Sustainable real estate
The market for sustainable real estate offers enormous potential at every stage in the value chain
The German real estate magazine bauingenieur24 published an article dealing with our study on sustainability in real estate management:
Sustainability certificates are important, but are still viewed skeptically
The Roland Berger "Sustainability in real estate management" study shows that there is financial potential for all players on all levels of the value chain – this includes project and construction developers, renters, operators, etc. According to those surveyed, sustainability certificates such as LEED or DGNB do not provide any measurable value.
The study shows that more than 70% of constructors, investors and renters are ready to pay more for sustainable real estate. They would be willing to pay up to 9% more on average for sustainability. This means there is additional investment potential worth approx EUR 13 billion in Germany. So far, real estate was mainly viewed as a production factor. According to those surveyed, real estate will be perceived more and more as a strategic resource in the coming years. However, they feel that sustainability certificates do not add any measurable value.
"The market for sustainable real estate offers enormous potential at every stage in the value chain," says Prof. Torsten Henzelmann, Partner in the Civil Economics Competence Center at Roland Berger Strategy Consultants. "And that holds true for all players – from project developers to the construction industry, landlords and property operators." More than 73% of the building owners and investors surveyed said that they would be willing to accept higher investment costs for sustainable real estate. "For them, sustainability would be worth paying an additional 9% on average," adds Roland Berger Principal Ralph Büchele. "This means that in Germany, there is additional investment potential of approximately EUR 13 billion per year for sustainable real estate." For Austria, the experts at Roland Berger put this figure at about EUR 1.3 billion; for Switzerland, EUR 1.4 billion. The rental market is moving in a similar direction: those surveyed would accept an extra charge of 4.5% on average. "A quarter of study participants would be ready to pay more, even if the 'sustainability fee' is higher than the savings from lower energy requirements," says Büchele.
Viewing sustainable real estate as a strategic resource
Nearly three quarters of those surveyed (72%) still view real estate purely as a production factor. Just one out of three sees it as a strategic resource. Comparing these results with those of a Roland Berger study conducted in 2005, it's clear that this view has not changed much in the past few years. However, this perception is influencing the action businesses take regarding sustainable real estate. Production factors are subject to short-term cost minimization, whereas investments in sustainable real estate are long-term and therefore pay off later. Half of the survey respondents assume that in five years, real estate will have assumed a strategic role in their company.
Sustainability certificates currently offer no measurable benefits
There are already certificates that provide the players in real estate management with some guidance and are intended to protect them against unjustifiably high prices. However, the diverse range of these certificates limits the transparency and with it, the acceptance of the certificates in the sector. In the opinion of the study participants, certifications such as LEED (Leadership in Energy and Environmental Design) and the German Sustainable Building Certification (DGNB) have three disadvantages: First, they are too focused on the environment, and the economic dimension recedes into the background. Second, the time and expense of the certification process is disproportionate to the needs of the applicants. And third, KPIs specific to real estate – such as energy consumption – already provide information about sustainability. Despite this skepticism, the survey respondents agreed that sustainability certificates will play an increasingly important role as a value driver for real estate.
Sustainability certificates are important, but are still viewed skeptically
The Roland Berger "Sustainability in real estate management" study shows that there is financial potential for all players on all levels of the value chain – this includes project and construction developers, renters, operators, etc. According to those surveyed, sustainability certificates such as LEED or DGNB do not provide any measurable value.
The study shows that more than 70% of constructors, investors and renters are ready to pay more for sustainable real estate. They would be willing to pay up to 9% more on average for sustainability. This means there is additional investment potential worth approx EUR 13 billion in Germany. So far, real estate was mainly viewed as a production factor. According to those surveyed, real estate will be perceived more and more as a strategic resource in the coming years. However, they feel that sustainability certificates do not add any measurable value.
"The market for sustainable real estate offers enormous potential at every stage in the value chain," says Prof. Torsten Henzelmann, Partner in the Civil Economics Competence Center at Roland Berger Strategy Consultants. "And that holds true for all players – from project developers to the construction industry, landlords and property operators." More than 73% of the building owners and investors surveyed said that they would be willing to accept higher investment costs for sustainable real estate. "For them, sustainability would be worth paying an additional 9% on average," adds Roland Berger Principal Ralph Büchele. "This means that in Germany, there is additional investment potential of approximately EUR 13 billion per year for sustainable real estate." For Austria, the experts at Roland Berger put this figure at about EUR 1.3 billion; for Switzerland, EUR 1.4 billion. The rental market is moving in a similar direction: those surveyed would accept an extra charge of 4.5% on average. "A quarter of study participants would be ready to pay more, even if the 'sustainability fee' is higher than the savings from lower energy requirements," says Büchele.
Viewing sustainable real estate as a strategic resource
Nearly three quarters of those surveyed (72%) still view real estate purely as a production factor. Just one out of three sees it as a strategic resource. Comparing these results with those of a Roland Berger study conducted in 2005, it's clear that this view has not changed much in the past few years. However, this perception is influencing the action businesses take regarding sustainable real estate. Production factors are subject to short-term cost minimization, whereas investments in sustainable real estate are long-term and therefore pay off later. Half of the survey respondents assume that in five years, real estate will have assumed a strategic role in their company.
Sustainability certificates currently offer no measurable benefits
There are already certificates that provide the players in real estate management with some guidance and are intended to protect them against unjustifiably high prices. However, the diverse range of these certificates limits the transparency and with it, the acceptance of the certificates in the sector. In the opinion of the study participants, certifications such as LEED (Leadership in Energy and Environmental Design) and the German Sustainable Building Certification (DGNB) have three disadvantages: First, they are too focused on the environment, and the economic dimension recedes into the background. Second, the time and expense of the certification process is disproportionate to the needs of the applicants. And third, KPIs specific to real estate – such as energy consumption – already provide information about sustainability. Despite this skepticism, the survey respondents agreed that sustainability certificates will play an increasingly important role as a value driver for real estate.
Language
English | German
Read the article at www.bauingenieur24.de (German)
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