Middle East Construction & Real Estate Podcast

Exploring Sustainable Construction and Decarbonization with Louise Collins, JLL's Regional Director of Energy and Engineering

• Jonathan Eveleigh • Season 1 • Episode 2

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What would you say if I told you that 40% of the world's annual carbon emissions originate from the built environment? Shocking, isn't it? In our latest conversation with Louise Collins, JLL's Regional Director of Energy and Engineering, we take an enlightening journey into the heart of the construction and real estate industry, examining its monumental role in responding to climate change. We delve into the intricate relationship between the concepts of net zero, decarbonisation, and sustainability and how they pertain to the built environment. Louise unveils the possibilities of designing and constructing buildings that are not only low in operation but are also high in maximizing and offsetting renewables.

This episode is more than an enlightening talk – it's a call to action for real estate developers and occupiers. Have you ever considered how your building can contribute to sustainability? We discuss the transformative potential of energy-efficient technology, smart building tech, and life cycle assessments, and how they can dramatically reduce environmental impact and help save money. We then explore the potential impact of government regulations and incentives on businesses following COP 28. By the end of this episode, you'll see the construction and real estate industry through a fresh lens of sustainability and net zero goals. Tune in, learn, be challenged, and let's change the world, one building at a time.

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Speaker 1:

Welcome everybody to episode two of the Middle East Construction and Real Estate podcast. Thank you for joining us. For those of you that listened to episode one our discussion with Rob Devereaux of Brookfield Properties, we very much hope you enjoyed it.

Speaker 1:

I'm joined on this episode by Louise Collins, regional Director Energy and Engineering at JLL. With COP28 being held in Dubai now only three months away and the UAE's commitment and drive towards net zero by 2050, there is, quite rightly, a huge focus on the built environment to reduce both emissions of buildings in use as well as the embodied carbon resulting from the whole construction process. In summary, construction in real estate needs to be at the heart of climate action in the Middle East region, so I'm keen to know from Louise how the industry can respond to these demands and expectations. One thing is very clear we as an industry need to act now, and so very warm welcome, louise, and thanks so much for joining me on this episode of the Middle East Construction and Real Estate Podcast. It's great to have you. Thanks for inviting me to pleasure, no problem. Can I start by firstly just asking you to briefly explain your role at JLL, please?

Speaker 2:

Yeah, absolutely so. Three years ago, JLL invited me in for a meeting and they could see the big demand in the market for sustainable engineering, sustainable implementation and decolonisation of real estate and they asked me to set up that function within the project and development services across the Middle East. So we started that journey three years ago with some energy audit and now we're working hand in hand with some of the biggest real estate developers in the Middle East on full overhaul, net zero implementation of their portfolios of existing and new developments, which is quite exciting.

Speaker 1:

Very exciting. That's a big task and that's an useful introduction. Thanks for the context, because that sets out the landscape for some of the stuff that we're going to be covering a bit later on in the discussion. So thank you for that. The topic we're going to be discussing is huge, obviously, so we're just going to have to see how much we cover. We've got a fairly limited time. We've committed to these podcasts being no more than 30 minutes. So with that in mind, if you're OK, let's get straight into it. And what I'd like to do, firstly, is to ask you to clarify something for me and maybe for some of our other listeners as well the terms net zero, decarbonisation, sustainability we hear them all fairly regularly. Just tell me, are they effectively the same thing or are they in any way different? And secondly, from a very personal perspective, how do you define net zero or sustainability in the context of construction and the built environment?

