The application of sustainability factors across the investment landscape is one of the great driving forces of the fund management industry. However, the property and real estate market is one area that open-end funds have so far failed to fully address. Investors have either assumed that beyond ‘green buildings’ there isn’t much to say, or they have struggled to develop a framework and process that can work across sectors and geographies. By contrast, we see huge opportunities for real estate companies that operate at the forefront of a range of sustainability considerations and it is about much more than just energy efficiency and environmental impact.
The UN Sustainable Development Goals (“SDGs”) cover several areas that are incredibly relevant for real estate owners and can help to build a wide-ranging conception of what sustainable real estate means. For example, we see state-of-the-art logistics buildings that can incorporate robotics and artificial intelligence as being supportive of SDG 9: Industry, Innovation and Infrastructure. Equally, portfolios of healthcare assets that enable specialist care and the delivery of critical services can make a significant impact against SDG 3: Good Health and Well-being. Many real estate owners around the world, particularly Real Estate Investment Trusts (“REITs”), are increasingly placing these sorts of considerations at the heart of their long-term strategies. Consequently, investors are faced with a choice of how they allocate their capital and the role that sustainability will play in their process.
It is our view that as well as making a tangible contribution to a better future, sustainable real estate companies will also deliver superior long-term returns for investors. REITs in particular require good access to capital markets to grow, and institutional investors are placing a growing emphasis on sustainability. Long-term laggards will eventually struggle to get the capital they need. Tenants are also focused on the sustainability performance of the real estate that they lease, and so portfolios of higher-performing buildings will attract and retain the best tenants.
Real estate is one area of the market where the opportunity for sustainability impact is substantial and investors have a vital role to play. A role that should also deliver sustainable returns.
If you would like further information or to discuss an investment opportunity, please contact us on +44(0)20 3667 8199 or email email@example.com.