Increasing regulation of climate risk reporting will aid real estate investors decision-making, claims a report from The Urban Land Institute and Heitman.
Entitled Change is Coming: Climate-Risk Disclosures and Their Implications for Property Owners, the report shows how investors can use data resulting from government regulations requiring real estate companies to disclose climate-related risks.
Investors and other market participants interviewed for the report say more accurate risk information could help them avoid investing in stranded assets, whose value will depreciate due to damage from adverse weather events or an inability to comply with new climate regulations.
“Governments and investors alike recognize that climate risk is financial risk," said Lindsay Brugger, head of urban resilience at ULI. "New regulations are proliferating across the globe and offer new data sets for enhanced investment decision-making. Investment managers will need to stay ahead of these rules for success in a rapidly evolving global market."
"Climate risk disclosures provide a crucial lens through which investors can evaluate the long-term viability and value of their real estate portfolios,” said Laura Craft, global head of portfolio sustainability strategies at Heitman.
“By leveraging this data, investors can proactively navigate regulatory changes, identify potential stranded assets, and allocate capital towards sustainable, climate-resilient investments. It's not just about mitigating risk; it's about identifying the investments positioned for the future."
More regulation of climate risk disclosure will produce a number of benefits, the report argues, such as standardising reporting and allowing investors to allocate their capital toward the best strategies for addressing climate change.
The report also details measures investment managers can take to make their portfolios attractive to potential investors, such as tracking asset-level carbon emissions, providing a comprehensive review of a fund's aggregate climate risk, and staying informed about regulatory changes.
Investors are targeting European office assets with the potential for ESG upgrades, says Knight Frank.
The broker’s ESG Property Investor Survey found 58% of investors are actively seeking to acquire commercial buildings which perform poorly on ESG metrics, in order to improve and upgrade them to meet future environmental standards.
In the first half of 2023, £2.5 billion of UK assets (13.4% of total real estate investment volumes) were purchased for the purpose of renovation or redevelopment.
Across all investors surveyed, 22% planned to divest poor-performing buildings, with 76% planning to repurpose or improve existing buildings. However, 40% of core investors plan to sell non-compliant assets. The survey found that 41% of investors were committed to their portfolios being net zero by 2030.
Knight Frank's research also revealed an increased focus on social sustainability. It found 46% of investors aim to enhance public spaces through their assets, while 35% plan direct investments in local communities and 27% seek local employment opportunities.
Flora Harley, head of ESG Research at Knight Frank, said: “Investors increasingly recognise the potential to create value by bringing older office assets into line with future regulatory requirements.
“A higher interest rate environment and lower valuations are making under-performing assets more attractive to core plus and value-add investors, while the ‘green premium’ for the best performing assets continues to rise, as demand far outstrips supply.”
Grosvenor has reported a 32% reduction in the carbon footprint of its UK business since 2019.
The business has committed to at least a 52% reduction in emissions across all scopes by 2030 and a 90% reduction by 2040. The major drivers for the net zero pathway include reducing emissions from its supply chain, developments and standing portfolio.
Ed Green, director – Sustainability, Grosvenor Property UK said: “With 2022 the first full year of the pathway not impacted by any COVID restrictions, and building occupancy and development activity normalising, this continued reduction is a significant achievement.
“Central to our ongoing success is developing stronger relationships with our supply chain. Through a partnership approach we have been able to get more accurate data, better understand our impact, and more effectively target interventions.”
Grosvenor said 44% of its suppliers by spend now report emissions data to the business and 52% hold a validated Science Based Target.
Green added: “We still face many challenges to meet our ambition of reducing emissions by 90% by 2040. Collaborations and innovations that address our largest emissions sources are an exciting opportunity and we’ll continue to invest in technologies and partnerships that will support our goals and deliver effective climate action.”
CTP has secured €200 million ($213 million) in financing from the European Investment Bank (EIB) to install solar panels across its European portfolio.
The listed European developer and manager has a 10.9 million sq m portfolio of industrial and logistics properties in Central & Eastern Europe, Germany, Austria and The Netherlands.
The 10-year unsecured loan will contribute to boosting solar PV capacity across the portfolio to 400MWp by 2026, from 38MWp at the end of 2022.
Peter Ceresnik, chief operating officer, CTP, said: “The European Investment Bank’s financing will accelerate our plans to maximize the solar potential of our portfolio and help us meet our medium-term goal of installing 400MWp by 2026.
“It will also help us achieve our longer-term vision for our parks to become energy positive, meaning they can produce and share excess renewable energy, benefitting not only our clients and the local communities where we operate, but also the planet.”
AXA IM Alts has received planning consent and launched the construction of a timber hybrid office building in the centre of Munich.
Called ‘The Stack’, the 16,000 sq m project is expected to complete by the end of 2025 and is being developed in partnership with German developer Accumulata.
AXA said the project combined a sustainably sourced timber hybrid construction method with green energy technology and biophilic design features, which will reduce energy demand considerably compared with a typical new-build development.
Additional smart building technology will regulate indoor air quality and enable efficient local climate and lighting control.
