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M7 Real Estate says it will deliver “Ireland’s greenest logistics refurbishment” with the regeneration of a Dublin facility.

The the pan-European investor and asset manager said its programme of sustainability-focused works at Ballymount Logistics Hub, Southwest Dublin will have the best energy rating for a refurbished logistics unit in Ireland once complete.

The 151,000 sq ft warehouse is set to achieve an improved Building Energy Rating (BER) of A3 and “very good” BREEAM In-Use certification.

M7 will install LED lighting, EV charging points and an air source heat pump system to the development, which was constructed in 1996. It will also be using locally-sourced and recycled materials where available and recycling 95% of construction waste.

John Murnaghan, managing director at M7 Real Estate Ireland, said: "As we continue our retrofit first approach to our portfolio through a rolling capital expenditure programme of sustainability-focused improvements, it is crucial that we create a cost efficient, sustainable asset that will prove extremely attractive to potential occupiers. 

“Once the works are complete, we expect this unit to be more energy efficient than the majority of newly built warehouses that are springing up around Dublin, especially when considering the huge environmental cost of development. This is clearly demonstrated by the fact that this refurbishment will result in a staggering 70% saving in embodied carbon versus a full new construction.”

Coima has bought a portfolio of Rome office buildings, with the intention to boost their sustainability.

The Italian investment manager has acquired a fund which owns three government-occupied buildings: Palazzo Verospi and Galleria Sciarra (pictured above), both in the Via Del Corso area and Palazzo Monte in the Campo de' Fiori area. The 484,375 sq ft portfolio has a total value of more than €200 million ($215 million), Coima said.

It will implement an asset management strategy aimed at improving the energy efficiency of the buildings, reducing their carbon footprint, and securing BREEAM certifications.

Coima is also seeking to convert the fund to Article 8 status under the European Sustainable Finance Disclosure Regulations (SFDR), designating it as a fund to promote positive social and environmental outcomes.

The acquisition was made through COIMA’s Core Fund I and Core Fund II, which are backed by Italian institutional investors and focus on the acquisition and management of income-producing properties in major Italian cities.

The transaction was supported by the issuance of a green loan from pool of banking institutions consisting of Credit Agricole, BPER and ING.

Gabriele Bonfiglioli, COIMA's chief investment officer, said: “COIMA is honoured to take on the management of these important and historic buildings in the heart of Rome, with the aim of improving their sustainability performance and ensuring they remain fit for the future. Rome is a strategically important market for COIMA and a city with great potential for urban redevelopment projects focusing on driving positive social and environmental impact.”

Sustainable building certifications are becoming an essential for occupiers, lenders and investors, investment manager Axa IM Alts says. 

Justin Curlow, global head of research & strategy, real assets, at AXA IM Alts, said: “Occupiers and investors alike have seen ESG, health and wellbeing considerations catapult themselves up the priority list for both space planning and investment decisions.”

He said it was becoming clear ESG-compliant assets let faster and at higher rents, but added: “What is less quantifiable but anecdotally clear is also the greater level of interest, and therefore liquidity, as more occupiers require certifications for buildings to be considered for occupation and both lenders and equity investors insist that either certifications are in place or capital expenditures under-written in order to consider investment.”

Curlow said upgrading existing stock and new development to cater to this change in occupier requirements “will provide a wave of investment opportunities” over the coming years. 

India’s real estate sector is embracing sustainability and building a green future, a new report from KPMG claims.

The consulting firm’s Navigating the dynamics of real estate in India report, published in conjunction with India’s National Real Estate Development Council, says the industry is increasingly adopting renewable energy sources, particularly solar power, in alignment with India’s goals for a cleaner and more sustainable energy mix.

Data show that 82% of new Grade A office supply as of September 2023 was green certified. Construction and maintenance practices now integrate circular economy principles, promoting the reuse and recycling of materials, KPMG claims. 

Sustainability measures are implemented throughout the entire value chain, bolstered by government initiatives such as the Green Rating for Integrated Habitat Assessment (GRIHA) and tax incentives which encourage developers to embrace sustainable design.

GRESB has launched a carbon footprint dashboard for real estate and infrastructure investments.

The ESG benchmarking group said its new interactive tool “marks a significant step in empowering GRESB’s real estate investor members with extensive insights into their portfolios' energy consumption and greenhouse gas emissions”.

Using asset level data, the tool will give investors a view of energy usage and emissions across their portfolio and enable analysis across markets or property types. Gaps in their data can be filled by GRESB’s estimation model. The dashboard aligns with the Partnership for Carbon Accounting Financials methodology.

"GRESB is dedicated to supporting investors in their sustainability journey. The launch of the Carbon Footprint Dashboard reinforces our commitment to providing invaluable tools that drive positive environmental impact within the real estate sector," said Sebastien Roussotte, CEO at GRESB.

A growing number of real estate investors are integrating ESG considerations into their strategies, new research from Colliers reveals.

