green Bond Principles (GBP) from the International Capital Market Association (ICMA), a set of voluntary guidelines that promote more transparent, unified reporting on bonds’ environmental objectives and estimated impact. In fact, ICMA is relevant for green, social or sustainability-linked bonds, since ICMA provides guidelines for all forms of such bonds.
Examples of project categories eligible for green bond issuance include: renewable energy, energy efficiency, clean transportation, green buildings, wastewater management and climate change adaption.
SOCIAL BONDS: CLOSE-UP
To qualify as a social bond, the proceeds must finance or refinance social projects or activities that achieve positive social outcomes and/or address a social issue. In many cases, social projects are aimed at target populations such as those living below the poverty line, marginalized communities, migrants, unemployed, women and/or sexual and gender minorities, people with disabilities, and displaced persons.
Similar to green bonds, issuance of social bonds is oriented by a set of voluntary guidelines – in this case the Social Bond Principles (SBP) from ICMA – aimed toward improved disclosure and transparency in the social bond market. The SBP outline best practices for issuing a social bond; they also arm investors with the information necessary to evaluate the social impact of their investments.
Examples of project categories eligible for social bonds include: food security and sustainable food systems, socioeconomic advancement, affordable housing, access to essential services, and affordable basic infrastructure. Social projects can include related and supporting expenditures
such as research and development and, in situations where projects also have environmental benefits, issuers may determine classification as a social bond based on the primary objective of the underlying project.
SUSTAINABILITY BONDS: CLOSE-UP
Sustainability bonds are issues where proceeds are used to finance or refinance a combination of green and social projects or activities. These bonds can be issued by companies, governments and municipalities, as well as for assets and projects and should follow the Sustainability Bond Guidelines from ICMA, which are aligned with both the GBP and SBP. They can be unsecured, backed by the creditworthiness of the corporate or government issuer, or secured
While there
are many off-the-peg
options and styles of sustainable bond, it's always a question of correctly evaluating the financial instrument so it is always fit for purpose.
While the explosive growth in green bond markets is encouraging, we believe the ‘opportunity set’ for climate action within the bond universe is even larger”
with collateral on a specific asset. Examples of project categories eligible for sustainability bonds include those in the green and social bonds categories.
SUSTAINABILITY-LINKED BONDS: CLOSE-UP
Sustainability-linked Bonds - such as key performance indicator (KPI)-linked or SDG-linked Bonds - are structurally linked to the issuer’s achievement of climate or broader SDG goals, such as through a covenant linking the coupon of a bond.
In this case, progress, or lack thereof, toward the SDGs or selected KPIs then results in a decrease or increase in the instrument’s coupon. These bonds can play a key role in encouraging companies to make sustainability
commitments at the corporate level, particularly through aligning to the UN SDGs or Paris Agreement.
BACKSTORY: WHAT IS THE HISTORY OF GREEN BONDS?
In 2007, the U.N. Intergovernmental Panel for Climate Change published a report linking human action to global warming, which added further weight to the growing body of data.
Recognising the risk posed by climate change as called out by the report, institutions (i.e., Swedish pension funds and their bank, SEB), the World Bank, and climate change experts (i.e., CICERO, the Centre for International Climate and Environmental Research) collaborated to establish a process for debt markets to be part of the solution.
To ensure investment and capitalraising for sustainability projects, a set of eligibility criteria was determined. And, in 2007-2008, the European Investment Bank
It
For those specifically looking to invest in climate solutions, it’s important to understand that the growing climate bond market includes not just labelled green bonds, but also unlabeled green bonds, and the bonds of climate leaders ”
The first green bond acted as a framework for the entire green bond market by creating criteria for issuance and reporting, as well as setting a precedent for the use of external reviews by including CICERO as a second opinion. Building on the first green bond issuance, ICMA established the GBP to further develop transparent guidelines for investors to support climate solutions. ICMA typically updates the GBPs on an annual basis and has also instituted voluntary guidelines for social bond, sustainability bond and sustainability-linked bond issuance.
