Sustainable futures – the importance of investing in green real estate

Three years ago, 195 countries signed the Paris Agreement in a bid to counteract the harmful effects of climate change and place humanity on a path to creating a healthier environment for future generations to come. 
Since, sustainability is a subject that is touching all walks of life. Globally, the conversation has been resounding – and no more so in the realms of finance, architecture and real estate.

Sustainable capital and ESG investments are becoming non-negotiable with investors and increasingly present in portfolios. More now than ever, society are investing in the ethical impact of their money.  This could not be truer within real estate and property. Last month, London celebrated its annual architecture festival. Thematically, sustainability has been explored throughout the UK capital by designers to contemplate how society can create buildings that enable our environment to flourish. 

London is placing the spotlight on how to work towards a future to minimise air pollution, whereby the city has zero emissions by 2050. At the same time, through a series of installations and creatives spaces within the city, the festival has explored opportunities for eco-living to prosper.

The sustainable economy is booming. Thus, the challenges we globally face to build a better and safer environment is being addressed by the world of real estate and property development. We are witnessing the greening of portfolios and documenting a shift in the ambition of combining
investments with acts of conscience. At the same time, governments, companies and consumers are increasing showing demand for ethical and eco products and services. 

At present, real estate accounts for 40% of the energy the world uses. As we contemplate the future of our cities and the planet we live on, it is crucial we look towards green real estate to help us achieve our goals in working towards a more sustainable planet. 

If we look to property, investing in green real estate is not only better for the planet and the health of the communities we live in, but also clients can expect more equity. At present 32% of homebuyers are millennials. This cohort prioritise purchasing energy-efficient homes. Green homes offer 10% higher appraisal value in comparison to homes. Yet at the same time, eco-friendly homes tend to sell for 3.5 more than traditional homes. Thus, this provides a lucrative opportunity for commercial property developers. 

Barbara Knoflach, the Deputy Chief Officer of BNP Paribas Real Estate Investment Management confirms these findings, stating that green properties improve returns whilst future proofing the value of investments. Simultaneously, these properties are more liquid and resilient to operational obsolescence. 

Green real estate is considered as a high-carbon asset class. Thus, sustainability presents an innovative opportunity for profitability for real estate. 

Additionally, the materials and land used within real estate is prime for investment. 85% of the building stock that met countries will use in 2050 has already been built. Whilst eco initiatives are paving the way for change for green real estate, investors must also pay attention to efforts to
improve the existing stock. 

As the world looks to build a better future, investing in green real estate and sustainable property development will prove to be opportune for investors. Vorto have partnered up with some of the largest developers in the UK to help them with their completion payments.  We handle the currency conversion for international buyers to ensure they receive a cost-effective rate when paying for their property. 

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