energy efficiency in real estate unlocking finance through an effective regulatory framework money...
TRANSCRIPT
Energy efficiency in real estate unlocking finance through aneffective regulatory framework
Money Matters – How to mobilise private finance for energy efficiency
February 13, 2012
Tatiana BosteelsHermes Real Estate - IIGCC
10 April 2023 Hermes Real Estate I 2
Energy efficiency and real estate
Buildings are key to energy efficiency
Existing buildings are real challenge!
Regulatory pressure has been one of main drivers for sector
No evidence, yet, of impact of sustainability on financial performance
Increasing market pressure from institutional investors
Growing sense in industry that sustainability is risk and opportunity that will impact financial performance
Crucial to understand real estate’s sustainability barriers
Dynamic and cyclical nature of European real estate markets
Large number of practitioners during long life cycles
Complex management arrangements, fragmented responsibilities and conflicts of interest between them
Limited investment terms by each practitioner
Lease conditions limits opportunities for ‘carbon events’
Small investment scale and lack of energy economics
Lack of market information, demand, impact on financial performance
Limited information and skills among large variety of practitioners
10 April 2023 Hermes Real Estate I 3
Financing energy efficiency in real estate
Energy efficiency and clean technology funds backed by multilateral banks
– Able to support building energy efficiency products and services industry
– Often government backed and public sector targeted
– Few directly applicable for commercial and residential
OR
Energy efficiency investment theme within real estate investment and management
Large potential capital investment opportunity within EU real estate investment industry
10 April 2023 Hermes Real Estate I 4
Key is strong regulatory framework Sensitive to buildings complex management arrangements
EU and MS, sound and comprehensive mix of sustainability policy instruments
However some flagship policies poorly conceived and partially implemented
Real estate effective policies need
Account for complex management arrangement and conflict of interest between practitioners
Who has control over energy consumption and control over capital allocation in building’s life cycle
Improved skills of all practitioners in sector
Fiscal incentives necessary to unlock full potential
Policies should support internalisation of sustainability in real estate financial performance
10 April 2023 Hermes Real Estate I 5