Sustainability, ESG, green construction, and low-carbon buildings are now strategic priorities across the GCC. As Saudi Arabia, the UAE, and Qatar scale major infrastructure and real-estate development, the region is becoming a global testbed for climate-aligned construction, energy-efficient buildings, and sustainable urban growth. With real estate responsible for 37% of global CO₂ emissions, the GCC’s shift toward ESG-driven development is not just necessary — it’s becoming a competitive advantage in a fast-moving regional market.
In our latest episode of Sustainability Unplugged, Wesley Thompson, Partner & Head of ESG MENA at Knight Frank, breaks down the realities behind ESG in the construction and real-estate sector — what’s misunderstood, what’s changing, and what will define the next decade.
ESG: No Longer Compliance — Now a Core Business Driver
Wesley points to a persistent misconception: many still treat ESG as a reporting burden or a box-ticking exercise.
But in the GCC, the shift is unmistakable — ESG is now tied directly to business value:
- Greater operational efficiency
- Stronger customer and tenant trust
- Higher employee engagement
- Clearer access to capital
- Improved long-term resilience
Investors are driving much of this change. In Knight Frank’s regional ESG survey, nearly 90% of respondents said ESG factors influence investment decisions across residential, commercial, and mixed-use assets. ESG is fast becoming a license to operate.
Why Real Estate Holds the Keys to the Net-Zero Transition
Real estate’s climate footprint is large — and the GCC cannot reach national targets without transforming buildings.
- 27% of emissions come from building operations
- 11% come from embodied carbon: steel, cement, aluminium and construction materials
- 80% of the buildings standing today will still exist when the region reaches its net-zero targets
These numbers reveal a clear priority: retrofit what exists and embed ESG early into every new project.
Wesley notes a mindset shift. A decade ago, developers demanded “three dollars back for every dollar spent” on sustainability. Today, the issue isn’t the return — it’s the risk of not being investable at all.
How the GCC Compares: Faster Than Expected
Contrary to assumptions, the GCC is moving quickly.
- The UAE ranks among the top 10 countries worldwide for LEED-certified buildings.
- Dubai is third globally for the number of green-certified buildings.
- Saudi Arabia’s Vision 2030 is embedding ESG across giga-projects, infrastructure, and planning guidelines.
Older cities in Europe struggle with retrofits; GCC cities, by contrast, can leapfrog with newer stock, stronger mandates and a high appetite for innovation.
What still needs work? Standardised reporting and global alignment — critical if the region wants to attract long-term international capital.
Capital Is Moving Toward ESG — Fast
Sovereign wealth funds and institutional investors are demanding compliance with global standards. Why?
Because international capital flows depend on transparent, verified, comparable data.
Developers that delay ESG integration risk:
- Lower valuations
- Higher insurance premiums
- Reduced access to debt
- Vulnerability to climate risk and stranded-asset exposure
On the other hand, those who lead on ESG are already seeing 10–40% higher valuations and stronger tenant demand.
Advice to GCC Developers: Stop Treating ESG as a Cost
Wesley’s message is direct:
ESG creates value — operational, financial, reputational and regulatory.
Developers should:
- Define what ESG means for their business, not just what regulations ask for.
- Build a clear strategy: KPIs, timelines, governance and reporting.
- Treat ESG as part of day-to-day asset operations, not a one-time certification.
- Engage tenants, communities and buyers — behaviour change is part of the impact.
The biggest risk now is waiting too long.
What Will Shape the Next Decade: Technology + Consumer Expectations
According to Wesley, three forces will define the next chapter of real-estate sustainability:
1. AI-driven optimisation
From reducing operational energy use to forecasting demand and waste, AI will reshape building management.
2. Circular construction
Today, up to 35% of construction materials become waste. Real-time redistribution, reuse and material tracking will reduce costs and emissions.
3. 3D printing and modular construction
Regulations like Dubai’s mandate — 25% of buildings must be 3D-printed by 2030 — show how quickly this trend will scale.
But technology must be balanced with the footprint of data centres and AI infrastructure — a new sustainability challenge emerging in parallel.
The Bottom Line
The GCC is entering a decisive period where ESG, real estate and sustainable construction are tightly linked to competitiveness.
Momentum is strong. Investor interest is increasing. And developers that act early will lead the next decade of growth.
Real estate is no longer a slow sector.
The region is proving that sustainability can scale — and do so fast.
FAQs
1. Why is ESG important for real estate in the GCC?
Because investors, regulators and tenants now expect energy-efficient, low-carbon buildings. ESG increases valuations, reduces long-term risk and improves operational efficiency.
2. What percentage of global emissions come from buildings?
Buildings account for 37% of global CO₂ emissions — 27% from operations and 11% from embodied carbon.
3. Is the GCC ahead or behind other regions in sustainable construction?
The GCC is progressing rapidly. The UAE is among the global leaders in green buildings, and Saudi Arabia’s Vision 2030 is accelerating sustainability across new developments.
4. How does ESG attract investment?
Investors use ESG standards to assess risk and long-term value. Projects aligned with international frameworks have easier access to capital and higher market confidence.
5. What technologies will shape the future of green construction?
AI optimisation, circular material flows, 3D printing, modular construction and smarter data systems for energy and carbon tracking.
