Report: Building Sustainability

Confronted with more signs of climate change and more popular support for climate action, the Australian Government has committed to markedly reduce greenhouse gas emissions by 2030, on the way to net zero emissions by 2050.

In this context, there is a lot of work to be done in real estate, as a major emitter of carbon in the economy. Also, there is considerable opportunity ahead across Australian real estate sectors to reduce energy usage, build more sustainably, manage climate risks and deliver better risk-adjusted returns.

The green push in real estate is all encompassing, not just including all future construction projects, but also covering the comprehensive retrofits of every existing residential and commercial building to align with the proposed net zero pathway.

Part of this journey involves measuring the environmental performance for each asset, by continually reporting upon their sustainability ratings, as a baseline for assessing future improvements.

For investors, there is increasing evidence of a green premium in real estate, with more sustainable buildings commanding higher occupancy, rents and asset prices. Investors are not just deploying to sustainable real estate for better environmental and social impacts, but likely for better financial rewards as well.

Importantly, there is an element of investor value protection at work as well. For buildings left behind by the rising tide of sustainability, there is a genuine risk that browner buildings might become stranded, unable to attract finance, insurance or buyers.