AMSTERDAM, December 8, 2022 – It took a while, but now the real estate world is gaining momentum with sustainability after all. A lot is going well, says Jeroen Lokerse of Cushman & Wakefield. And let's deal with what is not going well, especially together. There is no longer any reason not to do it, because the figures speak for themselves: 'In all cases, sustainability provides a healthy business case.'
"We need to find a new balance"
If there is one word that applies to the current time, it is: dynamism. A lot is happening and we are rolling from one crisis to another. You can become gloomy about that, but Jeroen Lokerse prefers to look at the bright spots. 'During the pandemic, we were all very afraid of covid and the disruption of the economy. But in the end, we got through it surprisingly well. When the world reopened, there was new energy. The atmosphere was positive, sustainability was high on the agenda and the willingness to invest was high: we were going for it! Until the war in Ukraine threw a spanner in the works. The war is still there, the economy has taken a hit and the world scene has changed dramatically, but life goes on as usual. Living with new circumstances, we as humans are apparently good at that. And now there is the energy crisis. It's going to hurt a lot, but we will find solutions for this too. That's already happening and it's going pretty fast. There is already a regulation for capping energy tariffs and the Netherlands is now the leader in solar panels. In short: there is great resilience and remarkable adaptability. We are constantly seeking a new balance'."Sustainability has changed from a cost item into a sound business case"
Another point he is positive about is the financial picture: building for the future has recently become financially interesting. 'Sustainability has changed from a cost item into a sound business case. Sustainability goals are now close to economic goals. That is a nice development. The difference in value between brown and green buildings is increasing and the cost of carbon offsetting is getting higher, partly because of stricter regulations. That makes it interesting to be more sustainable. A sustainable building is a valuable building and every investment in sustainability pays off. Making buildings more sustainable is much more profitable than expected. That offers opportunities and we, as a real estate sector, can play a major role in this.'
But then some sticking points need to be removed, such as the persistent short-term focus of policymakers and politicians. 'The reflex to a crisis is often: short-term measures. The increase in interest rates is going to have a real impact on the value of real estate worldwide in the near future. On top of that comes the increase of the transfer tax as of January 1, 2023, in the Netherlands. Intended to slow down the market, but unnecessary, because the interest rate increase is already doing its job. Or take the reaction of municipalities to high land prices: discounting instead of structurally lowering land prices. Such odd little interventions are disruptive and slow down-market forces. Thus, with the best of intentions, you create wrong outcomes.'
Short-term policies are nothing more than symptom control. Instead of sticking band-aids, it is better to tackle the underlying problems, Lokerse argues. A new balance is needed at a fundamental level. 'The real issues that require our attention are long-term projects. With spot on 1: sustainability. How can we contain the rise in temperature? How can we design a society that does not deplete the earth or cause irreparable damage? How do we deal with the consequences of climate change, such as migration and polarization? These are the really big issues we need to focus on, as a world and as a real estate industry. We need to look for a new balance, a healthy foundation for our world. That requires long-term policies, long-term agreements and long-term business cases.'"What we need is a sense of collectivity"
Mutual trust between government and market participants is a must. 'If trust is lacking, everything is clogged up with rules. And it is now abundantly clear that all those rules mainly lead to frustration and delays. What we need is a sense of collectivity. I am convinced that the interests of the market and government are ultimately alligned. We all have a problem, so we must also solve it together. Working on trust is the basis for that solution. Talk to each other more, get to know each other even better and make agreements together from there. If we can establish the big steps together, the small steps no longer need to be sealed.'"The best investment in real estate is an investment in making existing buildings more sustainable"
There is no time to waste. We must accelerate and increase sustainability, Lokerse emphasizes. That means: not only net-zero in new construction, but also in existing buildings. 'The best investment in real estate is an investment in making existing buildings more sustainable. The return on investment is short, the risk is small. Especially in these uncertain times, it is much more interesting to make existing buildings more sustainable than to add new buildings to the portfolio.' To that end, interesting tools are coming onto the market. Cushman & Wakefield can calculate exactly what the potential for sustainability is for all buildings, what the return on investment is and how you can make a good business case."The flywheel has been set in motion"