For 2020, we have identified three key environmental trends for real estate:
Environmental legislation is putting mounting pressure on the real estate sector across the continent. A survey of European countries identified more than 1,500 national measures aimed at mitigating climate change in ways connected to real estate – and we can expect this to increase over the next decade.
Investors are cautious
Investors are still waiting for occupiers to confirm a strong demand for ‘green’ properties. Investment managers are increasingly aware that long-term profitability will suffer if they are not able to include climate risk in their pricing, but they do not necessarily understand climate risk well enough to accurately price in climate-oriented features. As with electric cars or organic vegetables, people want these and know they should have them – but they don’t necessarily want to pay for them.
Data is helping assess climate risk
Various technologies are emerging to help investors price properties with climate features more accurately. These tools analyse the vulnerability of assets to climate risks, as well as the impact of such risks on market value; data is then used to guide the programming, planning and costing of necessary mitigation work, alongside an estimate of the consequent financial impact.
In our Environment Outlook report, we further examine how the industry is tackling environmental issues – and what impact these are having on valuation.