Real estate accounts for nearly 40 per cent of energy-related carbon emissions but cutting emissions to net zero in the sector is highly complex. Investors should focus instead on cutting emissions by refurbishing properties and avoiding new builds.
Reducing emissions in real estate portfolios is a growing challenge for asset owners, particularly since greener building are already beginning to show better returns via tenant demand and higher values. Focusing on refurbishment is key to success, said Zsolt Kohalmi, global head of real estate and co-CEO Pictet Alternative Advisors speaking at Sustainability in Practice.
Revealing statistics point to the challenge ahead. Buildings account for nearly 40 per cent of energy-related carbon dioxide emissions, according to UNEP’s 2020 Global Status Report; 90 per cent of buildings in Europe were built pre-1990, and around 45 per cent of emissions occur during the build. Moreover 80 per cent of today’s buildings will still be with us in 2050.
Statistics that suggest the most proactive strategy for asset owners seeking to cut emissions in their real estate portfolio involves refurbishing old buildings rather than investing in new real estate.
“The reduction has to come from refurbishment,” said Kohalmi, adding that it is possible to cut emissions by 30-70 per cent by refurbishment. One of the challenges in the process comes from the fact there are few common measurements or standards around embedded carbon emissions in real estate.
Encouragingly, a green premium is starting to emerge. Kohalmi said that buildings with a higher ESG standard are obtaining higher rental values.
“Going forward you will pay a premium if a building has improved its sustainability rating,” he said. “Refurbishment is not easy, but it is our best path to making an impact on overall emissions and creating climate resilient future.”
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The pressure on the sector to decarbonise coincides with wider challenges for real estate in the wake of the pandemic and the shift to working from home. Office spaces able to offer communal areas and space where employees can gather to share ideas rather than fixed desks will do best, predicted Kohalmi.
“We are seeing a shift between the new and old economy in real estate,” he said. Elsewhere, the pandemic has accelerated trends already visible in logistics and retail. The jump in online shopping made “a tough ride” for owners in retail and has proved positive for investors in logistics.
Fellow panellist Karen Lockridge, director, ESG investing, Canada Post Corporation Pension Plan who manages a $3 billion allocation to real estate agreed in the business case for refurbishment, noting statistics pointing to tenants paying a premium and cost savings around energy efficiency.
Both agreed that refurbishment is an opportunity but also vital for risk mitigation.
“There is a downside risk of not acting,” said Kohalmi. He also noted that unlike most trends which tend to emerge first in the US, demand for green real estate is more pronounced in Europe than the US.
“It will rebound in the US in due course,” he predicted.
Achieving net zero in real estate is complex. But significantly reducing emissions is achievable and worth fighting for.
The conversation concluded with a recognition to the fact new builds rather than refurbs will remain the focus in emerging market real estate.
“The focus has to be on how we can improve the way we do new builds like work around creating more sustainable cement,” said Kohalmi. “We have to accept there will be more new builds and become more sustainable when we build,” he said.
Sarah Rundell is a staff writer for Top1000funds.com based out of London. She writes on institutional investment across all asset classes, global trade and corporate treasury.
OTTAWA – The Canadian Real Estate Association says the number of homes sold in August fell compared with a year ago as the market remained largely stuck in a holding pattern despite borrowing costs beginning to come down.
The association says the number of homes sold in August fell 2.1 per cent compared with the same month last year.
On a seasonally adjusted month-over-month basis, national home sales edged up 1.3 per cent from July.
CREA senior economist Shaun Cathcart says that with forecasts of lower interest rates throughout the rest of this year and into 2025, “it makes sense that prospective buyers might continue to hold off for improved affordability, especially since prices are still well behaved in most of the country.”
The national average sale price for August amounted to $649,100, a 0.1 per cent increase compared with a year earlier.
The number of newly listed properties was up 1.1 per cent month-over-month.
This report by The Canadian Press was first published Sept. 16, 2024.
MONTREAL – Two Quebec real estate brokers are facing fines and years-long suspensions for submitting bogus offers on homes to drive up prices during the COVID-19 pandemic.
Christine Girouard has been suspended for 14 years and her business partner, Jonathan Dauphinais-Fortin, has been suspended for nine years after Quebec’s authority of real estate brokerage found they used fake bids to get buyers to raise their offers.
Girouard is a well-known broker who previously starred on a Quebec reality show that follows top real estate agents in the province.
She is facing a fine of $50,000, while Dauphinais-Fortin has been fined $10,000.
The two brokers were suspended in May 2023 after La Presse published an article about their practices.
One buyer ended up paying $40,000 more than his initial offer in 2022 after Girouard and Dauphinais-Fortin concocted a second bid on the house he wanted to buy.
This report by The Canadian Press was first published Sept. 11, 2024.
MONTREAL – The Quebec Professional Association of Real Estate Brokers says Montreal-area home sales rose 9.3 per cent in August compared with the same month last year, with levels slightly higher than the historical average for this time of year.
The association says home sales in the region totalled 2,991 for the month, up from 2,737 in August 2023.
The median price for all housing types was up year-over-year, led by a six per cent increase for the price of a plex at $763,000 last month.
The median price for a single-family home rose 5.2 per cent to $590,000 and the median price for a condominium rose 4.4 per cent to $407,100.
QPAREB market analysis director Charles Brant says the strength of the Montreal resale market contrasts with declines in many other Canadian cities struggling with higher levels of household debt, lower savings and diminishing purchasing power.
Active listings for August jumped 18 per cent compared with a year earlier to 17,200, while new listings rose 1.7 per cent to 4,840.
This report by The Canadian Press was first published Sept. 6, 2024.
