Demand surges for sustainable commercial property

6th October 2022


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IEMA

Demand for sustainable commercial property is rising among occupiers and investors, but the construction sector is lagging when it comes to measuring carbon emissions, according to surveyors.

The latest annual sustainability report from the Royal Institution of Chartered Surveyors (RICS) sought the views of 4,000 professionals, 1,200 of them in the UK. Of respondents, 45% reported a modest increase in investor appetite for green buildings during the past 12 months – 5% higher than the global average. However, the UK is lagging behind Europe, with around 80% of those surveyed across the continent reporting an increase in investor demand for green and sustainable real estate during the past year.

Demand for sustainable buildings is impacting rents and sales prices, with surveyors seeing a market premium for sustainable buildings and citing a ‘brown discount’ on non-green commercial property. A total of 48% of respondents noted a drop in rents, with around half also citing reduced sale prices in the UK.

Most respondents – 55% – noted a rise in climate risk assessments by investors on their built assets. According to RICS, this suggests that climate issues are now rising up the agenda and could be influencing the behaviour of key market players. However, 76% of UK-based professionals admitted that they make no operational measurement of carbon emissions on projects. This is in line with the whole of Europe, but slightly higher than the global average of 72%. More than half of the UK respondents also said that they do not measure embodied carbon, and among those that do, less than 14% use this measurement to select the materials for building projects.

Construction professionals in the UK are beginning to embrace digital tools and technologies to complete sustainability-related project analysis, predominantly for assessing energy needs and costs. They are less likely to use these tools to reduce embodied carbon or measure impacts on biodiversity.

A total of 47% of UK surveyors reported that digital tools and processes are used to complete sustainability assessments on less than half or none of their projects. In comparison, 40% of respondents in Europe reported that digital tools and processes are used to complete sustainability assessments on less than half or none of their projects.

When probed on barriers to reducing carbon emissions, around 38% of respondents identified a lack of established or adopted standards, guidance and tools, as well as high costs or poor availability of low-carbon products, as being the most fundamental issues. Respondents also highlighted ‘cultural issues’ and established practices as challenges.

“Behaviour change is happening, with higher rents and prices being seen for the more desirable sustainable properties, and climate risk assessments by investors on their built assets rising across the globe,” said RICS sustainability analyst Kisa Zehra. “But measuring all forms of carbon is also critical to the changes we need to see from the built environment.”

Image credit | Shutterstock

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