Green future in property investment
The Financial Times has reported that property investment professionals are realising the need to go greener and improve the environmental performance of their housing portfolios despite little evidence to show that a more sustainable portfolio generates an increased income.
It is hoped that such commitments from property managers will provide building jobs and jobs in construction for those specialists in sustainable building methods.
Mark Meiklejohn, property investment director at Standard Life investments, comments on this new trend saying ''as an issue its very, very topical, but we've not seen any economic impact from environmental issues to date''.
The built environment as a whole has a large carbon footprint, contributing to around 40 per cent of all UK carbon emissions according to the Institutional Investors Group on Climate Change. This reflects that property investors are likely to be affected by carbon reduction policies but they have yet to be targeted as much as the motor industry. However, this is attributed to the recession and the 'reality that the market hasn't fully priced that risk in'' according to William Hill, head of property at Schroders. It is expected that there will soon be penalties for environmental and energy deficiencies in the future.
Mr Hill continues by saying that these penalties shouldn't be considered the way forwards and that property investors should have ''environmental efficiency embedded in their portfolios''.
The green focus has previously put the spotlight on new builds. Nevertheless, new properties of less than five years old, only contribute to around two per cent of the UK's housing stock and in fact, older buildings such as Victorian terraces are more energy efficient than their new counterparts.
Instead of building a number of new green homes, older buildings can also be made more environmentally efficient with the help of double glazing, insulation and light motion sensors.
Real estate and investment managers Axa, are also committed to environmentally improving existing housing stock and have been integrating this idea into its investment processes. Gilles Bouteloup, head of sustainable development at Axa REIM said: ''The main benefit for the investor is to reduce the risk of loss in the case of regulatory change - it is future proofing our portfolio''.
Author: Sarah Howard
Keywords: building jobs, jobs in construction