Asia real estate must widen interest in ESG
The Asia Pacific region is making progress on ESG, however this is largely limited to a small number of large companies, interviewees for the 2024 Emerging Trends in Real Estate® Asia Pacific report said.
Progress on ESG matters is being hampered by two factors, professionals interviewed for the report produced by PwC and the Urban Land Institute, said. Rising costs are making ESG improvements harder to swallow and only a small slice of the real estate industry in the region has embraced ESG.
The report said asset owners are “dialling down carbon efficiency agendas as they focus for the time being on ensuring they are able to get assets refinanced while also delivering targeted returns”.
One respondent said: “There is a small group of Asian property companies who sing the song and are bona fide interested in driving down their carbon. But a lot of them, 90%, I think, don’t find it all that important.”
While more and more asset owners are collecting data on energy use, few are using it to drive efficiencies or sharing it at C-suite level.
Interviewees suggested the Asian real estate industry needed more basic messaging on ESG, focusing on: “incremental improvements and looking to educate how ESG-compliant buildings can attract better-paying tenants, improve asset values in the eyes of global investors, and eliminate risk of stranding”.
However, the report found an increased focus on transition risk amongst those surveyed, as well as companies seeking to blend green infrastructure, such as solar PV, with real estate.
Furthermore, the proportion of respondents declaring they have at net zero policy in place jumped sharply, to more than 50%, up from just over 30% two years ago.
The full 2024 Emerging Trends in Real Estate® Asia Pacific report can be found here.