Ashok Jha

As the world continues to grapple with an ever-shifting economic landscape, owing to the COVID-19 pandemic, stakeholders in the building sector across the GCC region have observed how the pandemic has triggered an evaluation and reassessment of priorities. Ashok Jha, Head FM and Retrofit Projects, Universal Voltas, points out that the unprecedented disruption caused by COVID-19 has prompted many organisations to take actions they have been putting off for some time, including launching new digital services and evolving their business models, enabling greater flexibility in their working and implementing cost optimisation measures.

However, Jha says, perhaps the most notable trend would be the move towards a greater number of retrofit projects in the region. “Because of the COVID-19 pandemic, the oil prices plummeted to one of the lowest levels and government revenues went down in the GCC region,” he says. “This has led to reduced spending across all sectors, including new construction, with the current market seeing greater push towards shallow retrofitting, deep retrofitting, energy conservation and reducing the building carbon footprint in the existing buildings to make them more sustainable.” Jha says that since the number of existing buildings in Oman, Kuwait and the UAE is very high compared to new buildings, there was also a need to address the physical deterioration of the buildings, due to functional and economic obsolescence, and to make them more sustainable. “Because of this, there is a surge in demand for the retrofitting of the existing buildings across the GCC region,” he says (see sidebar).

Andrea Di Gregorio

Andrea Di Gregorio, Executive Director, Reem, Ras Al Khaimah Municipality, also believes the region is poised to see a strong pipeline of retrofit projects. “More focus is being put in refurbishing existing buildings, to bring them up-to-speed with the latest best practices in sustainability,” he says. “We see an increase in interest from building owners in retrofit activities, and we expect this interest to further increase throughout 2021 and in the coming years.”

Energy efficiency and sustainability 

Another major driver for retrofits is the move towards energy efficient and sustainable practices, which has long been heralded by experts in the sector. Jha points out that because of the detrimental impact of buildings on the environment, with occupied buildings and the construction sector accounting for 36% of the global energy consumption and nearly 40% of total direct and indirect CO2 emissions according to International Energy Agency (IEA), the UAE has begun to actively transition into smart and sustainable cities, which has turned the focus on the energy efficiency of the buildings, specifically existing ones. 

In addition to its impact on overall sustainability efforts, much of the move can be attributed to growing awareness on return of investment in terms of reduced operational cost. As Jha points out, retrofitting primarily refers to the measures being taken to replace legacy energy and utility systems with new and energy-efficient technologies. “These technologies not only reduce energy consumption and decrease carbon emissions but also lower maintenance costs, improve safety, enhance productivity, boost property valuations and also prolong the useful life of the assets and the building as a whole,” he says. “In a nutshell, we can say that OPEX of the building reduces and the asset value increases. Hence, it is becoming important day by day to retrofit buildings to not only make them more sustainable for the future but also to derive economical value by reducing the operational cost and, in turn, optimise the rentals and make them more lucrative for the tenants.”

Weighing in, Di Gregorio says that sustainable buildings often result in lower life cycle cost of the building itself. “If sustainability features are carefully selected, operational savings – in terms of energy and water usage and equipment maintenance – typically exceed any incremental investments that those features require,” he says. “For this reason, in a perfect market, where developers are able to fairly monetise their investments in higher quality buildings, we would expect for tenants any rent premiums for more sustainable buildings to be exceeded by the value of operational savings.”

Jha adds that as energy prices continue to rise, the relative benefits of energy efficiency will become increasingly important, and this is leading to a huge surge in demand for equipment, such as Smart LED lights and motion sensors, air curtains and FAHUs, energy-efficient AHUs, FCUs or split units and VAV systems. This has also led to greater demand for water usage reduction through the use of low-flow fixtures, sensors, waterless urinals and low-flush WCs, and also for photovoltaic panels on rooftops to generate electricity from the solar power, among other solutions. 

A renewed focus on IAQ 

While the return on investment (ROI) from retrofitting for energy efficiency is becoming clear, stakeholders are hopeful that the new wave of retrofits would also accommodate enhancements of indoor air quality (IAQ), which has been typically overlooked over the past years. Di Gregorio says that he believes this would be the case. “There is increasing interest in IAQ, partly driven by COVID-19 concerns,” he says. “Some awareness and technical barriers are there; nonetheless we foresee development in this area in the future.”

Jha shares a similar opinion. He says: “Fear of pandemic is looming large in the minds of the people, and therefore, while carrying out the retrofitting of their buildings, owners are ensuring that retrofit projects also take into consideration IAQ of the buildings, where people are currently spending more than 90% of their time and also to reduce the chances of contamination through virus, bacteria, moulds and fungi.”

Di Gregorio says there is a lot of focus on safety and security from building owners, particularly in what concerns disinfection of common areas. “This sometimes adds to other measures, like filtration, turning into improved air quality,” he says. Jha adds that some of the measures that building owners are taking include Demand Control Ventilation through C02 sensors, fitting volume control dampers, ultraviolet lamps in AHUs, ultraviolet germicide irradiation and MERV 13/14 filters. He further adds that there has been an increase in the use of humidifiers and dehumidifiers to maintain humidity in the range of 40-60%, where the microbial and fungal growth is minimal.

Jha also says that the majority of the offices are allowing their staff to work from home and that people are spending more than 90% of their time indoors. “This further necessitates that apt measures are taken by the occupants to ensure proper lux levels, ergonomics and IAQ, as these will have a profound impact on their health and wellbeing and, in turn, impact their productivity,” he says. “Hence, there cannot be a better time than now to address the Indoor Environment Quality (IEQ) issues, if any.” Jha says these are the factors driving a lot of investment being done by the property owners in the built-environment to retrofit their buildings to ensure proper IAQ against the traditional retrofit, where emphasis was mainly towards energy efficiency.

Making a case for retrofits 

Keeping in mind the tangible and intangible benefits of retrofitting, Di Gregorio believes there is more than enough evidence to drive building owners to invest in such initiatives. “If building owners are not thinking about retrofits, they definitely should!” he says. “Retrofit projects tend to have very favourable returns. We are observing that for comprehensive retrofits of commercial buildings in Ras Al Khaimah, the payback time is 3-5 years. And the contracting standards that are being adopted often provide forms of guarantees for the investor on those returns.”

Jha, agreeing, says that in spite of the change in the occupancy profile of buildings, property owners must continue to retrofit within the built-environment. “Retrofitting of existing buildings offers tremendous opportunities for improving asset performance in terms of utilities,” he says. “Retrofitting also offers a potential upside in the overall performance of the building through improved energy efficiency, increased staff productivity, reduced maintenance costs, and better thermal comfort.” Jha believes that such key drivers should serve as a motivation and incentive for building owners, who are on the fence about investing in retrofit projects.