Study on sustainability in real estate management

• Survey of real estate management players in Germany, Austria and Switzerland
• Sustainable real estate is considerably more valuable: Additional investment potential in Germany of about EUR 13 billion per year
• 73% of building owners and investors and 86% of tenants are prepared to pay more for these properties
• Half of those who responded to the survey believe that over the next few years, real estate will increasingly be seen as a strategic resource
• Sustainability certificates such as LEED or DGNB add no measurable value, according to the study participants

The real estate and construction industries play a key role in reducing CO2 emissions. In the OECD countries, approximately 30% of greenhouse gases are produced by residential and commercial real estate – and that's just when they're being used. And the construction and real estate sector have more than just considerable environmental importance: The Roland Berger study "Sustainability in real estate management" shows that all links of the value chain harbor enormous financial potential for all players – from project developers to the construction industry, landlords and operators. More than 70% of building owners, investors and tenants are prepared to pay more for sustainable real estate, to the tune of 9% on average. This means additional investment potential of about EUR 13 billion in Germany. Up to now, real estate has still been viewed primarily as a production factor. But those surveyed believe that it will increasingly be seen as a strategic resource in the next few years. The study also revealed that sustainability certificates are seen as adding no 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.