Real estate sector the first to bear the impact of climate change
Real estate sector the first to bear the impact of climate change
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Real estate sector the first to bear the impact of climate change

RE+D magazine

With cities responsible for 70% of global carbon emissions, the best way to protect their residents from a warming world is to play a leading role in preventing it from overheating.

Climate Resilient Cities Index, highlights some of the measures that major cities are taking to mitigate the effects of climate change. It takes into account rising temperatures and sea levels, excess rainfall, drought and climate-related extreme events such as hurricanes, and focuses on the responses of major cities around the world.

One interesting development in the real-estate world is carbon pricing, which offers financial incentives for building users to reduce their carbon emissions.

According to  Savills' Climate Resilient Cities Index,Singapore is a leader in this, introducing Southeast Asia’s first carbon pricing scheme in 2019. South Africa also introduced a carbon tax in 2019, while the EU is establishing a “polluter pays” principle.

In Singapore, carbon taxes apply to commercial establishments that emit at least 25,000/t CO2 annually. To avoid shocking the economy, the rates will progressively increase over time. The objective is to reach a range of S$50 to S$80/t CO2 by 2030.

Carbon pricing could significantly impact both residential and commercial real-estate markets. The pandemic has already accelerated a flight to quality, with grade-A buildings commanding premium rents and lower-tier properties seeing lower demand.

Rewards for sustainability (or penalties for its absence) may accelerate this trend and nudge landlords and occupiers towards greener properties.

Collaboration in the fight against carbon

In all of these areas, education will be key. City governments need to take businesses and residents along with them, and convince them of the need for change.

To that end, many are prioritising collaboration. In Madrid, the ‘Green Office’ is a tool to promote sustainability in residential building stock and point citizens towards sources of public funding for refurbishment projects. New York’s Retrofit Accelerator provides free and bespoke advice to building owners looking for energy-efficient solutions.

Together this represents a carrot and stick approach to real-estate sustainability. When it comes to carbon reduction, city authorities can only do so much on their own. A mix of penalties, rewards and resources – encouraged by infrastructure improvements – is persuading private individuals and businesses to make a difference in their own homes and offices.

source: Savills