NEW YORK CITY – RICS has released their 2022 Sustainability Report.
- Occupier and investor demand for green buildings continues to rise globally as almost half of respondents report lower rents and sale prices for non-sustainable buildings – the majority of respondents citing that this is up to a 10% discount in price
- 54% note a rise in climate risk assessments by investors on their built assets, suggesting that climate issues could be influencing the behavior of key market players
- Lack of tools, databases, established standards, and benchmarks identified as key obstacles
- Industry must, however, help drive the establishment of standards by adopting and utilizing those that are available*
- Contributors also highlight high costs or low availability of low carbon materials and skill shortages as a challenge.
Progress is being seen in some aspects of the built environment on the drive to be more sustainable, according to the latest annual sustainability report produced by RICS, however the rate of advancement needs to accelerate significantly and become more widespread.
The 2022 RICS Sustainability Report shows that some improvement in the push for sustainability has been made in the past year, notably in the commercial real estate sector as demand for green buildings continues to rise. However, the data also shows there has been little or no change in some important areas in the past 12 months. Indeed, in construction, a significant share of professionals say they do not measure carbon emissions on projects.
Commercial Property: While the appetite to seek green buildings in the commercial property sector continues to rise, the change is modest, according to the majority of respondents in North America. Looking at investors and occupiers separately, around 45% of contributors note that occupier demand for green/sustainable buildings has risen over the past 12 months. On the investment side around 39% of survey contributors globally report a modest increase in investor appetite for green/sustainable buildings over the past 12 months. A further 8% suggest there has been a more significant increase in demand.
As demand for sustainable buildings continues to increase, it is impacting both rents and prices, with a significant share of contributors seeing a market premium for sustainable buildings, and citing that non-green real estate assets are subject to a ‘brown discount’. For those buildings that aren’t classed as green or sustainable, 38% of respondents noted a reduction in rents, and 39% also cited a reduction in sale prices. Interestingly, roughly a quarter of respondents believe this discount is up to 10% with 15% of respondents believing it is even higher.
In another signal that people are placing more focus on sustainable property, the majority of respondents (49%) note a modest rise in climate risk assessments by investors on their built assets, suggesting that climate issues are now rising up the agenda and could be influencing the behavior of key market players.
Construction: Survey respondents report that Construction professionals are beginning to embrace digital tools and technologies to complete sustainability-related analysis for construction projects, predominantly to assess energy needs and costs, but they are less likely to utilize these tools to reduce embodied carbon or to measure the impact on biodiversity. 56% of respondents report that digital tools and processes are used to complete sustainability assessments on less than half or none of their projects.
Kisa Zehra, RICS Sustainability Analyst, commented: “It is of benefit to all to embrace climate strategy, and we must reduce our impact as the built environment. Behavior change is happening, with higher rents and prices being seen for the more desirable sustainable properties, and climate risk assessments by investors on their built assets rising in the Americas. But, measuring all forms of carbon is also critical to the changes we need to see from the built environment.”
“Barriers to progress cited in the report have included a lack of established standards, guidance and tools. However, it is equally fair to say that the industry must adopt these tools and standards where they are available, and should make carbon assessment and management an integral part of business practice. This industry needs to work in collaboration to succeed. The work RICS is leading with partners, for example the ICMS coalition in developing a cost measurement standard that combines cost and carbon reporting, is a key example.
“RICS will continue to promote research, and demand policy changes while working in collaboration with industry, governments and our professionals to increase the impact of the built environment on positive climate strategy.”
Construct America Magazine | The Home of Construction Industry News
Got a story to share? email us at firstname.lastname@example.org