• Sustainability in the Living Sector

    June, 2024

Sustainability has become a must in the real estate sector. Regarding the Spanish living sector, more than 95% of dwellings require actions to improve their level of sustainability. Growing environmental awareness and new regulations are driving developers and investors to adopt sustainable practices in order to improve quality of life for residents and increase property values.

ESG criteria and policies are major drivers ofreal estate value. The segments within the living sector with the strongest trend towards sustainability are Multifamily, Flex Living and Granular Residential. Buildings that meet ESG standards have a higher market value: according to specialised industry brokers, buildings with sustainability certifications achieve value premiums of 8% in prime locations and of 4% in secondary locations.

Investors are more attracted to Assets that meet sustainability criteria, increasingly valuing buildings with international sustainability certifications (LEED, BREEAM, WELL). Among other benefits, they obtain greater liquidity at the time of divestment and access to better financing conditions. By achieving a 30% energy improvement in the property, financial institutions facilitate investors access to green loans.

Similarly, tenants are also starting to search for sustainable assets because of the lower level of investment required in the long term, as well as a 20% saving in energy consumption and CO2 emissions. Therefore, sustainable residential buildings may benefit from higher rents, reaching increases of up to 18%-20%.