Impact investing in the real estate sector can make a major contribution towards the ultimate goal of making the world more sustainable. How does that work?
Vienna, May 7, 2019 - Buildings worldwide consume enormous amounts of energy: 40 percent of global energy requirements and 30 percent of CO2 emissions are estimated. This has to be reduced in order to combat climate change, and the improvement of energy efficiency is therefore of great importance.
By improving the energy efficiency of buildings, consumption can often be reduced by up to 50 percent - thanks to better facade and roof insulation, tighter windows or technical systems for heating and cooling, and more economical light sources. The CO2 balance of a building can be further improved by using solar collectors or photovoltaic systems. The additional capital requirement is thus offset by direct savings in operating costs as well as increases in value through the improvement of the building substance.
Real estate investments, especially in growth markets, can therefore really be considered sustainable investments and they are also attractive for investors from the point of financial return: CO2 reduction and energy efficiency coupled with attractive returns diversify the portfolio and help the environment.
There is a particularly acute need for improvement - not surprisingly - in emerging markets. In addition, many of these markets are showing interesting price dynamics in real estate due to high economic growth and ongoing urbanization. This opens up attractive investment opportunities for investors who want to invest in tangible assets and at the same time actively support our environment and climate.
Local market knowledge is crucial for investment success
Real estate markets are generally subject to a number of local factors. These range from restrictions on acquisition, administrative processes, building regulations, economic and population development to tax aspects. For impact real estate investments abroad, specialised investment funds are therefore recommended – preferably managed by an experienced investment manager with a local presence. This means that nothing stands in the way of an attractive financial return and a significant contribution to climate protection.
The Example of Tridos
Triodos Vastgoedfonds and Triodos Groenfonds invest in sustainable buildings in the Netherlands. They offer investors a diversified portfolio of sustainable commercial real estate, aimed at contributing to the development of a more sustainable real estate sector in the Netherlands that in turn, will help to combat global climate change. Tridos has established that commercial real estate in the Netherlands contributes between 30% and 40% of the total carbon emissions in the country. The real estate sector thus plays a crucial role in the urgent action against climate change.
However, there are even more benefits even. Real estate also plays an important role in the wellbeing of people and society as a whole. The majority of people spend most of their time indoors, and it is important that buildings are both pleasant and healthy places to work and live. Thus, real estate can contribute to enhancing people’s quality of life in a significant way.
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