With an increasing number of UK residents adopting a more eco-conscious approach, buyers will be favouring greener and more sustainable new home purchases in the new year. And the trend is global.
The prediction by a conveyancing solicitor Daniel Chard, partner at Bird & Co, follows a recent survey which found that 82 per cent of buyers said they would be willing to pay more for an energy-efficient property.
In the same survey nearly two-thirds (63 per cent) of the 1730 prospective home buyers asked indicated a desire to purchase a sustainable home. 38 per cent said they intended to buy a property with features such as thermal wall insulation, efficient boilers and renewable energy supplies.
Not only did 82 per cent of buyers say that they would be willing to pay more for a sustainable home, more than one-quarter were willing to pay at least a six per cent premium for one.
The buyers ranked lower energy bills as more important than many other features; including a garden, parking spaces, amenities, external appeal or design of the home, and fittings and appliances.
More than three-quarters (78 per cent) believed that purchasing a greener home would have a positive environmental impact and 92 per cent were positive about making such a purchase.
A global trend
This is part of a general trend. According to global technology intelligence firm ABI Research, global public and private investment levels in green urban infrastructure are expected to increase from US$606 billion (A$604b) in 2022 to US$978 billion (A$1463b) in 2030 across a wide range of green assets, including city parks, urban forests, ponds and lakes, rooftop gardens, green walls and buildings, and pedestrianised green streets.
Example projects include the green makeover of the Champs-Élysées in Paris for the 2024 Olympics at a cost of €250 million (A$395m), the redevelopment of the former Athens International Airport into the Metropolitan Park and Coastal Front at a cost of €8 billion (A$12.6b), and the NEOM Regreening and Saudi Green Initiatives at a cost of US$187 billion (A$280b). Other examples include Madrid’s Nuevo Norte Urban Forest, Melbourne’s Green Infrastructure Plan, Bangkok’s Benchakitti Forest Park covering an area of 0.7 square kilometres, and Boston’s Green New Deal.
Athens
Back in Athens, the Ellinikon is the largest (in area) urban regeneration project in Europe, and it is controversial in this country of extreme political contrasts because of the involvement of big capital. If this were in Germany it would be occupied and developed by its squatters.
Built on what is not only the former airport but the 2004 Olympic site later used to house refugees, the plan is to develop a completely renewable smart city being built from the ground up on the edge of the capital of Greece.
Most recently, Lamda Development, the developer behind the Ellinikon, completed a share agreement with a Greece-based renewable energy company, which will further plans to install photovoltaic panels on the rooftops of all its buildings.
The Ellinikon Park (the largest coastal park in Europe) is already home to a small solar park. All of the development’s renewable energy projects are slated for completion by the conclusion of the development’s first phase. It already includes 50 kilometres of walkways and cycling paths that go through the park, as well as two large shopping malls, a 310-berth marina, two hotels, and approximately 10,000 residential units.
In the future there will be 31,000 new trees from 86 different tree species, replacing many that burnt down in the fires of recent years, as well as over one million plants – 70 per cent of which are native to the region and require no additional irrigation.
NABERS in the UK
Which brings us to the subject of commercial real estate. UK think tank Carbon Intelligence (part of Accenture) estimates that 95 per cent of UK office buildings, if subjected to NABERS UK analysis, would achieve under three stars, in this system which goes up to six stars.
This means landlords are missing out. Because research in 2021 from Knight Frank found that offices with NABERS Energy ratings of three to four and a half stars were worth an average of 8 per cent more than unrated buildings on a per square metre basis. This premium jumped up to 18 per cent among offices with 5- and 6-Star ratings.
A demonstration of strong energy efficiency performance could also provide access to cheaper debt through green finance. Banks increasingly require a decarbonisation plan for an asset and evidence of its exposure to physical and transitional risk, and this is provided by a high, or improving, NABERS rating.
UK office buildings have poor energy performance compared with the NABERS UK benchmarks.
This problem stems from the prevalence of natural gas heating systems and increased natural gas consumption in buildings due to the pandemic and reduced occupancy. The increase in gas consumption is due to longer ventilation times, reduced usage of heat recovery and the higher heating loads required for emptier buildings where fewer occupants mean there is a lower contribution from body heat.
An exhaustive and externally validated submetering system for electricity and gas is critical to accurately develop a NABERS rating, yet only a minority of UK buildings have this in place.
So to prepare for the world of performance-based energy rankings, landlords should consider where potential inefficiency hotspots are and assess where stock can be refurbished or upgraded to improve energy performance and stand out in the market to tenants and investors. In a world where energy costs are predicted to remain high, any investment in future-proofing buildings will also bring significant financial savings.