LOOKING TO THE FUTURE
While the explosive growth in green bond markets is encouraging, we believe the ‘opportunity set’ for climate action within the bond universe is even larger. For those specifically looking to invest in climate solutions, it’s important to understand that the growing climate bond market includes not just labelled green bonds, but also unlabeled green bonds, and the
• Green bonds are debt securities issued explicitly for environmental or climaterelated projects, as detailed above.
• Unlabeled green bonds are debt securities of issuers fundamentally aligned to low carbon products and services, such as a renewable energy company or a municipal water system improvement bond, rather than a certified green bond.
• Bonds of climate leaders, as we define them, are debt securities of issuers we deem to be at the forefront of the net-zero carbon transition, leading their industries forward. These issuers have demonstrated a commitment to mitigating carbon emissions and their broader environmental impact in sectors that may involve water, plastic, air pollution or biodiversity.
WHY
INVEST IN SUSTAINABLE
(GREEN, SOCIAL, SUSTAINABILITY AND SUSTAINABILITY-LINKED) BONDS?
Sustainable bonds, which include green, social, sustainability and sustainabilitylinked bonds, can offer a range of potential benefits including:
• Mitigating physical, transition, and long-term sustainability risk and seizing potential opportunities: The long-term challenge of decarbonising the economy in a socially equitable way comes with risks, but it also offers opportunities for active investors. We recognise that ESG factors are increasingly essential inputs when evaluating global economies, markets, industries and business models. Material ESG factors are also important considerations when evaluating long-term investment opportunities and risks for all asset classes, public and private markets.
• Meeting investor demand: Sustainable bond issuance is rising, regulations are setting global standards, client interest in ESG practices is increasing and, most importantly, responsible investing is becoming more mainstream. Focusing on sustainability supports growth over the medium and long term in an inclusive way.
• Aligning with sustainability goals: Sustainable bonds provide investors with a means of aligning their asset allocations with sustainability objectives in a meaningful way. We believe fixed
income is an important asset class to drive material ESG change. The global bond market is almost double the size of the equity market and, unlike equity securities, which are in perpetuity, bonds mature, prompting companies to return to the market to refinance. By engaging with companies when they need to fundraise, investors can help push for sustainability commitments or specific sustainable issuance, and accelerate positive social and environmental change.
WHAT ARE THE CHALLENGES?
While the establishment of the guiding principles has reinforced the integrity of the sustainable bond market, the act of ‘greenwashing’, or issuers misrepresenting the positive environmental impact of bond proceeds, is an ongoing challenge investors may face. Greenwashing can occur due to the relatively broad criteria for what constitutes a green bond and lack of formal issuance guidelines in many emerging markets. These challenges emphasise the importance of an investment manager that carefully assesses security documentations to determine the underlying use of proceeds and the expected impact.
Issuance in the ESG bond space has grown over the years, with total cumulative issuance passing the $3 trillion mark as of 30 September 2022 (Source: Bloomberg).
As the growing sustainable bond market still represents only a fraction of the broader fixed income market, these investments may carry more liquidity risks and overconcentration risks to certain issuers, sectors or regions. However, sophisticated investment managers are equipped to effectively manage these risks and to target attractive risk-adjusted returns.
In addition, sustainable bonds, like any other fixed income instrument, have credit or default risk - the risk that the borrower fails to repay the loan and defaults on its obligation. The level of default risk varies based on the underlying credit quality of the issuer.
THE SUSTAINABLE ASSET ADVANTAGE: UNLOCKING VALUE FOR A GREEN FUTURE
The real estate industry is undergoing a significant shift towards sustainable practices. This transformation, driven by a growing awareness of environmental responsibility, holds immense benefits for building owners and occupiers. Not only do these practices enhance asset performance and long-term value, but they also deliver favorable financial outcomes. Here, Middle East Consultant speaks to Elaine O’Connor, Head of Project & Development Services Egypt & Africa, JLL, to explore how sustainable solutions positively impact the bottom line and provide compelling reasons for the construction industry to embrace green building practices
LOWERING OPERATING COSTS
Incorporating sustainable designs and features into real estate developments offers numerous financial benefits. Energy-efficient HVAC systems, green roofs, rainwater harvesting systems, and advanced insulation materials significantly reduce energy consumption and utility costs. Real-time monitoring technology enables proactive adjustments, leading to considerable savings.
