Decarbonisation in real estate. What is the current state of play? Chapter 2 of the latest PWC/ ULI Global Emerging Trends in Real Estate 2021 report expertly summarises the current global position. Perhaps the overriding theme is that whilst the pace has accelerated, this is just the beginning and the path ahead is complex. Future annual reports will inevitably serve as a useful barometer.
There’s plenty to digest but one observation stands out.
“Every time we look at a new acquisition, we are underwriting how much it might cost to get that building to net zero,” one investment manager says. “If you come into our investment committee, and you haven’t come
up with a cap-ex budget for getting the building to zero, you’re told to go away and come back when you have,” another adds. “We don’t even look at a deal until we understand that.”
As the report acknowledges, it is only a select part of the investment market that is already thinking in this manner. Yet as the report hints, what if valuation methodology changes? If valuers must account for the cost of making a building net zero, there is nowhere to hide. It follows that if valuers start watching the “carbs”, the pace of change will no doubt intensify.
It’s moving quickly, and by the end of this year it will be an avalanche