However, the impact of ESG on the real estate industry goes beyond what is mentioned above. ESG is therefore here to stay and will increasingly shape and influence real estate valuation, and therefore real estate investment, as investors wish to allocate their commitments under this banner. This is the investor-driven global ESG benchmark and reporting framework for listed property companies, private property funds, developers and investors that invest directly in real estate 2. Another indication is the increased participation in the 2020 GRESB real estate assessment. This is evident from the development of the Sustainability guidelines of the European Association for Investors in Non-Listed Real Estate Vehicles (“INREV”) 1 to also adhere to investors’ needs. Sustainability has become increasingly vital to real estate investors. Medium-to-long term profit is therefore considered and kept with the usual lower risk volatility of a real estate asset. The correlative appetite that investors have for ESG, closes the loophole where more (long term) value is attributed to real estate assets. Awareness is growing that real estate can have a significant social impact either through the form of rehabilitation of public spaces (indirectly attributing value to existing real estate), affordable housing, social housing, and care centers, or through an environmental focus investment on new buildings such as green buildings. The application of ESG standards on real estate (notably by governments and developers in many developed countries) has shown that this asset class is also relevant when these guiding principles are being applied. The trend, however, is growing quite the opposite way. Once upon a time, real estate embodied the epitome of capitalism.
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