MENA’s next real-estate test may not be the tallest tower or smartest city, but whether buildings remain commercially viable as temperatures rise towards 50°C.
MENA’s construction boom is measured in towers, new cities and billions of dollars of investment. Rising temperatures are introducing another measure of value: what those buildings will cost to operate.
Electricity demand across the Middle East and North Africa tripled between 2000 and 2024 and is projected to rise another 50% by 2035. Cooling already accounts for nearly half of regional peak electricity demand, while cooling and desalination together are expected to generate close to 40% of additional demand through 2035.
Average temperatures in MENA are rising at more than twice the global rate, according to the International Energy Agency, while summer temperatures regularly exceed 40°C. For real estate, cooling is becoming not simply an environmental consideration but an economic one.
The question is no longer merely whether a building is green. Will it remain financially viable to own and operate as temperatures rise?
The First Investment Is the Building Itself
The cheapest cooling is heat that never enters the building.
Research covering three residential building types across 46 locations in Saudi Arabia found that applying Saudi Building Code envelope requirements reduced energy-use intensity by as much as 45%.
A separate study of a villa in Najran found that measures including insulated walls and roofs, low-emissivity glazing and improved airtightness reduced total energy consumption by 37.8%.
In a region where cooling dominates summer electricity peaks, such differences can materially alter the lifetime operating economics of a property.
That exposes a crucial real-estate distinction: CapEx versus OpEx.
A developer can reduce upfront expenditure by economising on insulation, glazing or façade performance. But the resulting cooling bill is paid by the owner or tenant for years.
Poor building performance does not eliminate cooling costs. It transfers them from construction budgets to operating budgets.
For property investors, those operating-cost differences may eventually become valuation differences. Buildings requiring expensive cooling or substantial retrofits could face higher service charges, weaker tenant demand and greater capital requirements than comparable heat-resilient properties.
Over time, those differences could feed into occupancy, rents, valuations and investment yields.
Dubai Turns Cooling Into Infrastructure
At city scale, the economics change.
Dubai has developed district cooling alongside its rapid real-estate expansion. Empower ended 2025 with connected capacity of about 1.7mn refrigeration tonnes, serving 1,747 buildings through 90 district-cooling plants and more than 430km of distribution pipelines.
For developers, district cooling shifts part of the cooling requirement from individual building systems towards shared, utility-like infrastructure, making cooling capacity part of the economics of an entire development.
But the model also highlights differences across MENA.
Large district-cooling networks require substantial capital, sufficient development density and long-term infrastructure planning. Gulf markets have generally been better positioned to deploy them at scale, while more capital-constrained economies may need to place greater emphasis on building efficiency, regulation and passive design.
Egypt Shows the Cost of Constrained Capital
Egypt faces a different equation.
Rising demand for space cooling is expected to place increasing pressure on the country’s electricity system, particularly during summer peaks.
Egypt adopted ES 8523-2/2025, an explanatory standard supporting assessment of the thermal, solar and daylight properties of building components. The Egyptian Organization for Standardization classifies it as non-obligatory.
The distinction illustrates a broader challenge: translating technical standards into consistently higher building performance.
Improving building performance requires capital upfront, while much of the return accrues later to owners or tenants through lower operating costs — weakening developers’ incentive to absorb additional construction costs. Households, meanwhile, may lack the capital to finance substantial retrofits.
The result is a financing mismatch: developers seek to contain CapEx, occupants inherit higher OpEx, and the electricity system ultimately absorbs the aggregate effect through higher peak demand.
The implications extend beyond individual properties.
MENA power-sector investment reached $44bn in 2024 and is projected to rise another 50% by 2035, according to the IEA. Grid investment is expected to account for close to 40% of total power-sector investment over the next decade.
Building efficiency is therefore not merely a property-level calculation. At sufficient scale, lower building demand could reduce pressure on the generation and grid investment needed to accommodate rising electricity peaks.
The Building Is Not the Whole City
Technology is not always the first answer.
At Wadi Sabarah in Marsa Alam, architect Karim El Kafrawi used thick local-stone walls, shading and natural airflow to reduce dependence on mechanical cooling — an example of how passive design can lower cooling requirements.
Such techniques are harder to replicate in dense high-rise developments, while even efficient buildings remain exposed to the thermal conditions of the neighbourhood around them.
Concrete, asphalt and other heat-absorbing surfaces can intensify the urban heat-island effect, raising local temperatures and cooling requirements.
Climate-resilient real estate therefore has to address the building, the block and the city — not simply the air conditioner inside the apartment.
The 50°C Test
MENA cannot solve rising heat simply by installing more air conditioners.
The average efficiency rating of air conditioners in the region is less than half that of the average unit in Japan, according to the IEA. Improving AC efficiency could avoid 35GW of peak electricity-demand growth by 2035 — roughly equivalent to Iraq’s current total power-generation capacity.
But more efficient machines cannot indefinitely compensate for inefficient buildings.
For investors, developers and policymakers, the equation is increasingly straightforward:
Lower CapEx today can create higher OpEx tomorrow. Higher resilience today can help protect asset value and reduce future infrastructure costs.
That is the 50°C Test: whether a building can remain comfortable, commercially viable and valuable as temperatures — and cooling costs — rise.
MENA does not need to wait until temperatures reach 50°C to find out.
Because in a hotter region, the building that costs less to construct may ultimately be the building that costs more to own.
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Climate Change and Food Security in the MENA Region
Tree Felling: Between Economic Necessity and Environmental Responsibility
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