In Europe, Investors Are Seeking Green Real Estate Strategies, Not Simply Sustainability Certifications

In Europe, Investors Are Seeking Green Real Estate Strategies, Not Simply Sustainability Certifications

In addition to presenting some important insights about the current state of the European green real estate market, a recent survey of property owners in France, Germany, and the United Kingdom concludes that investors are most interested in identifying green-related opportunities at the portfolio level.

• byStephen Del Percio
• on November 27, 2012
• inEurope, Green Real Estate Finance
• Leave a comment

According to a recent survey performed by the German cooperative bank fund Union Investment, the embattled continent’s real estate investment community is “not interested in simple sustainability certifications for individual assets, but are moving on to full-blown green real estate strategies” across entire portfolios and companies. These results echo those from a few years ago in a survey prepared by RICS, which concluded that investors are more interested in specific energy performance metrics rather than individual third-party certifications.
Union’s results were published in a recent issue of Property Investor Europe News, and came from surveying 172 property investors in Germany (75), France (50), and the United Kingdom (47). The survey required that participating companies only self-use 50 percent or less of their total real estate portfolios and its conclusions are interesting for those of us on the other side of the Atlantic, given that Europe has generally trended ahead of North America in terms of thinking about sustainability issues connected to real estate.

• First, for 35 percent of respondents, green leases have become “more relevant;” according to PIE, this is “an especially strong trend in France,” where 68 percent of respondents agreed. This result is likely because of the Grenelle environmental legislation that we’ve discussed here previously and requires landlords to incorporate an environmental appendix into most commercial office leases.

• 62 percent agreed that green maintenance has increased in importance; 39 percent actively look for green service providers; and 34 percent of respondents offer building metric data – energy consumption, lifecycle costs, and waste volume – at a portfolio level: an increase from 25 percent last year.

• Also at the corporate level, 34 percent of respondents have incorporated a sustainability program into their overall corporate social responsibility strategy; 31 percent have a sustainability strategy for their overall portfolio; and 36 percent produce a sustainability report (49 percent in the United Kingdom).

• Given Europe’s more acute energy challenges, it’s perhaps not surprising that for 58 percent of respondents overall energy consumption remains the most important metric in considering how “sustainable” an individual property may be. In France, that figure swelled to 72 percent. But only 36 percent of respondents answered the same question by ranking a property’s carbon footprint or use of renewable energy resources as most important.

The survey also yielded some interesting attitudes about green buildings and sustainability within real estate generally. For example, although 50 percent of respondents agreed that green buildings have the potential to become an asset class of their own, less than 50 percent agreed that a market for green buildings has already emerged within their respective country. Perhaps of most interest to USGBC and other third-party organizations that certify the environmental performance of buildings, less than 20 percent of respondents agreed that there are “clear evaluation criteria for sustainable buildings.”
On the other hand, over 60 percent agreed that “user behavior has a significant impact on the environmental performance of a building” and that “transparency is not possible without benchmarking ” This latter conclusion should be of interest to those of us here in New York City, where mandatory benchmarking for both public and private sector buildings has already resulted in some important reports and other conclusions that ought to assist in driving building performance higher in the months ahead.
A fully copy of the survey results is available for download here.