The European real estate sector seems to be ahead of the rest of the regions in terms of sustainability and decarbonisation. But the road is arduous and they are still crossed by great dark shadows. The main one appears at the very base of the system. While the demand for greener buildings is progressing, it is in the construction itself that the biggest problems persist. "Carbon dioxide emissions in the construction sector remain at record highs," says a RICS study published on Wednesday, coinciding with the COP28 climate summit. "The sector is not yet on track to achieve decarbonisation by 2050", completes what is one of the most prestigious associations of real estate professionals in the world (and also dedicated to issuing certificates of good practice).
The London-based association's new Sustainability Report is based on a survey of 4,600 professionals from around the world. The starting point is that buildings are responsible for 40% of global emissions and that is why the United Nations has called for a significant reduction in these to reach neutrality by 2050. Hence, I ask them about their perceptions of the matter.
To begin with, most of them say that the demand for environmentally friendly properties is growing. The difference between those who believe this and those who think otherwise is 44 points, in line with what happened in 2022 and 2021. "This suggests that the appetite for green buildings continues to grow around the world," the study authors write. But that difference isn't equally large everywhere. In Europe (excluding the United Kingdom, which is the only national market that is analysed separately, due to the British origin of the organisation) it reaches 73 points, while in America it does not reach 30.
Respondents were also asked whether they believed an efficient building has more value or allows for higher rents, and again the most positive response (27% said the impact is significant) was in Europe. Among the most demanded features, at a global level, are energy efficiency, having a green certificate, indoor air quality and temperature, and efficiency in the use of water. And there the regional differences are noticeable in the accents: the first aspects are more valued by European professionals, both from the investment point of view and from the tenant point of view, while the rationalization of water stands out in the answers given by the respondents from the Middle East.
Aside from climatic conditions, the study finds another powerful reason to explain the different sensitivities to the issue. "The analysis suggests that policies may be playing an important role," the report said. In this sense, he highlights that "the slightly more robust numbers in Europe could respond to the ambitious legislation of the European Commission", which requires all new construction to be neutral in emissions by 2028 and has brought forward that target for public buildings to 2026. But there are also other initiatives related to building certification (a business that RICS is obviously interested in) both in the Middle East and in Singapore.
On the negative side, the "barriers" that prevent faster progress are highlighted. Basically, they are financial, as the three causes cited by respondents are that potential investors in sustainable buildings are wary of higher costs and uncertainty about the return they will obtain. However, the biggest blur in the report comes mainly by shifting the focus from what is known as commercial real estate (i.e., the business of buying and selling buildings or obtaining rents from them) to construction. More than half of those surveyed responded that their companies do not measure the price of carbon emissions involved in their activity, a measure considered essential to move towards climate neutrality.
In this, moreover, regional differences are reduced. In other words, the outlook is discouraging everywhere. "Globally, just over a quarter of respondents believe that government policies on the price of emissions could be effective in curbing greenhouse gases and managing climate risks," the RICS report states. And only half responded that demand for recyclables and reusables has increased in the past year, compared to another half who 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 reach zero emissions by 2050," summarises the institution's president, Tina Paillet, in the introduction. " In fact, the picture is one of an industry reluctant to pursue a lower-carbon future," he adds.
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