At the level of individual properties, several aspects of sustainability are already taking effect in terms of the triple bottom line – whether in purchasing criteria, the resulting asset management approach in property management or aspects such as tenant satisfaction. This is also particularly apparent from the growing number of properties that are evaluated and certified on the basis of sustainability criteria – before an investment is made.
But if you look at the level of capital market products above this, you get a different picture. To date, there have not been a significant number of sustainable real estate investment products that invest specifically and exclusively in sustainable properties and are managed in line with ESG (environment, social, governance) criteria. If this is compared to the development of the total supply of sustainably managed investment products such as bond or equity funds on the capital market, there is a considerable shortfall in the area of real estate products. And this is despite the fact that demand among major institutional investors for this type of real estate investment product has been clearly articulated. Only a small number of such fund products – such as the IVG Premium Green Fund – have been fully placed.
To shed some light on this situation, IVG Research conducted a survey of the 100 biggest European institutional real estate investors in July and August 2013. In the summary of the current IVG Research LAB “Sustainable real estate investment products – between demand pressure and supply shortfall”, the findings were almost soberingly clear:
· There is a clear consensus among investors: Properties are suitable as a basis for sustainable investment products. 96% of the participants agree on this.
- Nonetheless, whether in developed or emerging markets, 80% of investors prefer investments in the Core and Core+ risk classes.
- 58% of investors prefer investments in newly constructed properties. By contrast, the remaining 42% rather see renovated existing properties as suitable.
· With regard to the current reticence in product development, 61% of the respondents argue that there is no stringent asset management approach in place. A lack of suitable fund managers is also cited.
In addition to the strategic and ideal type of product DNA, other very convincing arguments regarding the current operational reticence were mentioned in the survey. However, this also makes it clear that a new type of fund manager will move into the real estate investment sector in the coming years, a type that can contribute the necessary CS skills for their asset management responsibilities.
Source : Company