Speaker 2:

What I like to say to a lot of my colleagues and clients is that the sustainability industry has managed the art of abscification, so we managed to take something that was very clear and make it quite obscure. Whether that's intentional or not, I'm not sure, but basically they're all kind of branches of each other sustainability, decarbonisation, net zero. I would personally define net zero as design buildings that are low in operation, that maximise, offset renewables on site, and then finally they offset renewables that are off site as well. So it's getting that balance between the optimum design, the optimised construction processes and supply chain and then having whatever renewables we can fit onto our site, whether that's geothermal or whether that's having solar panels on the roof. And when you really have gone down as many avenues as possible, then you look at offsetting somewhere else and buying renewable certifications somewhere else. So, yeah, it's just doing what's best for the building and trying to have zero impact on the environment within your real estate and how you build it and operate it.

Speaker 1:

Because I've seen, probably on several occasions actually I've seen it reported that approximately 40% of the world's annual carbon emissions are caused by our results of the built environment. I mean that's a huge percentage 40%. So what role do you think the construction and real estate industry can play in achieving global sustainability goals like net zero emissions? And I guess, to be perhaps provocative or a little bit controversial is decarbonisation of the Middle East built environment actually feasible or achievable in your opinion?

Speaker 2:

A couple of questions there. I guess let's start with the first one. Well, 40% of all of the carbon emissions across the globe is coming from real estate. So can we do something about that? Of course we can. I also like to tell clients that if you look at our buildings, they're 10 to 12 years old now. So if you can go back retrospectively and apply some of the technologies, the supply chain, the design thinking onto those into those buildings, then, even retrospectively, you'll start to decarbonise those buildings. And we're in a part of the world that has renewable energy everywhere. We're looking at places like Neon that are processing full grids based on solar energy. So can we do it? I think if anyone can anywhere in the world with that abundance of renewable energy, it's definitely got to be the Middle East.

Speaker 1:

Yeah, I would agree with you there. If it's going to happen anywhere, it's going to happen in the region and probably driven by the need to be that much greater, being that much greater anyway, from a pure climb up point of view. So, with bearing that in mind and JLL, when you're looking at selecting construction companies let's say whether that be contractors or other consultants how do you or your team ensure that those companies at least understand or, better still, I guess, are committed to or are aligned to any specific project or client sustainability goals and targets? How do you do that? What's the process within JLL for trying to do that?

Speaker 2:

Well, a lot of contractor tenders are fit between technical and commercial.

Speaker 2:

Obviously, at the end of the day, bottom line is still really precedent in most places in the world, unfortunately, and hopefully we'll get to a time where that changes.

Speaker 2:

But for the moment we have focused on the technical side of the submissions from contractors and the waiting will also help us to analyze and push clients into picking more sustainable contractors.

Speaker 2:

So when we're doing our PPQs, if we can wait the sustainability alliance of some of these contractors and push clients into grading that are scoring that much higher, that obviously gives us a little bit of wind to get ahead with that.

Speaker 2:

We know which contractors are really kind of leading the way in these terms and they're working with A-grade clients. So they're kind of being matched at the moment and it's only a matter of time before this becomes a prerequisite for all clients as technologies change, as supply chains become more localized and again, I guess with contractors, particularly with B and C-grade contractors, it's really educating them as well. The A-grade contractors have the luxury of having R&D departments, of having sustainability departments that they've invested in, but trying to bring that down the line with contractors, that's something that we're also trying to focus on JLL did do a contractor survey earlier this year and it's published on our website. But some of the feedback from contractors unfortunately was it's always a prerequisite, but not when you get to BAFO or you get in the room and you want to get to a number.

Speaker 2:

It's sometimes lost, not for all but for probably the majority of developers at the moment. But they are still coming around a little bit again and hopefully with eyes on sustainability from the government here, with COP coming up etc. We'll see a bit more cadence on this as well.

Speaker 1:

Yeah, yeah, I think you're right. I think it's inevitable. I want to touch a bit later on, actually, in terms of what drivers there are for the actual developers in terms of adopting net zero or sustainability procedures. We'll come to that a bit later, just to follow on. You've almost touched on it, but I'll just follow on what you just said with a second question. Really, to date, how progressive or committed do you think the companies that you're trying to work with and I take your point about there being a subtle difference between A and then B and C grade contractors but how progressive do you think they have been or are trying to be in terms of transitioning towards more of a net zero model?

