Fund Managers & Occupiers Are Driving Force to Improving ESG Credentials of UK Commercial Real Estate

New research with UK real estate management professionals conducted by Deepki, the ESG data intelligence firm, shows that almost half (44%) believe that fund managers have greatest influence when it comes to improving the ESG credentials of commercial real estate, followed by those using the buildings – occupiers (42%) and their employees (36%).

Government and regulators were deemed less influential despite having publicly stated and ambitious commitments to meeting net zero targets in 2030 and 2050.

The value of sustainable assets is reinforced by the research findings, with 90% of UK real estate professionals saying property with green premia have seen asset values increase by 16% and 25%.

The impact of poor ESG credentials performance is also marked with one half of respondents experiencing asset values which are 16%-20% lower in buildings with poor carbon footprint, and 42% are seeing values which are 21-30% lower.

Some 54% are experiencing rental yields which are 21-25% lower because of brown discounting, as occupiers favour greener buildings.

Commenting on the research findings, Katie Whipp, Head of UK, Deepki, said:

“Our research shows that fund managers are at the forefront of the drive to improve commercial real estate’s ESG credentials.

They have seen the capital and rental values of green assets increase by 16-25% because occupiers are prepared to pay a premium for buildings which are energy efficient and provide an environment which supports the health and well-being of employees.

We expect ESG regulation to tighten up in the UK during 2023 which will make greenwashing much harder and will support the drive for real change across the sector.”