One in five surveyors globally believe that 90% of the commercial real estate stock will still fall short of meeting good sustainable standards by 2020 without rethink of green incentives, says the RICS survey of commercial property agents released today (May 28, 2010).
Despite the general view that new buildings are meeting better standards, with new stock typically representing only 1-2 percent of existing supply in any one year, the survey of agents highlights the immense challenges that governments face in putting idealistic real estate plans into action on a global scale. RICS believes that an urgent rethink to incentivise the refurbishment of existing stock should be seen as a top priority over the coming decade.
The challenges appear bigger in the developing markets with agents in Africa and the Middle East, similarly pessimistic about meeting relatively modest targets within the next decade. Interestingly, agents in Emerging Asia and Emerging Europe were less pessimistic and more in line with the view in developed economies.
The survey also found that most types of occupiers are starting to implement greater measures of sustainability with regard to their real estate requirements with the biggest growth seen in the office sector, especially in Europe, ahead of industrial and the retail sector respectively. Indeed, professional firms were reported to be leading the way in terms of implementing sustainable solutions, slightly ahead of the media industry and government occupiers in Q1 2010.
Agents feel that small firms (less than 50 employees) are facing bigger challenges in implementing sustainable real estate solutions with this category a notable exception to the overall trend of greater implementation. This was the only category where declines in implementation were reported in the first quarter of 2010 compared to Q4 2009.
Commenting on the survey results, RICS Global Head of Sustainability Policy, Ursula Hartenberger said:"The findings of the survey clearly indicate that governments worldwide have a key role to play in providing the right sort of fiscal and direct incentives to raise the quality of the real estate stock. This will send the right signals to sceptical investors who still remain concerned that the benefits of sustainable property do not outweigh the upfront investment costs.
Crucially, developing government policies which incentivise the refurbishment of the existing stock may reap the greatest benefits in the coming decade. With mounting environmental legislation likely to affect the real estate sector worldwide, smart forward-thinking investment is simply risk-proofing the sector for