In order to achieve climate and environmental sustainability goals, the real estate industry fulfills its responsibility and potential through sustainable real estate investment opportunities.
As the world becomes more urbanized, the real estate industry stands at the center of unprecedented activity and growth.
In the construction and operation of real estate, investors, occupiers, cities, and governments can and must play a significant role in reducing greenhouse gas emissions.
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Incentives are increasingly being provided by governments to encourage the construction or retrofitting of residential and commercial buildings—reducing their energy consumption and emissions.
Several cities report that tenants make location decisions based on their environmental awareness. In residential and commercial real estate investing, buildings that are Leadership in Energy and Environmental Design (LEED) certified or carbon-neutral are increasingly in demand among tech tenants.
Even though such buildings may incur higher costs to operate, investors can make more money by renting them out at a higher rate.
A recent analysis of US real estate investment trusts (REITs) suggests that certified buildings suffer fewer re-lease risks, maintain more stable occupancy, and are more resilient to market shocks.
It may be possible to reduce the systematic risk of a portfolio by including more certified sustainable buildings.
Increased efficiency and reduced emissions are the upsides of sustainable infrastructure investments. The benefits can include lowered operating costs, reduced risk, and improved brand recognition.
Increasing asset values is another factor to consider. In recent years, the percentage of owners reported that new green buildings have higher asset values, which has nearly doubled to 30%—this is according to a report from the U.S. Green Building Council.
It is also possible to partner with suppliers to improve processes, reduce waste, and improve circularity, or to invest in green technologies and transportation infrastructure, among other things.
With increasing awareness of the social and environmental impacts of their investment decisions, institutional and private equity investors are expected to develop impact investing plans.
In addition to meeting real needs, funds nowadays target areas that offer attractive returns. For example, affordable housing, renewable energy, or green buildings could all be part of such strategies.
Sustainability and climate considerations are the responsibility of industry practitioners in all sectors. Nevertheless, many people do not realize that the real estate industry and investors will benefit both financially and economically from guiding market decisions toward sustainable, climate-friendly outcomes.
In recent decades, sustainable property investments have evolved from niche concerns into mainstream investing products and real estate developments. Globally, green buildings represent an increasingly large proportion of development projects. It is a requirement that investors receive a sustainability rating for new development projects before investing.
Defining a sustainable future has become imperative after people have had to fight for food, water, and living space—and have witnessed unprecedented floods of refugees, pointing towards the need to act more sustainably for our sake.
Sustainability, however, has historically been viewed more as an ideological or moral imperative. Investments in this sector have typically been viewed primarily from a cost standpoint.
Initially, the real estate industry also had trouble reconciling its economic objectives with environmental and social responsibility. Nevertheless, attitudes have evolved, not only due to legal requirements, but also due to stakeholder expectations increasing worldwide—that is, among investors, stakeholders, tenants, and clients.
In today's market, more and more investors consider ethical, ecological, and social factors in real estate investing.
In recent years, sustainable real estate has gained increasing interest among investors due to its ability to reduce a portfolio's operational risk.
As building requirements evolve, more and more people are looking for buildings that conserve resources, are climate neutral, and are healthy to live and work in. Digital technology and networking are proving to be the innovation drivers in this sector.
If you invest in green buildings, you would not need to sell your property at a discounted price in the future—or conduct costly retrofitting work on your traditional building to maintain your market competitiveness. Sustainable investments can be made when you work with us.
You can count on our team for assistance with your real estate needs. Email us at general@saintinvestment.com or contact us at 949-881-7128 at Saint Investment Group today!
A master in Investment, Marketing, and Capital Raising.
Nic has honed his focus on the Real Estate and debt markets with Saint Investment Group and pursues large-scale Distressed Asset purchases with his partners and syndications.
