As for any industry out there, trends come and go. But the sustainability trends projected for 2023 are about to change the future of real estate, according to experts.
The real estate sector is thinking big about climate action. 2022 was impactful, as the focus was on decarbonization and data protection. And now, as we look ahead to 2023, more changes are hitting the horizon. Sustainability is a major concern for all industries, and the fact that companies all over the world have started to adopt measures to reduce their carbon footprint is clear proof of this. Real estate companies aim at transformative solutions, too, in order to handle a diverse set of challenges associated with climate change. According to Architecture 2023, about 40 percent of global carbon dioxide emissions are generated by the real estate sector. And of these emissions, nearly 70 percent come from building operations. Without a doubt, the numbers are alarming, and the need for change has never been greater.
However, the journey toward net zero has already started. Real estate firms’ plans include responding to government influence, adopting newer technologies for low-carbon heating and cooling, upgrading to eco-friendlier lighting systems, and incorporating climate change risks into asset and portfolio valuations. Given the latest innovations in real estate, we have hope that this could be reachable in the near future. Let us not forget that the real estate sector was among the first to accept crypto payments, allowing individuals to purchase properties with virtual coins. This means anyone interested in the Bitcoin or Ethereum price USB and investing in such coins could further use them to buy a property.
Sustainability will certainly influence the real estate’s decision-making. How this will happen is discussed in the following.
Carbon tunnel vision is all about decarbonization, carbon emission reductions, carbon credits, carbon compensation, and carbon equivalents. By 2022, most of the real estate sector was stuck in this tunnel - data shows that in New York, for example, high-carbon working spaces valuing $500 billion could be stranded as they do not meet sustainability standards, and renovation might be too expensive. However, real estate companies worldwide have started recognizing the risk and are working towards net zero. Some have taken concrete steps in this regard, accepting the Paris Agreement and the New Green Deal, making net-zero pledges, and embracing developments such as the WEF’s Giving to Amplify Earth Action (GAEA) and CBAM (EU’s Carbon Border Adjustment Mechanism), among others.
2023 has come with the need to turn promises into tangible action for real estate. Whether the sector will thrive or not remains to be seen, but from what we have so far, becoming greener seems quite attainable.
Achieving zero emissions seems impossible if we are to mention the surface of the new floor space that has to be built, given the expansion of the world population. Nonetheless, if real estate companies focus more on energy-efficient buildings than on financial returns, sustainability will be more reachable. This kind of building is powered by renewable energy sources (solar power, wind power, hydroelectric energy) and uses zero fossil fuels on-site. Looking at the expansion of living spaces projected between now and 2040, the need for embodied carbon is greater than ever. In order to achieve more sustainable living spaces, each continent, region, country, and city is taking its own measures. Europe, for example, is forecast to become the home of industrial innovation and clean tech on the road to net zero, while Saudi Arabia is taking active steps to build The Line, a next-gen sustainable city projected to be completed by 2030.
Real estate organizations are aiming to strengthen their ESG (Environmental, Social, and Governance) programs, so the demand for skilled ESG professionals has never been higher. That is because proficient specialists in this field would help real estate companies support the overwhelming technical work of diminishing emissions and energy across their portfolios, stay abreast of reporting requirements and regulations, and incorporate ESG considerations into their business operations. Moreover, the search focuses on more than one area, as ESG contains a vast and disparate range of disciplines. But one individual cannot master all the distinct aspects of ESG, so companies are looking to expand their personnel in areas such as legal compliance, investor relations, data analysis, marketing and communications, and finance, among other things.
The ambition for more sustainable infrastructure started in 2022, as electric vehicle (EG) charging stations and on-site solar generation have become the new norm. This raise in demand for sustainable infrastructure is influenced by various factors, among which the most important is the appeal of these ‘green’ amenities to potential tenants that could push rents forward, the availability of financing vehicles like rebates and incentives, the ongoing popularity of EVs with consumers, and the declining costs of EV charging tech and solar panels. And, apart from the evident benefit of helping with decarbonization, on-site renewable solutions can pick up the utility bills, a significant consideration if we allude to the ever-growing electricity rates.
Biodiversity has become a real concern in the real estate sector, which is now trying to comply with the United Nation’s Biodiversity Conference’s (COP15) plan to stop biodiversity loss by 2030. However, the full framework on this issue is expected to be launched in September 2023, and it targets real estate organizations that must act on ongoing nature-related risks. So, as biodiversity is growing in popularity, we expect to see more greenness in urban environments around the world, as well as new habitat opportunities for wildlife.
2023 is undoubtedly going to be a pivotal year for the real estate industry. Since sustainability has become a major concern, real estate players spare no efforts to adopt the required - and so much-needed - measures in this sense.