The Future of Sustainability in Real Estate - Part 1

In a rapidly urbanising world, the real estate industry is predicted to experience exceptional growth and activity in the coming years. Yet, rising inflation rates and economic factors have begun to change this outlook. 

One thing that is more certain is sustainable investment will be required to support the industry in any potential expansion or retrofit projects to transform its history of untenable carbon emissions and to preserve the environment for future generations.

The real estate industry will need to combat its high consumption of global energy (40%), greenhouse gas emissions (20%) and raw material usage (40%). 

Transforming these percentages will be essential in the fight against climate change. Recognising this, many enterprises are increasingly considering how they fulfil their obligations to reduce their ecological footprint. 

Further spurring companies into action are the following three driving forces:

Long-term financial investors such as pension funds view their investments through a 30-plus-year lens. These investors, in particular, understand that action against climate change will safeguard their long-term investments. 

Secondly, corporate tenants and residents have become increasingly aware of their carbon footprints and are concerned with taking care of the environment. 

On the other side of the equation are the Governments establishing sustainable and comprehensive long-term policies. Exemplifying this, in America, local law 97 in New York mandates carbon emissions reductions, and across Europe, access to the circa €750 billion in Recovery Fund hinges on countries' ability to reach a 55% emissions reduction target by 2030 and the goal of becoming carbon neutral by 2050. These findings imply the real estate sector will remain a prime target for policy action.

Investors, occupiers and Government are each formidable forces in encouraging companies to embrace sustainable values. These three factors each pressure the market in similar ways and push real estate owners and operators to take on the ESG narrative earnestly.

Therefore understandably, environmental preservation plays a significant role in the decision-making process of businesses. With strategic plans and innovative solutions in place, companies can reduce their energy consumption and carbon footprints. 

According to the 2020 Global Status Report for Buildings and Constructions-

"the elimination of building emissions by 2050 is possible with existing technologies."

This statement is further reinforced by the World Economic Forum report, which states-

"there are opportunities to embrace new technology and innovation to meet environmental goals and enhance business performance."

Since these statements were made, technologies have become pivotal in orchestrating positive and meaningful change across the sector. 

Proptech is the latest weapon in the sector's fight to become more sustainable. With the help of digital initiatives and smart software, corporations worldwide have been meeting and exceeding their carbon-reduction objectives and making expenditure savings in the process. These technologies, specially designed for the real estate sector, drive efficiencies using data collection and, as a result, reduce consumption across the built environment. As the list of integrated tools making up building software grows, so does their value. Solutions such as IoT sensors, cloud storage, and artificial intelligence (AI) generate CO₂ and cost-saving opportunities. Not only can sustainable investment in the form of digital integration result in financial savings, but these technologies can also attract tenants who consider sustainable practices as one of their priorities when deciding on a workplace. 

At the same time, however, the Real Estate industry is commonly considered slow-moving, traditional and often reluctant to adopt new innovations. In the eyes of some businesses, PropTech is the great unknown. 

PropTech has the potential to transform the future of sustainability in Real Estate.

Niall Gaffney, CEO of commercial property company IPUT-

"There is now a critical need for the real estate community to invest in sustainable buildings and the public realm. The value of technology in servicing the needs of investors and occupiers will influence the shape of the real estate sector over the next decade."

Undoubtedly, the proven success of these technologies is helping generate great momentum behind sustainability across the built environment. In the long run, digital solutions will remain a constant to support and ensure the future of the Real Estate industry is significantly more sustainable than its past. ESGs will become instrumental in building and operating more efficient cities, with digital twins playing a prominent role.

Help shape the vision for the industry. Strengthen and measure your sustainable initiatives with Twinview. Book a demo and discover how to reduce carbon emissions in your building and move closer to net zero. 

PART TWO