Will Energy Efficiency Create a ‘Green Premium’ in MENA Real Estate?

MENA commercial real estate faces a reality check driven by surging energy bills, strict regulations, and tenant expectations. As operating costs directly dictate asset valuation, regional developers are discovering that environmental performance is no longer optional for maintaining asset value. Sustainability has stopped being a marketing line and started showing up on the balance sheet. The question landlords and investors care about is simple: does energy efficiency genuinely drive-up valuation, or is ‘green’ still just good branding? The numbers emerging from the Gulf have started giving a real answer.

What ‘green premium’ means

A ‘green premium’ is the extra rent, occupancy, or valuation a certified or energy-efficient building demands over a comparable conventional building once the location, age, and building class are determined. This distinction is crucial. Since efficient buildings tend to be newer and better located, the real test is whether efficiency alone adds value, independent of the building’s age or address.

UAE: The numbers

The UAE offers the clearest evidence to date. A 2023 study of office buildings in Abu Dhabi and Dubai found that LEED-certified properties commanded an average rental premium of 33% over non-certified buildings. They also achieved higher occupancy: in Abu Dhabi, LEED-certified buildings reached an occupancy rate of 96% compared with 89.5% for non-certified properties, with Dubai reflecting a nearly identical trend. Such high-performance buildings are becoming increasingly common, accounting for ~50% of tracked office space in Abu Dhabi and ~24% in Dubai.

Saudi Arabia: Rules are leading the way

In Saudi Arabia, the push for energy efficiency mainly comes from policy than direct market comparison. The country has a building rating system linked to Vision 2030, and currently, many government‑related projects require this rating. Part of the reason is to protect long‑term property value, and this policy push is already showing results. A 2025 report on GCC office markets revealed that the demand for office space was driving rents and occupancy to near‑record highs. In 2025, Grade‑A rental prices in Riyadh increased by more than 15% from the previous year, while occupancy reached 98%. Across the region, the desire for responsible office space has lifted rents and occupancy to levels not seen previously.

The wider Gulf: Energy costs are catching up

Energy pricing is reshaping the market even without formal building certifications. A 2025 study on rooftop solar in Abu Dhabi and Riyadh showed that a typical commercial solar kit would pay back its cost in 7–11 years. By tying Gulf economic realities to national net-zero strategies, research highlights a growing divide between energy-efficient and inefficient structures as regional electricity tariffs rise towards true cost. Tailored regional certification systems have validated over $100 billion in assets. Experts forecast that additional trillions will be spent on green buildings in emerging markets over the next decade.

A few points to keep in mind

This does not prove that efficiency alone adds value. Certified buildings are usually newer and owned by larger and more professional companies: these factors alone can lift rents. However, a major clue is that older buildings that become certified often see an even larger boost than new ones. This shows that the value is actually derived from performance and not just from a shiny label.

The bottom line

In the UAE, the green premium is real, and it already appears in rents and occupancy. In Saudi Arabia and the rest of the Gulf, the premium is driven more by government rules and investor demand than proof, but the trend is clear. As energy costs rise and ESG becomes a must, the real question is no longer whether efficiency pays off. It is what it costs to ignore it.