The world recognizes that we need to adjust our living habits right now, or we will experience long-term effects of climate change with no solution. Real estate investors are now considering the impact of climate change and looking at changing how homes, buildings, etc., are constructed with the most negligible carbon footprint.
One solution real estate investors are looking at is sustainable real estate. Sustainable real estate, which incorporates environmentally friendly practices, is a growing market offering financial and environmental benefits to its investors.
The following article highlights the reason for investing in green properties is a wise choice, and the key factors to consider before investing.
What Is Sustainable Real Estate?
Sustainable real estate refers to properties that developers design, construct, and manage in an environmentally responsible way. Property developers design these properties to reduce their impact on the environment and improve their occupant’s quality of life.
Some examples of sustainable real estate features include:
· Energy-efficient appliances and lighting
· Renewable energy sources like solar panels
· Water conservation features such as low-flow toilets and rainwater harvesting systems
· Building materials that are sustainable and non-toxic
· Waste reduction and recycling programs
Why Invest in Sustainable Real Estate?
There’s no better time than now to invest in Green properties. With new research and developments into more eco-friendly construction and various interior design features to enhance the energy efficiency, green properties are the hot items on the real estate market.
A recent report by the International Finance Corporation (IFC) conveyed that incorporating green technology in commercial properties decreases operational costs by as much as 37%. Additionally, green homeowners report an average savings of 15% to 20% on utility bills.
Buildings that implement recycling measures can reduce waste output by up to 90% and consume 30% less energy, resulting in a 5% increase in net operating income (NOI) compared to conventional buildings.
There are several more reasons why investing in sustainable real estate is a smart move:
Financial Benefits
Green properties typically have lower operating costs and maintenance expenses, resulting in higher net operating income (NOI) and higher returns on investment.
Tenant Attraction
Sustainable real estate is becoming increasingly popular among tenants looking for environmentally friendly living and working spaces. Surveys show tenants are willing to pay up to $200 extra to rent green properties. This can result in higher occupancy rates and lower tenant turnover.
Environmental Impact
Sustainable real estate investment helps reduce the impact of greenhouse gas emissions, conserve natural resources, and promote a more sustainable future.
Key Factors to Consider When Investing in Green Properties
While sustainable real estate investment has many benefits, it’s essential to consider the following factors before investing. Investors in sustainable real estate must always conduct thorough research into the best sustainable practices of everyone involved.
Location
The property’s location is critical, as it can impact its value and attractiveness to potential tenants. Look for areas with high demand for sustainable properties, good access to public transportation, and proximity to amenities.
Certification
Look for properties certified by organizations like LEED, which is Leadership in the Energy and Environmental Design, or ENERGY STAR. These certifications indicate that the property meets specific environmental standards.
Market Demand
Evaluate the demand for sustainable real estate in the local market, including the potential for rent growth and occupancy rates.
Investment Goals
Consider your investment goals and timeline. Sustainable real estate investments may have more extended payback periods, so it’s essential to have a long-term investment strategy.
Conclusion
Investing in sustainable real estate offers financial, environmental, and social benefits. Investors can make informed decisions and contribute to a more sustainable future by considering the key factors outlined above.
