The Importance Of ESG In Real Estate Practice In Germany

The topic of ESG has long been brought up in the real estate industry, which is regarded as one of the most important factors in climate security. Real estate, along with the building industry, accounts for about 40% of global carbon dioxide emissions.   بيع 

Buildings account for roughly one-third of CO2 emissions in Germany. ESG standards have a major effect on the following areas:

Decisions on investments and current asset management

ESG considerations are taken into account during the investment life cycle. To that end, due diligence tests are performed at the time of purchase, with a particular emphasis on long-term viability. The certification of a building's long-term viability is particularly important. When a property meets international expectations, it is much less likely to lose value, which pays off when the property is sold. During the holding period, properties are reviewed and optimized according to ESG standards on a regular basis, with an emphasis on improving energy quality through energy management and operational optimization. Energy-efficient building renovations are widely regarded as one of the most effective ways to improve energy efficiency and thus reduce CO2 emissions. Building owners can save money on repairs and provide more efficient accommodation to their tenants by doing so.

Getting a lease

Tenants are a major driver of green building since an increasing number of businesses have a corporate strategy that affects their choice of location. Buildings that are modern and functional attract the best tenants, who have more stable rental income. Employee health and well-being are important plus points, which are accomplished by technological construction equipment, public transportation links, and services such as charging stations for electric vehicles and bicycle parking facilities, exercise rooms, and so on.

Furthermore, landlords have started to sell tenants "green," or environmentally friendly, rental contracts. Although there is no universal norm for such rental contracts, there are two types of "green" rental contract clauses. On the one side, I'm referring to laws pertaining to the property's material and facilities. They are, on the other hand, regulations that concentrate on the property's sustainable, resource-saving, and ecological use and management. The ZIA Zentraler Immobilien Ausschuss e.V. has published a document with regulatory guidelines. Investors may not want to be associated with those activities or industries for environmental or social reasons, so ESG considerations may have an effect on tenant selection.

In conclusion

Given the extensive collection of EU regulations mentioned above, ESG will play an even bigger role in the real estate industry in the future. Whether social and environmental gains can be reconciled with investor return expectations would be the deciding factor. Since future problems are already being considered, it is increasingly expected that this will lead to better investment efficiency. In any case, it is past time for all real estate market participants to take a closer look at the topic of ESG and incorporate it into their policy, organization, and decisions.

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