The energy transition in the real estate sector is central to achieving the climate targets that have been defined. With this in mind, the focus in the renovation of existing properties and the construction of new ones is being placed clearly on sustainability. In this article our Baloise Real Estate experts discuss what makes a property sustainable, and why this is beneficial not only for investors.
A property has a life cycle of approximately 25 to 30 years, after which time elements such as heating, windows or the kitchen will gradually need to be replaced. The decisions we make when it comes to new builds or restructuring processes will therefore have a long-term impact. Our living accommodation accounts for around 24 per cent of the carbon emissions in Switzerland, taking second place just after transport. The heating of residential space is an especially significant driver (admin.ch).
At the same time, real estate is one of the most popular investments: “Real estate is one of the safest investments there is. To make sure this continues to be the case in the future, however, properties must be built and managed in a sustainable overall approach,” say Baloise real estate experts Stefan Frehner and Munzur Halis. Baloise is one of the largest real estate owners in Switzerland (german), with approximately 80 per cent of the portfolio consisting of residential property. As a responsible investor, sustainable real estate investments (german) and long-term returns are intricately connected for us.
Sustainable real estate management encompasses the key areas of ecology, social responsibility and profitability. “Each property is valued on a case-by-case basis with a view to ensuring the best possible environmental approach, while taking into account regional and social factors such as the income and age structures of potential tenants. This is the only way for a property to create sustainable economic value,” explains Stefan Frehner, Head of Construction and Development in the Real Estate division at Baloise.
In terms of investment, real estate should never lose value. “Investors focus on the return a property can earn them. This is not a bad thing in itself. Here we can combine economic, ecological and social sustainability, and use the capital wisely,” says Munzur Halis, Head of Real Estate Trading. Real estate that already meets the highest sustainability standards can also be sold better in the future: “Buyers must expect the energy requirements for existing buildings to become stricter. Sustainable real estate is considered more future-proof compared to buildings that are built or renovated according to less strict standards.” At the same time, working and residential properties must also meet tenant requirements: “Location, size and price. Depending on the place, different factors need to be considered. Without real estate that meets people’s needs, we won’t find any tenants. This is why, for example, low-cost new-build apartments also need to be available in different sizes.”
Sustainability certificates can be used to ensure measurability and increased transparency. “Motivation for achieving certification can vary. A certificate confirms that the owner has created a sustainable workplace for users, which may be more cost-effective to operate than a conventional property and enables legally specified sustainability targets to be met,” comments Munzur Halis. Here are some examples of well-known sustainability certificates:
The most widespread standard worldwide is the American Leadership in Energy and Environmental Design (LEED), which uses a points system to distinguish between four levels of highly efficient and cost-saving buildings.
The Building Research Establishment Environmental Assessment Method (BREEAM) has been on the market since 1990 and comes from the UK. It distinguishes between five levels ranging from Good, Very Good, Excellent to Outstanding.
SNBS (german) Building Construction is based on the Federal Council’s strategy for sustainable development in Switzerland and was launched in 2013. It covers the building itself and the site in the context of its surroundings.
Minergie (german) is a Swiss construction standard for new and modernised buildings in the standards Minergie, Minergie-P and Minergie-A. With the suffix “ECO”, the issues of health and building ecology are also considered.
In Germany, the German Sustainable Building Council (DGNB) has been the German seal of quality for sustainable construction since 2009. Ecological, economic and social aspects are included in the assessment.
Baloise Real Estate always aims to achieve certification for new buildings. This applies not only to our investment properties, but also to the company buildings we use ourselves, such as the new Baloise Park in Basel (SNBS certificate), THE LINK in Belgium (BREEAM Excellent) and the WOODEN in Luxembourg (BREEAM Excellent and others), which is currently under construction. Everything that is not being built from scratch must be renovated at some point, and the goal here is to always ensure an improved energy balance. “In many older properties, a lot can be done in terms of climate protection. In the past, people just built, and there were no requirements for climate-friendly heating, for example,” says Stefan Frehner. At the same time, gradual renovation makes it possible for tenants to remain in their apartment, and to prevent rental costs from rising disproportionately with the increase in value resulting from the renovation work. “For all our properties, we calculate the progress achieved through renovation work with a so-called CO2 reduction pathway.”