The European real estate sector appears to be ahead of other regions in terms of sustainability and decarbonization. But the path is difficult and large, dark shadows still loom over them. The most important one is at the bottom of the system. While the demand for greener buildings is increasing, the biggest problems with the construction itself remain. “Carbon emissions from the construction sector remain at historic highs,” says a RICS study published this Wednesday, coinciding with the celebration of the COP28 climate summit. “The sector is not yet on the path to decarbonization in 2050,” concludes one of the most prestigious associations of real estate professionals in the world (which is also dedicated to issuing certificates of good practices).
The London-based association’s new sustainability report is based on a survey in which 4,600 professionals from around the world took part. The starting point is that buildings are responsible for 40% of global emissions. For this reason, the United Nations has called for a significant reduction in these emissions until neutrality is achieved in 2050. So I asked her for her perspective on this topic.
First of all, most assure that the demand for environmentally friendly properties is growing. The difference between those who believe this and those who think otherwise is 44 points, which corresponds to events in 2022 and 2021. “This suggests that the appetite for green buildings continues to grow worldwide,” the study authors state. However, this difference is not the same everywhere. In Europe (excluding the United Kingdom, which is the only national market analyzed separately due to the British origin of the organization), it scores 73 points, while in America it does not reach 30 points.
Respondents were also asked whether they thought an efficient building had higher value or enabled higher rents. Again, the most positive response (27% said the impact was significant) was from Europe. Some of the most sought-after features worldwide include energy efficiency, green certification, indoor air quality and temperature, and water use efficiency. And there the regional differences in accents are noticeable: the first aspects are more appreciated by European professionals both from the point of view of investors and from the point of view of tenants, while the rationalization of water supply stands out in the answers of respondents from the Central East .
Apart from the climatic conditions, the study finds another important reason that explains the different sensitivity towards the issue. “The analysis suggests that policy measures could play an important role,” the report said. In this sense, he emphasizes that “Europe’s slightly more robust figures could be a response to the European Commission’s ambitious legislation”, which requires all new buildings to be emissions neutral by 2028 and has brought this target forward to 2026 for public buildings. But other initiatives related to building certification (a business that is clearly of interest to RICS) also stand out, both in the Middle East and in Singapore.
On the negative side, the “barriers” that prevent faster progress stand out. They are essentially financial, with respondents citing higher costs and uncertainty about returns as three reasons potential investors in sustainable buildings fear. Although the biggest flaw in the report is essentially that it shifts the focus from the so-called commercial real estate sector (i.e. the business of buying and selling buildings or generating income from them) to the construction sector. More than half of respondents answered that their companies do not measure the price of carbon emissions that their activities entail, a measure seen as a fundamental measure on the path to climate neutrality.
In addition, regional differences are reduced. That means the outlook is discouraging everywhere. “Globally, just over a quarter of respondents believe government emissions pricing policies could be effective in curbing greenhouse gases and managing climate risks,” the RICS report said. And only half responded that demand for recyclable and reusable materials has increased over the past year, while the other half believe it has stagnated or even declined. “The sustainability report is a wake-up call for our industry: we are making progress, but not enough to achieve zero emissions by 2050,” summarizes the institution’s president, Tina Paillet, in the introduction. “In fact, what characterizes the picture is that the industry is hesitant to pursue a lower carbon future,” he adds.
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