18 Jan 2013 10:00
- Sustainable properties increasingly commanding higher rents and values
- Regulation “forcing” people to make buildings greener
- Green Deal could accelerate business retro-fitting
Refurbishing existing buildings to new standards turning them into good green assets has been identified as one of the best bets for the property sector in the year ahead, according to industry investors.
The findings, published in Emerging Trends in Real Estate® Europe 2013, published jointly by the Urban Land Institute and PwC show 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.
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.
The survey of industry leaders across Europe found the move to ‘reactivate assets’ – refurbish good properties with green credentials - is taking hold. One interviewee described refurbishing buildings with green credentials as “the only things tenants want to talk about.”
Interviewees, including Real Estate Investment Trusts, residential developers, banks, and investors, say environmental concerns are now intrinsic to their plans. For investors in particular, the green agenda is now tied to refinancing risks, meaning sustainability continues to rise up their agenda.
Sustainability was identified by 96% of respondents as a top business issue for industry in 2013, with 38% saying it will increase in importance again in the year ahead. Amongst other findings:
- 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.
In the UK, Paul Davies, partner, PwC, 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.”
The report found that sentiment in the real estate industry is more positive than it has been since 2008, despite continuing uncertainty about the macro economic outlook. While most sectors are facing pressure from changing occupational trends, the report finds there are angles for those prepared to think laterally, as technology, sustainability and demographics reshape the built environment.
Notes to Editors:
1. Emerging Trends in Real Estate® Europe is a joint report published annually since 2003 by the Urban Land Institute (ULI) and Pricewaterhouse Cooper (PwC). The report provides an outlook on European real estate investment and development trends, real estate finance and capital markets, as well as trends by property sector and geographical area. It is based on the opinions of more than 500 internationally renowned real estate professionals, including investors, developers, lenders, agents and consultants. Analysis from Dirk Brouen, professor of real estate economics at Tilburg University, which compares actual IPD property market performance data with past Emerging Trends predictions, demonstrates that the report has correctly predicted what the overall trend for European real estate would be in eight out of the past 10 years.
2. The Urban Land Institute (www.uli.org) is a global nonprofit education and research institute supported by its members. Its mission is to provide leadership in the responsible use of land and in creating and sustaining thriving communities worldwide. Established in 1936, the Institute has nearly 30,000 members representing all aspects of land use and development disciplines.
For more information contact:
PwC firms provide industry-focused assurance, tax and advisory services to enhance value for their clients. More than 161,000 people in 154 countries in firms across the PwC network share their thinking, experience and solutions to develop fresh perspectives and practical advice. See pwc.com for more information.