Sustainability Value of Real Estate

ESG (Environmental, Social and Corporate Governance), namely Environmental, Social and Corporate Governance, has become a concept that takes more and more place in our lives in recent years. It is a fact that sustainability has become one of the most important priorities in our lives. The pandemic period gave the world a serious impetus for reviewing their perspective on nature and increasing the importance of sustainability. Real estate investments and the value of the portfolios are starting to make a difference with these developments as well. With regards to real estate investments, the expectation now is not only to generate high earnings for its investors but also to be open and useful to society and the environment. ESG policies cover environmental aspects of real estate in the upcoming period, including the impact on climate change, carbon emissions, water-saving ability, ability to produce renewable energy, energy efficiency and waste recycling. Properties that do not meet these criteria are expected to be adapted to the system by having an additional investment or suffer significant depreciation; some are not allowed to be used under legal sanctions. On the other hand, banks and other financial institutions also encourage eco-friendly real estate projects by placing this issue among the priority criteria in real estate financing processes. It is known that institutional investors are especially attracted to real estate that is built and managed with environmentally friendly, socially responsible, and a sense of social responsibility. While it is known that the building stock has a share of approximately 25-30% in total energy consumption in the world, “zero-carbon” themed properties will be preferred in the future, where more ecological construction materials are used, smart heating and cooling systems, and the ability to produce as much as they consume. In the aftermath of this transformation, buildings and urban infrastructure have undergone. Smart and sustainable cities that are now being seen in cities like Singapore, Hong Kong, and Luxembourg are set to become the primary choice of investors and be rapidly increasing in developed countries.