Developments in sustainability legislation, the EU Taxonomy, have significantly changed the market. This particularly affects property developers who now have to do more to make their properties profitable. Investors will increasingly base their final judgement on compliance with the new legislation. A technically well-built property in leased condition is no longer a decisive factor for sale.
Anno 2023, sustainability requirements have become the foundation for buying and selling properties. Due to the many changes surrounding the new requirements, staying on the ball is very important. Developers have to consider a few familiar components from different perspectives: the property’s income and the amount of rent that will be released.What will the rent bring in over time? The valuer determines the amount of rent based on that. This will also include the future prospects of the property in question.
For both property developers and investors, European legislation is crucial. Properties must comply with the most up-to-date requirements. Project developers will thus make the properties more attractive to investors, so they will not be stuck with the properties themselves. It will also make investors more likely to invest.
Besides the renewed European requirements under the EU Taxonomy, tenants themselves also have a greater interest in sustainability. They are interested in air quality, daylight levels and the use of non-toxic materials. Our Environmental, Social, & Governance (ESG) sets the tone for this. ESG criteria also include social aspects such as health and well-being.Tenants value buildings that provide a healthy and safe environment. Project developers must also pay attention to this otherwise this too is of no interest to investors.
Finding investors, loans and tenants can be difficult. Especially if the project is deemed risky, combined with not meeting sustainability requirements. So finding financing can be a big challenge for project developers.Thereby, tenants want security. They do not want to face unexpected costs or disruptions due to hidden defects.
The opportunities for green investment and certification are endless. Since the EU taxonomy with its rating system is legally in place, property developers can no longer get away with ”we are sustainable”. With the presence of these new regulations, this rating system allows the real estate industry to test organisations on the sustainability of this green investment. If this is not the case, the financing will be higher.
All in all, the new regulations are unmissable for all parties involved in the sector. For developers and investors, the new sustainability requirements are a must. For tenants, the benefits are incontrovertible. Real estate is a complex and challenging sector that can promote economic growth and urban development. Especially now, it is so important that we collectively provide new and existing buildings with a sustainability label.
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