Re:sustain: European real estate market faces enery efficiency problem
New research by re:sustain highlights the magnitude of the problem faced by European real estate institutional investors. Re:sustain surveyed 200 European real estate institutional asset managers in the UK, Germany, France, Netherlands, Spain and Italy.
Over half (58%) of respondents said that between 10% and 30% of their commercial real estate portfolio has poor energy consumption i.e. that which is materially above expected energy benchmarks for that asset type and location. One third (33%) said between 30-50% of their portfolio was performing badly and 11% said that more than 50% of assets in their portfolio have poor energy consumption.
Not only are investors facing declining values as a result, but 69% have also seen energy costs rise between 20% and 30% over the past two years, with 31% citing increases of more than 40% across their portfolios. However, the majority (95%) of those surveyed have plans in place to improve the energy efficiency of their real estate portfolio, with 82% targeting energy consumption reductions of between 10% and 30% across their portfolios over the next three years.
In terms of tackling the problem, the research shows that for 58% of respondents, modernizing systems such as HVAC and electrics is a priority, followed by making greater use of technology to improve optimisation of existing systems such as controls, set points and scheduling (48%). Modernising building management systems where needed was the third most likely action (45%) and demolishing poorly performing buildings came fourth (44%).
However, making changes to commercial buildings can be difficult, with respondents citing the complexity of coordinating landlords and tenants as the greatest challenge, with the capex and investment commitment second. Business interruption while work and upgrades take place ranked third, followed by navigating complex regulations. Economic and political uncertainty and a lack of professional expertise were also cited as challenges by respondents (ranked 5th and 6th respectively).
