The sustainable recovery

Real estate has a crucial part to play in addressing the climate emergency with implications reaching across every aspect of the global marketplace. A combination of top-level investor pressure, risk mitigation, regulatory changes, and the search for outperformance by investors is driving forward the demand for sustainable real estate around the world. For this reason, we have put our resources into understanding these trends and their implications for the investment market.

"Sustainability is already having an enormous impact on asset management and selection."

While demand for sustainable investment opportunities is growing, the quantitative benefits that investors, landlords, and developers can reap from targeting ESG have been challenging to measure accurately. That is where this year’s Active Capital adds to investor intelligence: we have quantified the ESG conversation at the city, building, finance, and corporate level.

In this section, we cover:

Sustainably led cities

We take a deep dive into the factors that make a city sustainable, distilling more than 150,000 data points into scores for the amount of green space, resource, use per person, climate change-reducing initiatives, climate risk, and urbanisation pressures across 286 global cities.

Quantifying green building value

We present a hemisphere to hemisphere assessment of the green sales price premium on office buildings in London (UK), Sydney, and Melbourne (Australia). We have used hedonic pricing methods to develop a proprietary model which measures the extent to which green credentials increase building value, controlling for building, lease length, time, and locational factors.

Sustainable finance

We share our latest experiences, observations, and predictions on the rise of green finance – a rapidly expanding opportunity and a critical part of the solution to climate change.

Corporate performance and ESG

We investigate the impact of ESG factors on the performance of global corporate real estate.

Why do these insights matter?

These themes transcend geography. While not all countries and markets are currently at the same stage in recognising their importance, they have relevance to all.

The greening of investment and development activities is influencing decision making at the highest levels – from the consideration of environmental obsolescence to green rental premiums, from the use of innovative development materials to beneficial green financing terms – sustainability is already having an enormous impact on asset management and selection.

Likewise, owners and advisors of real estate are increasingly measured and valued on their environmental, social impact and governance standards. A failure to comprehend the forces at play amid the growing importance of ESG poses risks to real estate investors in terms of performance and scrutiny, as well as risks to society at large.

Download Active Capital 2021