UAE Federal Law 11 on climate change: clock ticking for full compliance

THE UAE Federal Decree Law No. 11 of 2024 on Climate Change Mitigation and Adaptation, issued in August 2024, is a landmark step in the country’s sustainability journey. Unlike past voluntary strategies, this law is binding and enforceable. It came into effect on 28 May 2025, with full compliance required by May 2026. Penalties for non-compliance range from AED 50,000 to AED 2 million. For the real estate sector, a major contributor to emissions, this marks a turning point, as global climate commitments are embedded into enforceable domestic law.

The law directly links to global climate obligations:
■ Paris Agreement (2015): UAE actions must align with its Nationally Determined Contributions (NDCs)
■ UAE NDC (2023): 40% emissions reduction target by 2030
■ Net Zero by 2050 Initiative: Now legally reinforced
■ COP28 Legacy: UAE strengthens its role as a hub for climate compliance and carbon markets

For the real estate sector, this means binding requirements for emissions reduction, adaptation planning and verified reporting

Dr Samiullah Khan: Law No. 11 promotes alignment with international climate frameworks planning and verified reporting.

CORE COMPLIANCE MECHANISMS

Monitoring, Reporting and Verification (MRV) – Article 6

■ Companies must prepare auditable emissions inventories
■ Records must be registry-verifiable and stored for five years
■ Real estate must track wholebuilding emissions, including Scope 1 and Scope 2
■ Digital systems with sensors and AI tools will be needed

Mitigation Obligations – Article 4

■ Clean energy procurement
■ Efficiency upgrades and retrofits
■ Waste management and recycling
■ Carbon offsets retired in the national registry This shifts compliance from formality to active decarbonisation.

Adaptation and Resilience – Article 7

■ Projects must address risks like flooding and heat stress
■ Insurers will model climate losses, affecting property values
■ Climate risks must be factored into valuations and financing

Incentives and Market Instruments – Article 10

■ National Carbon Credit Registry: All offsets and certificates must be retired here
■ Carbon Pricing: Firms must factor costs of CO2 into project economics
■ Carbon Trading: Creates new financial opportunities for early movers

Virtual PPAs: From Voluntary to Mandatory

■ Virtual Power Purchase Agreements (VPPAs), once voluntary CSR tools, are now compliance instruments
■ Recognised as a pathway for clean energy procurement
■ Certificates must be retired in the national registry
■ Contracts must clearly define responsibility for certificate retirement

CFOs must treat carbon exposure like financial debt in reporting and financing.

RISK LANDSCAPE UNDER THE LAW

Real estate must adopt robust contracts and align sustainability with legal and finance teams.

MARKET IMPLICATIONS FOR REAL ESTATE

■ Clean Energy Demand: Legally required procurement creates stable demand.
■ Premium for Compliance: Verified low-carbon projects gain higher valuations
■ Finance & Insurance Integration: Banks and insurers will favour climate-ready assets
■ Asset Differentiation: Compliant properties will gain value, while non-compliant ones risk “brown discounts”

CONCLUSION: REAL ESTATE AS A NET-ZERO ENABLER

Federal Law No. 11 makes climate compliance a license to operate. For the real estate sector, the next 18 months are crucial:
■ May 2025: Enforcement begins
■ May 2026: Penalties apply

The sector now plays a dual role, as both a compliance subject and a driver of net zero. Properties that are low-carbon, resilient and registry-verified will attract green finance and international investors.

At Fakhruddin Properties, we see this as a paradigm shift: The future of real estate is no longer about square metres, but about carbon meters and resilience scores.

The writer is Chief Sustainability Officer, Fakhruddin Properties. He may be contacted at <k.sam@fakhruddin.ae>