A key take out of the SIOR International European Conference was the need for the real estate investment market to wise up to the EU Taxonomy Regulations and the monumental impact it is going to have on the industry in the future.
Environmental sustainability standards are increasing and will only get more stringent in the years to come. Progressive increases in the carbon tax nationally, set to reach €100 by 2030, will have cost implications for operating buildings that are not energy efficient and still rely on fossil fuel for heating, and on construction costs of building materials used in new property developments.
Add to this the new EU Taxonomy Regulations, aimed at diverting finance and investment into sustainable economic activities, such as sustainable buildings, and one can see that the focus of the real estate industry in the coming years must be on building sustainable buildings if they are to continue to attract the interest of investors and finance and to attract occupiers with sustainability ambitions willing to pay premium rents. The solution, said Kevin Nowlan, Senior Adviser of Hibernia REIT, is twofold, firstly the delivery of new buildings is going to become more expensive, and the market is going to be economically encouraged to try to utilise existing buildings as much as possible through retro fitting and repurposing. Secondly the carbon footprint from the delivery of new building is going to have to significantly fall which will mean significant material innovation will be needed.
Kevin said: “The EU Taxonomy will transform property. Buildings that mitigate against and are able to adapt to climate change will be more expensive and this will only increase as minimum standards get tougher. We welcome this intervention because we know it’s what we need to ensure our sector responds and plays its part.
“What needs to happen at the same time though is a change in mindset. To safeguard our assets and investments, we need to be planning for this now, by fundamentally changing the way we develop, so we don’t have to price buildings out of the market altogether.
“We must innovate, build differently, embrace sustainable materials such as timber and look to modern methods of construction to build in cost efficiencies as well as sustainability. To do this effectively we need to ensure planning and building regulations can keep up. The industry and the system that supports it need to be more agile.”