The broker’s 2024 Global Investor Outlook found that, while Europe may be leading the way on regulation to embed ESG in the built environment, the global nature of investment means standards are being raised across the board. 

“Our survey of investors shows an expanding acceptance that ESG is a key strategic element of investment decision-making, particularly in the EMEA and APAC regions,” the report says. 

"The proportion of investors moving to the phase of ESG-based disposal and acquisition strategies has reached 25%, compared to just 10% two years ago. As a result, a wave of disposals and value-add opportunities are coming to market."

Colliers predicts that the “brown discount” for non-compliant assets will grow to make repositioning them a worthwhile endeavour. Damian Harrington, head of research, global & EMEA capital markets, says: ““The view is that many of these brown assets that are not fit for purpose won’t be cheap enough for a profitable exit after repositioning. But once we see the brown discount reflected, investment volumes will pick up considerably as there is plenty of stock to green up.”

Investors expect the value premiums for ESG-compliant assets to range from 8% for retail properties to 22% for industrial and logistics assets over the next three years. 

Singaporean sovereign fund GIC has anchored a new sustainable real estate fund, which will focus on retrofit and redevelopment.

Italian real estate investment manager COIMA SGR announced a first close for its Opportunity Fund III, with an initial €200 million ($218 million) committed by an Asian sovereign wealth fund, understood to be GIC, as anchor investor. 

The new vehicle will focus on decarbonising office and residential real estate across Italian cities, with a “brown to green” strategy and plans to raise €500 million by 2024, with potential to invest €1 billion with leverage. The target return rate (levered IRR) is 14%.

COIMA will particularly target central areas of Milan and Rome, where corporate demand for sustainable real estate is strong. The portfolio will be fully aligned with European taxonomy on decarbonisation, and all buildings will be LEED certified.

Separately, COIMA announced that its ESG City Impact Fund (COIMA Impact), which has so far has raised over €800m from Italian institutional investors and is set to reach €1bn in investment by year end, has also approved an increase in its target size from to €1bn to €2bn.

Manfredi Catella, founder and CEO of COIMA, said: “The first close of COF III and the expansion of our COIMA Impact Fund underline Italy’s continued importance as a strategic market for national and international capital focused on sustainable urban regeneration.”

(pictured above, Pirelli 35, a COIMA project in Milan)

Asia Pacific CBDs are substantially undersupplied with low carbon office buildings, new JLL research claims.

Large multinationals have net zero carbon commitments which are driving their occupational decisions, however Asian cities are not ready to meet this demand.

JLL’s Sustainable Offices City Index evaluates 20 cities in Asia Pacific on four metrics: green stock, physical risk to buildings, city competitiveness and city administrations’ proactiveness with NZC targets.

The index shows that not even Sydney, the region’s top-ranked city, has green building standards which can achieve a net zero carbon built environment. Sydney is expected to face an 84% undersupply of net zero carbon-ready office space by 2027.

JLL Research shows Sydney to have the largest undersupply of green office space

Meanwhile, Hong Kong and Mumbai - which are placed in the bottom half of the JLL index - are expected to see a 68% and 62% supply deficit of top-quality sustainable workplaces respectively. Singapore, Melbourne and Delhi are also expected to be 56%, 43% and 44% undersupplied, respectively.

JLL argues occupiers will look beyond green certifications and make decisions based on building-level sustainability metrics, including energy efficiency and green energy procurement. 

“Leasing office space in green-certified office buildings is becoming a non-negotiable for occupiers, but currently there is very little correlation between these certifications and a building’s energy performance,” says Kamya Miglani, head of ESG research, Asia Pacific, JLL. 

“Even buildings with platinum grade green certifications may not be NZC-ready, partly because current regulations are not stringent enough to demand NZC-ready assets.”

JLL says the region must accelerate the rate of retrofitting to meet future regulations to meet the growing demand of sustainable workplaces. The broker says investors and owners should start incremental upgrades now or risk a “brown discount” as climate-related regulations become more stringent.

“Only a handful of office buildings in Asia Pacific match the criteria of a zero-carbon building today,” says Miglani. “The involvement of governments, coupled with corporate demand and action, will fuel the momentum and ensure a steady pipeline of NZC-ready office stock in the future.”

One of the UK’s longest established real estate funds is working hard to continuously improve its sustainability performance with a top-down and bottom-up approach. Sustain talks to Eleanor Jukes, deputy fund manager at the Schroders Capital UK Real Estate Fund (SCREF), about the fund’s sustainability initiatives and challenges.

The Fund was launched in 1971, making it one of the oldest real estate investment vehicles in the world. An open-ended fund with a core/core-plus risk profile, SCREF has more than 180 institutional investors and owns UK real estate assets with a total value of around £2 billion ($2.5 billion). 

Eleanor Jukes is deputy fund manager at the Schroders Capital UK Real Estate Fund

How big a challenge is improving sustainability in a portfolio with more than £2 billion in assets and 50 years of history?

