Sustainable buildings: Optimizing lifecycle costs becoming more important to investors (EUR)

When evaluating the sustainability of properties, it seems that investors still have to live with a lack of precise data. Although there is an emerging set of metrics in Europe which companies use to examine the ecological sustainability of their real estate holdings, just 20% of European real estate professionals feel there are clear evaluation criteria for sustainable buildings in their respective countries.

That is the conclusion of a follow-up study commissioned by Union Investment and involving a representative sample of 167 property investors in Germany, France and the UK. Interestingly, compared to last year's survey an already low value has fallen by a further 5 percentage points.

There have also been major changes to the ranking of key metrics used by investors to assess the sustainability of their properties. Calculation of lifecycle costs came second after primary energy consumption, which was rated as a "particularly important metric" by 83% of those polled. A total of 67% of investors (prior year: 58%) attach particularly high significance to lifecycle costs. Awareness of the need for active management and optimization of lifecycle costs grew particularly strongly among German property investors (80% agreement) last year. In the UK and France, the lifecycle costs metric is rated as important by a significantly smaller number, namely 64% and 46% respectively.

However, there was little change in how real estate companies present these metrics. 74% of the real estate companies surveyed compile the metrics on a per-building basis, 32% present them by usage category. Only a small number of companies have full metrics covering entire portfolios: just 25% of investors present metrics on a portfolio basis.

Sustainability nonetheless remains a prominent factor in the strategies of European property investors. 60% of investors taking part in the Union Investment survey stated that they intend to invest significantly more in sustainable properties in the future. That is particularly true of institutional investors, such as insurance companies and pension funds, who said they intended to invest above-average amounts.

Updating existing properties with regard to sustainability ranks roughly equal with investors alongside developing new green buildings. Another finding of the survey is that fewer than 10% of those polled report banks offering favorable terms when granting loans for sustainable buildings.

Source: Union Investment

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