Property investors are targeting green refurbishments in a bid to reduce risk and increase income according to new research.
Emerging Trends in Real Estate Europe 2013, published by the Urban Land Institute (ULI) and PricewaterhouseCoopers (PwC), says lenders increasingly see green buildings as a way of reducing refinancing risk. Respondents reported that sustainability credentials in real estate help maximize finance, mitigate obsolescence and underpin security of income.
Through interviews with real estate investment trusts, residential developers, banks and investors, 96% of respondents said sustainability was a top business issue for the industry in 2013, with 38% saying it will increase in importance again in the year ahead. Other findings include:
- 96% of fund/investment managers, and 95% of banks/lenders said sustainability will have an impact on their real estate business this year.
- 100% of residential land/homebuilders say it will have an impact on their business this year. Over two thirds say it will increase its impact.
The report also claims that sustainable properties are increasingly commanding higher rents and values, as governments move to force companies to increase building’s energy efficiency and reduce their environmental footprint, so as to avoid potential environmental regulation linked to energy usage.
Paul Davies, a partner at PwC in the UK and a specialist in the Green Deal, said the launch of the new government scheme could accelerate retro fit interest, transforming the profile of the property sector’s legacy building stock. “There’s no doubt that environmentally sound properties will attract the best tenants and score plus points with lenders and investors. The Green Deal scheme is a great opportunity for businesses to make the investment cost – neutral, with increased energy efficiency being matched by a reduction in energy needs.”
Malcolm Preston, global lead, sustainability & climate change, PwC said: “The property sector’s view of sustainability is maturing. The next stage of the debate is a conversation not just about the environmental performance of the building, but the role the buildings play in the economic growth and social well-being of the communities around it. It’s sustainability in its broadest sense.”