There's a lot of legacy data, there's a lot of heritage and I think we have at least a couple of assets that have been with us since 1971. That has presented some interesting challenges for how to make these buildings appropriate for the sustainability demands of modern occupiers and investors. We have 51 buildings and around 665 tenants so it's a big job trying to keep on top of all those assets and customers. What this means for sustainability is that we must use both a top- down and bottom-up approach to reach our goals. 

We have our Schroders sustainability objectives and guidelines, such as the net zero pathway, which flow down, but we must also engage from the bottom up, otherwise it would just be an impossible job. We have some outstanding external property management teams who do a huge amount of work alongside our in-house asset managers to make sure that we’re delivering best-in-class sustainable assets. That means getting service level agreements right, but also making sure they are empowered to use their initiative to deliver improvements on the ground.

Talk us through some of those bottom-up initiatives…. 

Our Mermaid Quay retail and leisure centre in Cardiff [pictured above] is close to a district which is high on the deprivation index. The team at the centre has started some great outreach initiatives to engage the local community, with food donation programmes or providing theatre and cinema tickets for children in that area. We also run wider-ranging community and sustainability initiatives like our water bottle refilling programme. Closer to London, managers at our town centre development in Bracknell work with woodlands and bees charities and recently they won an award for placemaking initiatives.

And what are the top-down initiatives from Schroders Capital?

We have a real estate with sustainable impact mantra, which is something we work hard to ensure is embedded across all our funds. We have four pillars of sustainability in real estate: people, planet, place and prosperity, derived from the UN Sustainable Development Goals.

SCREF is also a SFDR Article 8-equivalent fund, which means  we need to consistently demonstrate improvement in our sustainability characteristics to be able to market ourselves as a fund that promotes sustainability. Ensuring that we hit or exceed our sustainability objectives is a huge part of my role as the deputy fund manager, an important one, and one which is constantly changing.

What are the accreditation and certification objectives for the fund and what are the obstacles to achieving them?

Recently, we have been checking our coverage of Energy Performance Certificates is aligned with the regulation that came in April, which states that all commercial rented properties must achieve an EPC rating of E or better for leasing deals. That was a huge effort across a portfolio of this size, because we've got a lot of assets and a lot of units that need certifying. The team has also worked on the coverage of Green Building Certificates this year. For example, 90% of the SCREF office portfolio is certified and we were proud to have been awarded a WiredScore portfolio award. This sits alongside our 4* GRESB rating.  

Our fund, asset, property, and sustainability teams put a lot of work into hitting our sustainability aspirations, because it is very difficult to achieve accreditations across a large diverse portfolio. The industry needs accreditations that are rigorous, but also consider the challenges of managing a multi-asset portfolio with a huge number of tenants with different aspirations. So it would be great to see some progress within the wider sector to make sure sustainability accreditation is aligned with what the market and tenant base needs.

How do you use technology to boost sustainability in the portfolio?

We make effective use of technology to help us meet our goals. For example, we have a partnership with Deepki, who have built a bespoke product to be rolled out across Schroder Capital real estate funds that enables us to suck up data for all our sustainable data points: EPCs, certificates, net zero carbon audits, all our tenant data. This will provide us with a clear sustainability profile of the units, the assets, the buildings in the fund and how well we’re doing against our objectives.

It’s taken a huge onboarding process: about six months to get everything onto this platform for SCREF alone. It's not been easy, but we have finally got there and it's been really illuminating where we do well and where the gaps are. For example, we need to do better in automating the collection of tenant information. We will be able to use it in a more proactive way and start building it into the business planning process, ensuring that we're tracking all those different objectives, particularly as we start to do more work on net zero carbon over the next couple years.

The other piece of technology we're proud of is called S:connect, a proprietary app built for us by CBRE that  we use in nine of our assets. Anyone who uses one of these buildings can use it, and it enables us to have a two-way dialogue with users. We primarily use it as a social value initiative - there is a rolling calendar of initiatives, such reducing food waste, mental health or encouraging use of public transport.

Do you have any renewable energy initiatives?

Our self-storage portfolio has been a surprising leader in this regard. We have five self-storage units in London, where we have installed EV chargers and we are now rolling out the installation of solar PV and battery storage to power those chargers.

What’s the next sustainability challenge for the fund? 

We have biodiversity net gain requirements for new developments coming up in November this year and we are working towards achieving that in a thoughtful and impactful way. However, I think biodiversity is something which hasn't received a huge amount of attention yet in the industry. So it'll be interesting to see how people tackle the challenge.

Taiwanese super-skyscraper Taipei 101 has become the tallest building to achieve platinum WELL core certification.

Platinum is the highest rating available under the International WELL Building Institute's healthy buildings certification system. The building is also LEED Platinum certified.

Taipei 101 achieved its certification through installing air purification systems, providing access to quality drinking water, increasing natural light exposure, promoting physical activity and promoting thermal comfort.

Completed in 2004, Taipei 101 was the world's tallest building until overtaken by the Burj Khalifa in 2010 and is now the 10th tallest building in the world.