We recently presented the findings of our latest research on sustainability in the Mena real estate market at the Change Initiative in Dubai and at Masdar Institute in Abu Dhabi, two excellent champions of sustainable development here in the UAE. It is therefore something of a paradox that less progress has been made on creating sustainable buildings and communities in the Middle East and North Africa than in more developed real estate markets overseas.

Puzzling over this apparent contradiction, I put it down to an issue of timing. While developing more sustainable buildings has been mainstream thinking in more mature western markets for many years now, the need to create more sustainable buildings and cities in the Middle East has only been recognised over the past five years.

There are four basic reasons for the limited progress made. The first relates to the relative lack of legislation to enforce change and introduce more sustainable practices in most markets in the Middle East.

Overseas experience suggests that mandatory legislation can be a ‘stick’ to enforce developers to incorporate more sustainable features into their projects. The introduction of a tax (that has increased the cost of land fill in the UK by nine times since 1996) has led to a major change in behaviour, with a significant reduction in the volume of landfill being generated by the construction industry.

Going forward, the UK Energy Act of 2011 may also prove to be a something of a game changer.

The second major constraint is the current absence of any discernable financial premium for more sustainable real estate in the Mena region. Elsewhere, there is a growing body of evidence that shows that green buildings are worthy of a premium, this being realised through higher rentals, faster leasing up periods, lower operating costs and lower exit yields.

To date, this is not the case in the Mena region, where there is little evidence of higher values being achievable as a result of higher levels of sustainability. With more global corporates now adding sustainability to their locational criteria (and thereby not considering projects that do not meet their CSR tagets), I would expect more evidence of a sustainability premium to emerge in this region over the next five years.

The third existing constraint relates to the subsidised cost of energy, water and waste disposal that typifies many markets in the Middle East. Electricity and water prices are generally heavily subsidised, with end-users not paying the full cost of production.

Electricity charges in Abu Dhabi are on average three times lower than those in the UK, while real estate owners and tenants in Abu Dhabi typically pay five times less for their water than those in France or Germany. This reduces the financial incentive for building owners and occupiers to introduce sustainability initiatives to reduce their energy consumption.

The final constraint we identify in our research is the limited awareness of environmental issues in general in the Mena region. Political pressures from more environmentally aware voters have been a major driver of the move to green buildings in western democracies.

While not subject to the same political pressures, many governments across the region are now recognising the need to achieve more progress to reduce carbon emissions. There is a growing range of government-sponsored initiatives being introduced within the UAE and to a lesser extent in other Mena markets. Many of these initiatives are still in the early stages, but they are likely to have an increasing impact on real estate stakeholders in coming years.

Despite these constraints, it would clearly be wrong to assume that no progress has been made. Considerable gains have been made over a relatively short timeframe.

The evidence lies in the completion of projects such as the Change Initiative and progress on the development of Masdar City in Abu Dhabi. There are now more than 1,250 Leed-accredited real estate projects in the Middle East, of which more than 800 are located in the UAE.

The leading role of the UAE within the region is further illustrated by the development of Estidama, the Abu Dhabi Urban Planning Council’s framework for creating more sustainable buildings and communities, and the Executive Council resolutions that all new buildings in Abu Dhabi and Dubai will be required to meet recognised levels of green accreditation by 2014.

The decision that sustainability will be one of three key themes should Dubai be successful in its bid to secure the 2020 World Expo is another indication that sustainability will be taken more seriously, at least in the UAE in the years ahead. While the future is bright, and I am confident that we will see great strides towards creating more sustainable buildings and communities in the MENA region over the next five years, much remains to be done.

— The writer is the CEO of Jones Lang LaSalle, Middle East and North Africa.