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  • October 2022
  • Case
  • HBS Case Collection

Masdar City: Aiming for Sustainable and Profitable Real Estate

By: Boris Vallee and Fares Khrais
  • Format:Print
  • | Language:English
  • | Pages:47
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Abstract

Masdar City broke ground in 2008 and was conceived by the Abu Dhabi government to be an international beacon of innovation in sustainable energy and real estate. It was also to be a profitable investment for the government. At first glance, the two goals pulled in opposite directions as conventional wisdom at the time claimed that building sustainably inevitably came at a premium. Over time, with each new project, Masdar learned more on how to balance building sustainably with being profitable. Masdar had financed all of its developments through equity but in 2020 was considering using debt for the first time through a “Green REIT” that was to be made up of a selection of Masdar’s own properties. The question was how would this affect Masdar’s ability to innovate, complete building the city, and continue to balance sustainability and cost. The case chronicles Masdar’s learning journey with each of its major developments from inception to 2020 and provides students an opportunity to understand the thought processes, inner workings, and design approaches that Masdar followed in the pursuit of balancing cost and sustainability. It also allows students to consider different approaches to financing a real estate development and the implications those approaches can have.

Keywords

Analysis; Green Building; Business Growth And Maturation; Decisions; Public Sector; Financial Crisis; Construction; Climate Change; Green Technology; Borrowing And Debt; Corporate Finance; Capital; Capital Budgeting; Capital Structure; Cost Of Capital; Equity; REIT; Financial Management; Financial Strategy; Initial Public Offering; Innovation; Growth And Development Strategy; Emerging Markets; Urban Development; Middle East; United Arab Emirates; Sustainable Cities; Green Buildings; Business and Government Relations; Decision Choices and Conditions; Financing and Loans; Real Estate Industry; Construction Industry; Energy Industry; Green Technology Industry; Abu Dhabi

Citation

Vallee, Boris, and Fares Khrais. "Masdar City: Aiming for Sustainable and Profitable Real Estate." Harvard Business School Case 223-036, October 2022.
  • Educators

About The Author

Boris Vallee

Finance
→More Publications

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More from the Authors
  • Women in the Saudi Arabian Workforce By: Sandra J. Sucher, Fares Khrais, Shalene Gupta and Menna Hassan
  • Can Finance Save the World? Measurement and Effects of Coal Divestment Policies by Banks By: Daniel Green and Boris Vallée
  • Arçelik (A), (B): From a Dealer Network to an Omnichannel Experience By: Ayelet Israeli, Fares Khrais and Menna Hassan
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