Speaker 2:

I guess it will always really be driven by the developer themselves. There are a few contractors that are trying to spearhead some initiatives, but really when we're talking about A-grade projects, that's when the A-grade contractors really push themselves to align. That's what we're seeing at the moment.

Speaker 1:

Okay, and again, following on from that, the restrictions or the limitations of our industry. Do you think they're any different than any other industry? I mean, does the real estate and construction industry face specific or particular challenges that other industries don't when it comes to achieving net zero? If it does, what do you think those challenges are and can they be addressed and ultimately overcome?

Speaker 2:

Yeah, I think the construction real estate industry can be quite siloed and archaic at times, whereas it's driven by the regional compliances and regulations in region or in country as opposed to bigger industry that are defined globally. So that kind of drives silo thinking and we're not sharing as much data as we could be and as much innovation as we could be. A lot of that we're seeing coming from the supply chain, who are obviously trying to leverage their position as well, but I think one of the biggest challenges really is the basic understanding of what is sustainability and what data we need in relation to real estate. For example, what is your energy usage per square meter in your building and what's your neighbour doing? That's different. So there are some benchmarks that are published, but really people still don't understand them and people are still not sharing them as well. There's a few developers that are willing to share that information and really it should be a common goal and it should be transparency around this.

Speaker 2:

The second issue I would say is probably supply chain. We have a slightly immature supply chain here. We're seeing a lot of local supply coming in the last three years, which is fantastic. A lot of investment in innovation and supply chain locally will really help with embodied carbon. But again it's defining what that product is and its impact is carbon footprint. It's embodied carbon footprint, etc.

Speaker 2:

That again suppliers, developers are not aware of. And again there's no public directory of who the suppliers are, what their carbon impact is, what their cost impact is of this and again the payback of that. So it's again transparency and education around that, but again it's just a disjointment of our industry that really is pulling us apart. And again, hopefully, things like COP and I know there's some great non-for-profits that are starting to publicise some of this information and we have big global energy companies that are doing it as well but hopefully that will really kind of streamline over the next few years and that's what I'd like to see happening and see it going all the way down the line into contractors, operators and a kind of united front.

Speaker 1:

I agree. I mean, I think the industry is its own worst enemy in terms of that, as you call it, silo attitude or approach and almost secretive really. I mean we do tend to operate in almost a secretive way and those barriers and boundaries do need to be broken down for all of this to move forward a bit more meaningfully. I also wonder whether an additional problem, if you like, or reason for the slow adoption is simply the perception that using more sustainable and low carbon, either methods or materials, will have a detrimental impact or effect on project timelines and costs, ie projects just will take longer and become more expensive to build. Do you think that's? Do you think that's still a perception and founded or unfounded?

Speaker 2:

100%. It's only when you get into clients and you explain return on investment and you explain that, if you look at not one segment of the whole real estate process, if you explain that during design, if we look at orientation and you values, and if we look at the systems of cooling within the building, and then we might pay a little bit more for that embodied carbon piece, but now we've reduced your operational costs considerably and that offset payback might be three to five years and then you then you've obviously got savings to come for the lifespan of a building. So it really is kind of getting them involved in those kind of decisions and not. Unfortunately, historically we a lot of buildings developers have built and just passed on, so the ownership of operation hasn't been in place as well. So if we could get I don't know if it's regulation, if some kind of compliance where you have to operate a building at a certain optimum performance all the way through, regardless of who owns it and it's designed for that operation, that really would make a difference.

Speaker 2:

One example of that was we were looking at a sales center for a client recently and he was doing a net zero sales center and it's diesel generators in the design at the moment and obviously there's an operational cost associated with that. And they asked us to look at what have we done solar generators and again the operator on the generator budget wasn't talking to the designer. So when we, when we looked at solar generators, we realized that they pay for themselves in three years, so the part and the diesel generators would have to run for a lot longer. So really these things can pay for themselves very quickly as well if we all have a joint up kind of commitment to this as well. So that's quite interesting Very very interesting.

