Sustainability
Impact of sustainability on residential value.
On what three levels does sustainability impact?
The ESG (Environment, Social, Governance) criteria and policies have become major drivers of real estate value in Real Estate.
Based on these criteria, at CBRE we have identified and classified different KPIs that impact value, grouping them into three fundamental pillars. For sustainability to really have an impact on value, the three pillars must be considered as a whole.
In the Multifamily / Flex Living sector the value impact findings have been conclusive, showing a very relevant value differential between sustainable and non-sustainable assets:
Operational performance of the asset
Reduced energy consumption and CO2 emissions. Sustainable buildings require less investment to cope with obsolescence.
Market attraction
Increased capacity to capture higher rents than those in their environment. Increased ability to reposition rents. Compression of yields, generating greater value. Decreased remarketing periods (shorter vacancy and turnover periods).
Implementation of social and governance regulations
Increased ability to attract better tenants. Improved occupant experience for the benefit of occupants and increased occupant motivation, wellbeing and productivity. Compliance with regulations and ESG plans. Reputational benefits.
What are the benefits to be gained in the Multifamily / Flex Living
sector?
Operational performance of the asset
- Up to 20% reduction in energy consumption and CO2 emissions
- Significant savings
- Long-term supply of raw materials.
- Fiscal incentives, insurance and taxes.
Market attraction
- More liquidity at the time of divestment. ESG criteria increasingly key for investors and residents.
- Better financing
Implementation of social and governance regulations
- Attraction of residents attracted by energy savings and wellbeing.
- Increased occupancy.
- Lower tenant turnover.
- Energy changes and actions that imply an improvement in well-being attract more solvent tenants who prioritise habitability and housing experience.
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