Germain Aunidas, global head of development at AXA IM Alts, said: “The Stack will pair market-leading sustainability credentials with a technology-led focus on workplace wellbeing, delivering new, high-quality office space that meets the evolving requirements of top-tier occupiers and aligns to our global investment convictions.”
Jean-Michel Wilmotte, founder of Wilmotte & Associés Architectes, the project’s designer, said: “Recent advances in timber hybrid construction techniques present exciting opportunities to deliver new sustainable space at scale.”
Link Asset Management has signed a memorandum of understanding with CLP Power Hong Kong and its renewable energy subsidiary CLPe to collaborate on energy efficient solutions in Link’s development projects in the China’s Greater Bay Area (GBA).
The Hong Kong real estate investment trust manager currently works with CLP in its home city and will now expand that relationship into the cities of the GBA in Southern China.
The two companies will explore collaboration opportunities such as energy management solutions, the acquisition of sustainability-linked loans, EV charging facilities and replacing diesel generators on construction sites.
In Hong Kong, CLP has installed energy efficient cooling systems in 21 Link REIT shopping arcades and installed solar PV panels at 14 assets.
Link chairman Nicholas Allen said: “This MOU strengthens our shared commitment to a low-carbon, sustainable future. The two companies will collaborate on a variety of energy-saving and electrification initiatives across Link’s diverse portfolio, laying the groundwork for impactful emission reduction and deepening our cooperation.’”
MAPP has launched a new sustainable energy procurement services arm.
The UK consultant and property manager announced the launch of Energy by MAPP, which will help clients secure renewable energy for their assets. The business line will be led by MAPP executive director of sustainability Rowan Packer.
Clients of the new business include Pioneer Group, a developer and operator of life science and technology campuses across the UK. MAPP brokered a rolling two-year virtual corporate power purchase agreement (CPPA) with Ray Valley Solar, an Oxfordshire-based solar farm. Under the agreement, four locations from the Pioneer Group portfolio will source green electricity from a single, dedicated solar PV farm.
CPPAs are fixed-priced, long-term electricity contracts which help enable renewable power providers to invest in new renewable power generators.
Nigel Mapp, founder and chairman, MAPP said: “We are continuously looking for ways that we can help our clients deliver their net zero carbon pathways and ESG strategies; providing an optimal sustainable energy choice is a key part of that.”
The Urban Land Institute (ULI) Europe has announced the France and Switzerland regional winners for its PropTech Innovation Challenge.
Switzerland’s winner ShareP is a platform dedicated to promoting sustainable urban mobility. It optimises parking for businesses, residential buildings, sports arenas, and events and enables cities to better organise and plan urban parking.
French winner Roofscapes seeks to adapt unused roof space into accessible green places to mitigate the effects of climate change and provide new outdoor areas in cities.
Sabine Georgi, executive director of ULI in Germany, Austria, Switzerland, said: “Our urban living spaces are facing immense challenges, and we need innovative solutions to be able to make cities liveable in the future. This competition has shown that the market not only has great ideas, but that there are also young people who have the courage to implement them.”
The first phase of the competition comprises six regional competitions, for France, Germany, Iberia, the Nordics, Switzerland, and the UK. Winners will participate in the second phase and the overall winner will be announced during the ULI Europe C Change Summit in Copenhagen on 11 October 2023.
CBRE has hired former UK Green Buildings Council chief executive Julie Hirigoyen as special advisor to its ESG consultancy division.
The broker said Hirigoyen would “bolster CBRE’s capacity to amplify the sustainability ambitions and performance of organisations investing in or occupying real estate”. She
will focus on anticipating emerging trends and priorities for real estate owners, occupiers and investors.
Kaela Fenn-Smith, managing director, sustainability and ESG consultancy at CBRE, says: “Having pioneered sustainability in property and construction over the last 25 years, Julie brings a wealth of experience and rich diversity of thought to CBRE, enhancing our ability to advise clients on how to navigate future challenges and opportunities. She’s an inspiring advocate for sustainability and a leader with the ability to translate what’s coming into tangible actions for the here and now.”
CBRE’s UK ESG consultancy has more than 100 team members advising clients on how to deliver their ESG goals across real estate.
Hirigoyen was CEO of the UK Green Buildings Council for eight years, leaving in July. Previously she was UK head of sustainability at JLL and also worked for consultancy Upstream.
Knight Frank has appointed David Goatman to the newly created role of global head of energy and sustainability services.
The broker said it planned “significant investment” to grow the energy and sustainability services business line over the next two years, based on “clear and compelling client demand”.
Goatman was previously head of energy, sustainability and natural resources EMEA at Knight Frank and has been with the UK-based partnership for more than 13 years.
Knight Frank senior partner William Beardmore-Gray, said: “The greatest challenge facing the global real estate industry is climate change and the pathway to net zero. As a global business it is crucial that we support our clients on this journey with a range of high-quality advisory services. David has successfully grown our UK energy and sustainability business over a number of years and I am very pleased that he has taken on this global role.”