We are all becoming more aware of environmental matters, and it seems that the real estate sector is no exception. Businesses are realising the financial benefits of pro-environmental policies and the positive impact they can have on the bottom line.
The "circular economy" (where items are reused) is taking off in construction. For example, the new town hall in the Dutch town of Venlo was constructed so that it could be completely disassembled and every piece of it subsequently reused. The lender to the building agreed to put a 5% value on the building at its end of life, rather than zero, and the interior suppliers agreed to take them back after 10 years and repay 18% of the original cost.
Globechain is an online platform that allows companies to list furniture or other items they no longer need, for other businesses to take for free. It now has 10,000 members offering materials for use, and has diverted 5.1 million kilos from landfill across 200,000 separate interactions from users. The companies giving away the items for free can offset the value against tax in the UK and also don't have to pay the cost of disposing of them. Clients include Arcadia, Berkeley Homes and the NHS.
EDGE Technologies have started introducing materials passports to its new developments, meaning that everything used to build a facility is tagged and logged so it can be reused later. It is anticipated that, certainly for pension and sovereign wealth funds, and other longer term holders, these "cradle to cradle" buildings will be worth more.
Individuals have bought into the cost-effectiveness of reusing shopping bags, and having reusable coffee cups; those real estate companies that have a sustainability strategy and are actively looking to reduce consumption will surely be more resilient in the future.
Globechain is just one example of how the circular economy is starting to gain a foothold in the real estate industry. The implications are huge for the sector. Accenture estimates that the circular economy could unlock about $4.5 trillion of economic growth by reducing resource waste that has become latent in the modern economy. It will have a huge impact on real estate companies’ bottom line, and their environmental impact.