Speaker 1:

Again, I want to touch on a bit later on. I want to touch on the whole life cycle approach to how we look at buildings in the longer term rather than just in the short term with initial capital costs. I'll touch on that a bit later. That example that you were just giving then of the solar generators are there any other examples? Do you have anything else that companies you've come across have been taking or maybe could start to take in their attempts to move towards greater levels of sustainability? Do you have other examples?

Speaker 2:

Yeah, absolutely. Look. Again, being from an engineering background and knowing that this is quite a dark art, all of the team in JLL and our team are all engineers. So for me it's whatever we give to the client, we have to give them a tangible return. So if you want to change from or if you want to add adiabatic cooling, for instance, into an old chiller system, how much is that going to cost the client and what is their return on investment? So we're implementing that on quite a number of buildings for a bank locally.

Speaker 2:

At the moment we have a huge developer in Saudi Arabia that's looking at retrofitting solar panels across all of his car parks. We've got a lot of car parks. Again, what's the return on investments? The supply chain are coming to the market on that as well. So suppliers are now paying for the installation of these kind of systems and getting the payment over a number of payback years from clients as well on retrofits. So that's nice.

Speaker 2:

Again, optimization we're seeing a lot on IoT sensors, whether that's for facilities management, for temperature control, for occupancy, carbon, etc. That's really reducing air conditioning costs, some such as that but again, really kind of bringing home to clients these are all of your. This is a full shopping list of potential options for a new build or a retrofit and these are your um. These are your number of years that will take to pay that back and this is your carbon reduction across your portfolio. And that's really much better selling point for joins now than they will get you a lead certification. That's a story that can really tell and again, bottom line, they're getting money back in their pockets and they get the whole stigma of helping the environment and their tenants love it as well.

Speaker 1:

Sure, okay, I mean I just want to stick with with specifics, if you like. I mean, one of the things that we keep hearing about as being perhaps one of the more obvious things to do on a building is is to install some sort of energy efficient envelope or facade. I mean, do you do believe that that's one of the key critical factors for for installing on a building, and if it is, what, what else is there? I mean, that's just one example. What are the sort of technologies, materials or techniques apart from the envelope do you believe are critical for for optimizing energy management in a building, both both journey construction, by the way, and through the ongoing operation?

Speaker 2:

Yeah, well, the façades. We. We've done a few optional studies for a developer and we found that by playing with the wall and glass u-value and this is a compliant u-value for the region so we've got a fairly robust set of u-value compliances that we must use. So if we can have an uplift on those, we're seeing a 20 to 30 percent reduction in the heat loads just for making the new value changes. That's a huge impact across a big building or a master plan or even a mega project if you get into that kind of detail as well. So those new values really have impacts on what we're doing.

Speaker 1:

Yeah, massive savings. And again, similarly, in terms of a specific but moving aside from perhaps a design or material product, smart building technology. Do you? Do you believe that's important in terms of the monitoring and the controlling of a building's actual energy use in in real time, you know, in the here and now you can actually monitor what the building's doing and is energy efficiency or usage, and I'm talking over and above a standard sort of BMS installation, if you like. Have you got examples of where technology has been used successfully?

Speaker 2:

Yeah, absolutely. Again, smart buildings, another great buzzword around at the moment and we.

Speaker 2:

We deal with a lot of big corporates and there are a number of new certifications around, like wire score or smart score, that are being rolled out in the Middle East at the moment they're already in the States and Europe. So what they're doing is going into buildings and looking at their tech ready or already existing technology and scoring them with regards to how they can perform, and that performance is based on how that will impact the reduction in energy, water, waste, etc. And so technology first, the first thing it does is it gives you a benchmark point. So we have a global account, with HSBC as an example, and through their smart building technology, we record a 5% reduction in their EOI every year, and that's what JLL have committed to do with them as a KPI. So by really embedding that technology and they're evolving it, they're really. They're really invested in it.

