Sustainability now a key driver in real estate market

UK real estate fund managers and investors believe the market no longer views sustainability as a ‘nice to have‘ but a key driver for investment, according to GVAs Green to Gold survey.

The research showed that more than half of those questioned believe the market no longer considers sustainability as just an add on for investors, but something that is starting to be, or is already considered, a key driver of investment performance. This belief strengthens among those fund managers and investors with long term investment.

The finding is also emphasised by the fact that 94% had a sustainability policy in place at either the organisation or fund level for the properties and funds they manage. Furthermore, the statistics highlight a major increase in the number of properties being assessed against sustainability criteria - 59% of fund managers and investors have reported that three quarters of their portfolios have been assessed against sustainability criteria, compared with just a quarter in 2012.

Alastair Mant, director and head of sustainability at GVA, said: “Our latest Green to Gold findings are encouraging. What’s clear is that the majority of fund managers and investors believe the industry is moving away from a simple box-ticking mentality.

“Given the scale of policy, due diligence and strategy that appears to now be in place, as well as the growing proportion of existing assets and potential investments being assessed against sustainability criteria, it’s clear sustainability is no longer being treated as an add on, but rather considered as best practice, or the norm. We believe as an industry we have moved beyond preaching to convincing and are moving into an era of acceptance and integration.”

Other findings include:

98% of investors undertake some form of sustainability due diligence at pre-acquisition.

50% indicated that they reflect these issues in their investment appraisal calculations.

More than half of the respondents participate in two or more reporting processes, an increase from just over 25% in 2012. This is particularly true of investors with an investment horizon greater than 15 years, where 63% take part in two or more reporting processes.

Government regulation is reported as the main driving factor for undertaking a sustainability assessment, with 56% of respondents reporting this as a reason for understanding the sustainability credentials of their assets.

This article has been adapted from an article published in 2Degrees.