Two studies carried out recently by the real estate consultancy CBRE on Environmental, Social and Governance (ESG), reveal that 83% of investors foresee an increase in the demand for sustainable buildings.
According to them, “zero carbon/energy saving” goals are the new norm, which puts pressure on building owners, operators and occupants to reduce their carbon footprint.
“While efforts to reduce carbon may not generate higher returns on investment, they will play an important role in preserving heritage value as occupants increasingly avoid sub-standard properties. Green leases between owners and tenants, for the fulfillment of certain environmental goals, will become a more common tool for investors to monitor and boost the environmental performance of their real estate assets”, stresses CBRE, noting that the gap between ‘green premium’ and ‘brown discount’ in leasing is on the rise.
The document states that there is sufficient evidence that green buildings generate higher returns than comparable non-green properties, indicating considerable potential for a ‘brown discount’ in properties with a relatively lower environmental performance. The revenue impact for investors is that eco-buildings generate higher rents and capital values, while incurring lower monthly operating and maintenance costs.
The construction industry is responsible for almost 40% of global annual carbon emissions, and the production of cement and steel represents approximately 5% each. Thus, viable alternatives, such as wood, are more ecological, due to carbon fixation. The costs of construction in wood vary according to the type of property, but, on average, they are equal to or less than those of construction with conventional materials.
Source: Executive Digest