Speaker 2:

As one example, hsbc although we have other clients that do the same they've really invested in, like these, smart buildings that are automated, so when a room is empty, then the fresh air is off, you're not wasting energy, there's sometimes automatic shading outside windows and you have minimum water sensors within your toilets. It's all the little things to stop waste, really. And the thing about sustainability is it's we need air conditioning, we need certain things, but it's the wastage really that we're trying to get to and the technology is really optimizing it. And if we can optimize it to a premium level on a big building, the savings can be 50 60 percent uncontrolling the building yeah, it's huge, huge savings.

Speaker 1:

Yeah, and you're right, technology is advancing, so so quickly. I mean there's there's literally no excuse for not using it to our advantage. I want to just move on to slightly different subjects. It's one that I know is a bugbear for a lot of people in the Middle East, and it has been for quite some time. You've touched on it a little bit in your earlier points, and that's around what I think is a need for greater recognition and appreciation in the area of life cycle assessments, ie the buildings, running and maintenance costs over whatever it may be 25 years, if that's the life cycle of a particular building, the importance and, I guess, ability of being able to evaluate the true environmental impact of the building over its entire lifespan. Give me your views on that.

Speaker 2:

I think we touched on it earlier that it can be quite siloed in this region and we've all got everyone's got operational budgets. The Middle East wasn't as affected as Europe by energy prices, but I think clients now see that there are savings in their building. So what are those savings and what can we do with those savings? So if we can retrofit some systems, how much will that save me and can I put that into the building again and double my saving again? So they're really starting to invest in that life cycle operational investments. But again, when we are designing buildings as engineers, we always put in life cycle assessments and tell our clients from the outset the impact of changes in your systems that will be had from these on life cycle assessments and, more importantly, on the life cycle costs. So we're doing that.

Speaker 2:

We're seeing a lot more of that in tenders as well, which is quite interesting Again, usually when clients are developing and operating their asset over time but, yeah, that's the only thing that's really going to unlock this and that's where the investment is going to come from hopefully, because I don't think people are going to open up blank checkbooks. So it's really again getting that return on investment, and unlocking that from the building itself is the best place to get it.

Speaker 1:

Yeah, absolutely. And again, you've referred to retrofitting a couple of times. I want to to ask you around. There's a vast amount of existing real estate stock across the certainly the UAE and across the broader Middle East and whilst it may not be as old as some of the stock around other parts of the world, as you said earlier, it's still, you know, 15, let's say 20 years old. Do you believe it's possible to do much with existing real estate stock in terms of decarbonising through retrofit works?

Speaker 2:

100%. This is going to be the key. I had a client earlier that called us up and they've committed to net zero, and they were asking if they should do a fit out or build a new building. And obviously, straight away, my answer is a fit out. The embodied carbon related to building a new building is well, embodied carbon is 70% of the carbon of a lifespan of a building.

Speaker 2:

So being able to recycle or retain as much of an existing building should always be our priority. And again, if these buildings are 15 and 20 years ago and you were here back in that time, as was I buildings were going up faster than they could be designed. So the potential within those buildings to see, for example, we have air filtration in buildings, so buildings here don't get smoke tested. So the amount of leakage through facades in buildings and the savings from that alone can be estimated at 20% of your air conditioning. So being able to go into those buildings retrospectively and fix them, upgrade them and then bring in all this innovation that's happened over the last few years to optimise their performance, that really is where the gold is and that's where we should really be focused on. But we're obviously expanding as a population and new buildings are inevitable and they keep us in a job, which is great, but we need to keep the existing stock. We need to reuse, we need to repurpose and we need to reduce our embodied carbon as much as possible.

