Staff Report
Dubai, UAE
Middle East and North African (MENA) countries need to invest $500 billion (Dh1.83 trillion) for integrating environmental, social and governance (ESG) principles in urban regeneration strategies to build inclusive and sustainable economic development and preserve cultural heritage, according to a report by Strategy&, part of PriceWaterhouseCoopers (PwC), a global accounting firm.
As one-third of the Arab world urban population lives in substandard conditions, the necessity for urban regeneration is seen across the region, with unplanned ‘informal settlements’ continuing their rapid growth with around 40 percent of the populations of both Cairo and Makkah live in such settlements, the report says. Meanwhile, emissions from new construction activity and ongoing building operations represent 37 percent of energy-related emissions and 34 percent of global energy demand.
Karim Abdallah, Partner with Strategy& Middle East, said, “As recently as 2018, roughly 31 per cent of those in the Arab world living in cities did so in decaying neighbourhoods and dwellings. Our analysis shows that it would cost the region US$500 billion to regenerate a sample of 15 densely populated cities – such as in Saudi Arabia, the UAE, Qatar, Egypt, Iraq, Syria, and Jordan. This injection of capital and urban planning has enormous potential to transform the livelihoods of millions of people, directly or indirectly.”
While economic growth delivers social and economic benefits, rapid and unplanned urbanization can create economic, environmental and social issues, from sprawl and decay, to displaced communities and neglected cultural and historical sites.
The Strategy& report points out that several Middle East urban regeneration efforts are already underway, notably Jeddah’s Al Balad district and downtown Sharjah in the UAE. However, these programmes must strike a balance between improvements without gentrification, meet housing demands while preserving neighborhood aesthetics, and enhance socio-economic conditions while safeguarding their historical heritage and social fabric.
Unlike traditional development, urban regeneration must not only breathe new life into old districts that helps improve quality of life and economic opportunity, but also be financially viable for the government agencies, developers and financial institutions sponsoring these projects.
An ESG-based strategy therefore can ensure that programs conform to growing demand for ESG compliance from investors and banks while opening up further investment and financing avenues. In 2021 alone, over $1.6 trillion in sustainable debt was issued, with a third of that specifically linked to ESG targets. Additionally, by reviving decaying districts, an ESG-based strategy can also restore much-needed housing stock, commercial space and support with tourism development that many Middle East countries are seeking.
Charly Nakhoul, Partner with Strategy& Middle East, commented, “When linked to ESG principles, urban regeneration acts as a powerful tool to mitigate the common challenges of regeneration. Whether we’re talking about better infrastructure, construction efficiencies or energy efficiency, sustainability is integral to the environmental goal.”
Several nations, including Bahrain, Saudi Arabia, and the UAE, have set out net-zero strategies recognizing the significance of preserving the social fabric and engaging with communities to maintain cohesive and healthy societies.
Fady Halim, Partner with Strategy& Middle East, said, “Urban regeneration is integral to the effective management of the MENA region’s population growth. By implementing a ‘LIFE’ approach, which integrates ESG principles into urban regeneration projects, a variety of sustainability, socio-economic, cultural and quality of life goals can be achieved. These outcomes will have a lasting impact; including providing better life opportunities, fostering thriving communities, and creating financial incentives for continuous urban revival and development,” he added.
For governments across the region, urban regeneration is a social and economic imperative – their national security depends on the maintenance of cohesive societies and empowered individuals. Moreover, urban regeneration projects can only deliver these outcomes if they integrate ESG principles built around transparency, fairness, integrity, inclusion and can provide policymakers and developers with a powerful roadmap to successful regeneration and towards building sustainable urban centers of the future.
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