Sustainability rising up agenda for real estate investors

European real estate investors are increasingly considering sustainability when developing or investing in new buildings, and also recognise the benefits of real estate with a green certification scheme.

The findings, published in a report called Towards a Greener Future, come from a survey conducted by international law firm DLA Piper. Survey responses found that market demand from occupiers – rather than issues such as government legislation – was the driving force behind delivering sustainable real estate.

Sustainability has become a key issue for occupiers who are thinking about energy efficiency and their carbon footprint and this is impacting on investors.

Some 71% of investors said they would be willing to incur higher investment costs for sustainable real estate. Respondents recognised that sustainability could have a positive impact on capital and income, operational costs, rents and brand reputation.

One respondent, Christophe Garot, head of environmental sustainability at Unibail-Radamco, commented, “At Unibail-Radamco sustainability is seen as a competitive advantage; accelerating differentiation, creating new business opportunities and sustaining the group’s economic performance in the long-term.”

According to the report, real estate is responsible for the majority of Europe’s carbon emissions. As a result, the industry embracing sustainable practices and reducing pollution could have a significant impact on Europe’s overall emission targets.

Some 88% of survey participants said they consider green certification to be important when developing or investing in new buildings.

However, concerns around the number of schemes available were raised and many said they wanted a single certification scheme that allows for a ‘level playing field’ for comparisons and benchmarking.

Olaf Schmidt, co-head of DLA Piper’s real estate practice, said, “We have witnessed the growth in interest in sustainable real estate across the continent.

“Our survey confirms that investors – particularly those involved with cross-border transactions – would welcome a harmonisation of certification standards to facilitate further take up of sustainable practices and engender transparency of performance standards.”

When asked to rank five certification bodies in terms of preference, 60% stated they favoured BREEAM. LEED and DGNG were also popular.

Responding to the survey, Tim Schomberg of Catella Real Estate AG said, “Green building standards will play a crucial role in the future. Faced with increasing sustainability regulations and the increasing importance of green building issues, investment managers need assets that are environmentally friendly and resource-efficient.

“However, the industry yet lacks a common definition of what establishes a green building.”

Further reading:

Government spends £63m buying homes affected by HS2 plans

Mythbusting on sustainable homes

Government to review impact of energy infrastructure on house prices

Claims that wind farms knock a third off house prices refuted

The Guide to Sustainable Homes 2013