Speaker 1:

So we must definitely not take our eye off the existing stock ball in preference to just focusing purely on the new stuff.

Speaker 2:

Absolutely, even more so on the old stuff, I would say, if we really want to make it impact.

Speaker 1:

Sure, okay, I want to quickly turn to COP28. We know it's coming up in just over three months time. As I said in the introduction to the podcast, do you really think that outcomes from COP28 are likely to change the way businesses in the region operate in terms of sustainability and net zero over the next 12, 24 months? And if you do, in what way do you think they'll change?

Speaker 2:

I had the pleasure of going to COP last year and it was my first COP, obviously at least, and it was in Egypt and what I've took away from it was it really is just a spotlight to remind people of what's happening with regards to climate change et cetera, and it brings really important people together for sharing ideas and for changing regulations. And we've seen with having COP28 here we're in. The UAE is probably one of the most dynamic countries on the planet and giving them, giving us, cop28 has really pushed their agenda. So we have seen a lot of regulation changes and commitments being upgraded in the last few months, so from that perspective, it's very positive. My worry is obviously that everybody is the year of sustainability and everybody's got a real eye on it. My worry is that in January, when the year of sustainability is over, that there might be a little less focus and hopefully, not Hopefully.

Speaker 2:

it will just cement the commitment of the UAE and Saudi and our other neighbours. But again, we just push on and we hope for the best.

Speaker 1:

Yeah, ok, and look very finely, and almost a yes, no answer, because I'm conscious that we're going to run out of time. You therefore, I think, believe that there will be changes in regulations which come out of COP28, because for me it's a fundamental question, that is it government regulations and incentives that are likely to have an impact on what companies are almost forced to do? Are you saying that you do believe that those changes will come out of COP28?

Speaker 2:

We've seen some already. I think sometimes we forget there are a lot of regulations in place. So we have seen changes and commitments in the last nine months being upgraded, and I see you right. If we're going to be driving this, I could imagine there will be some big commitments and regulation change at the end there, and I hope so.

Speaker 1:

Yeah, for sure. I think we'll all be surprised if there aren't any. Look, louise, sadly our time is up. I knew we were going to struggle to get through some of the questions that I'd intended to ask you, but thank you so much for giving the answers that you have given. It's all been very insightful and very informative, so thank you for that. Before I do let you go, one thing that we are doing through these podcasts is we like to try and leave the listeners with some sort of key takeaway, if you like, or nugget of information or a key message. If you were to offer one piece of advice before I let you go, what would that be?

Speaker 2:

I guess if I was a real estate developer or occupier, I'd be asking myself how is my building performing in relation to my peers? What impact is my building having on the environment? And what will happen to my building if I invest in sustainability from a value perspective utility bills, type of tenants what will it affect and how it can increase productivity? So what can my building do to support sustainability and how can that help me?

Speaker 1:

Sure, that's a great answer. So it gives you a point of differentiation almost, doesn't it? 100%, louise, thank you so much for joining us.

Speaker 2:

Thank you very much.

Speaker 1:

Good luck with everything in the future that you, and indeed JLL, do in terms of moving the whole sustainability agenda forward in the Middle East, and maybe we could get you back on a future podcast for an update following COP28. How does that sound?

Speaker 2:

Yeah, that'd be great. Hopefully we'll have big news.

Speaker 1:

I hope so, Louise. Thank you very much indeed.

Speaker 2:

Thanks a lot, bye-bye, bye-bye.

Speaker 1:

And so that's it for episode two of the Middle East Construction and Real Estate Podcast. We do hope you enjoyed it and found it interesting and useful. Thank you very much for listening. We really do appreciate it, because without people like you out there listening, there really wouldn't be any point in us doing them. And a big thank you to the people who have been involved in putting this podcast together. You know who you are, so a big thank you. Further episodes in the series will be published in due course. So for now, thank you and goodbye until next time.