In fact, The World Green Building Council’s report estimates reductions in energy use ranging from 25% to 30% in green buildings compared to conventional code-compliant structures. While the initial implementation costs may be perceived as high, the long-term savings often offset the investment within three to five years. Case in point: the Empire State Building’s retrofit reduced energy consumption by over 40%, resulting in annual energy savings of $4.4 million.
OCCUPANT HEALTH AND WELL-BEING
Sustainable buildings go beyond financial gains and promote the well-being and productivity of occupants. Factors like air quality, natural lighting, and green spaces create healthier indoor environments that improve productivity and overall satisfaction. Studies have shown a direct correlation between occupant health and sustainable design, leading to higher tenant retention rates. Additionally, companies seeking to create positive work environments are increasingly attracted to environmentally friendly buildings, aligning with their corporate strategy and values. For example, the Interface office in Paris, designed according to the WELL Building Standard, reported increased employee well-being of (43%) and productivity (38%).
GREEN PREMIUMS VS. BROWN DISCOUNTS
Building owners who incorporate sustainable practices experience significant advantages in the market. Properties with green credentials generate more occupier demand and achieve greater
Elaine O’Connor, Head of Project & Development Services Egypt & Africa, JLL, explains how sustainability can involve replicable and substantive commercial advantages.
rental premiums globally. JLL’s research shows average premiums of over 7% in North America,10% in Asia Pacific, and more than 11% in London. Conversely, properties lacking sustainable practices are experiencing a decline in value, leading to lower rental income and reduced sales prices, these are referred to as "brown discounts." According to a survey conducted by RICS almost 50% of respondents worldwide reported experiencing a brown discount, with significant impacts on the property's overall performance.
RETROFITTING AND ADAPTIVE REUSE
Revitalising underperforming spaces through retrofitting and adaptive reuse presents unique opportunities for both building owners and the environment.
These practices enable the transformation of dated, underutilised, and energyinefficient spaces into high-performing structures that align with current market demands and sustainability goals. Retrofitting addresses energy efficiency, functionality, and aesthetics, often involving upgrades to building systems, insulation improvements, and the incorporation of modern energy management technologies. Adaptive reuse caters to the growing demand for repurposed spaces while delivering significant carbon emissions savings. Projects where we were directly engaged such as Heriot-Watt University Dubai's campus and Aldar's headquarters in Abu Dhabi have achieved carbon emissions savings ranging from 40% to 70% when compared to new builds.
OWNER-OCCUPIER COLLABORATION THROUGH GREEN LEASING
Green leasing, despite not being widely adopted yet, offers substantial financial and
environmental benefits for both building owners and occupiers. By incorporating environmental considerations and sustainability principles into lease agreements, green leasing encourages collaboration between the two parties. It drives efforts to reduce the environmental impact of buildings while improving energy and water efficiency. Moreover, it provides a platform for knowledge-sharing and innovation, ensuring long-term benefits for both owners and occupants.
We are at the forefront of understanding global benchmarks and studies to demonstrate the tangible return on investment (ROI) for sustainable real estate to clients. With access to extensive market data and research, JLL employs a data-driven approach to showcase the financial benefits and long-term value of incorporating sustainability practices into real estate projects.
By leveraging our broad network and deep industry expertise, JLL provides clients with comprehensive analyses and tailored solutions that demonstrate the financial viability of sustainable initiatives. Global benchmarks and studies allow JLL to quantify the ROI of sustainable real estate, offering clients valuable insights into the potential economic gains associated with energy efficiency, green certifications, and sustainable building practices.
These benchmarks and studies not only highlight the financial advantages, such as lower operating costs, increased rental premiums, and improved market positioning, but they also showcase the positive impact on tenant satisfaction, employee productivity, and overall asset performance.
Through evidence-based strategies and a commitment to sustainability, JLL empowers clients with the knowledge and confidence to make informed decisions that align with their financial goals and environmental values. By emphasizing the compelling ROI of sustainable real estate, JLL encourages clients to embrace green building practices as a smart and profitable investment choice.
Aldar's well-known Abu Dhabi HQ has achieved significant savings in carbon emissions.
Commercial
