Sustainability and Green Building
The built environment is a sector with a large consumption of energy, estimated to be about 40% of global energy use. The sector also accounts for about 30% of greenhouse gas emissions. In the recent past, the industry has experienced significant transformations following the introduction of sustainable and green building practices.
This is necessitated by the increase of environmental concerns and the urgent need to address climate change across the globe. In this regard, developers, investors, and all other players in the real estate industry are inclined to embrace sustainable and green building practices with a focus of creating a sustainable and eco-friendly future.
Impacts of Sustainable and Green Building Practices
Efficiency and Cost Savings
Sustainable buildings are designed to optimize energy efficiency by minimizing the amount of energy used and integrating alternative sources such as natural lighting and renewable energy sources like solar panels. Water-efficient systems and fixtures are also used to reduce water consumption and hence utility expenses. These practices offer significant long-term cost benefits to both the developers and occupants.
Environmental Impact
Sustainable and green building practices aim to minimize the environmental effects of construction and operation activities of buildings. The practices include lowering energy and water consumption, proper waste management, and use of eco-friendly materials in construction, among others. This ensures reduction of carbon emissions and other environmental pollutants, thereby enhancing sustainability and safety.
Market Demand
Most consumers and occupants of buildings are today highly cautious of the choices they make with regard to potential environmental impacts. Sustainable and green buildings provide a number of benefits to consumers including cost cutting, and a healthy and sustainable environment. Moreover, the green spaces and easy access to nature within such developments significantly contribute to the overall well-being of occupants.
This has increased the demand for sustainable buildings and pushed developers to prioritize eco-friendly practices and incorporate green building certifications, such as EDGE, into their projects.
Investor Preference
Investors are highly prioritizing sustainability and eco-friendliness of the products in which they invest. Green and sustainable buildings not only align with most investors' values as far as the environment is concerned, but also present a lower risk to their investment portfolio. Notably, the inclusion of environmental, social, and governance (ESG) concepts into investment decisions is gaining momentum, and real estate developers acknowledge the need to apply this concept to attract investors and raise capital.
By incorporating sustainability, the real estate industry enhances its reputation even as the world aims to address environmental challenges such as climate change and resource depletion.
Our View
Sustainable and green building practices introduce a new generation of the real estate industry. They are changing and reshaping the whole process of development projects, including planning, design, construction, operation, and maintenance of future developments. The focus on environmental impacts, cost savings, investor preference, and market demand calls for the adoption of sustainable practices.
Arguably, as the real estate industry evolves with time, sustainable buildings — one of the ways aimed at achieving the SDGs — will become the new standard.
Sources: UNEP, Deloitte, ProptechOS and Sterling Real Estate Advisory