Sustainable Real Estate

Sustainable real estate investing involves investments in eco-friendly construction projects that use eco-friendly materials to build structures and reduce their negative impact on the environment. Sustainable real estate development aims to leave a lesser carbon footprint while such projects are being developed. Hence, it attracts a number of investors who are ready to invest in them for a positive contribution toward the environment. 

Also, developing such structures helps conserve natural resources and ensures better utilization of them. Thus, a developer may construct properties considering the current demand and requirements without compromising on environmental factors. It allows them to create a balance between the need for proper infrastructure and a sustainable environment. 

Also referred to as green real estate, it provides a feasible method for developing estate properties with a positive and energy-efficient environment. However, the sustainability of these construction companies depends on the materials used and the building technique utilized. For example, the developers may use grown bamboo instead of timber and fly ash, blast furnace slag, rice husk ash, and silica fume as an alternative to cement. Moreover, as a part of sustainable real estate management, using solar panels for electricity generation can save dollars. 

Choosing eco-friendly alternatives reduces traditional construction costs. It not only benefits the public but also provides healthy investment opportunities to potential investors, who can invest in real estate investment trusts (REITs) focusing on such sustainable real estate funds. 

As this concept is now most applicable in the real estate industry, let us understand the benefits associated with it. 

#1 - Helps in preserving the environment:

The foremost advantage of investing in sustainable real estate is proportional to preserving the environment. In other words, the primary purpose of using this approach is to prevent any harmful effects on the biological nature. For instance, while constructing buildings, the dust and waste generated are often dumped in the locality. As a result, the waste and polluted air affect the ecological balance. However, with green real estate, the effect reduces to a major extent. 

#2 - Reduction in development costs

Another implication also results in the reduction of traditional development costs. Since most of the raw materials used for the traditional construction of structures were expensive, the capital used for it also increased. As a result, the pricing rate for houses accessible to customers is also high. However, using sustainable materials reduces the overall effect. 

#3 - Better lifestyle for customers:

Likewise, customers can benefit from it. As energy-efficient products are used, there are savings in customers' pockets. Also, they are able to access better energy systems and ventilation features. 

#4 - Enough health benefits to the public

Furthermore, there are multiple health benefits transferred to the public via green real estate. In other words, the improved air quality and reduction of waste dumped creates a healthy atmosphere for people to live in. 

These three concepts are related and used in rebuilding a brand's image and reputation. However, the three hold significant differences, as discussed below: 

After understanding the benefits of using green real estate, let us look at the challenges for the same:

#1 - Affordability issues:

The foremost challenge faced in sustainable real estate occurs in the budget. At times, construction companies are not able to afford these materials due to the cost involved. Although they have various benefits to offer, the demand for these materials is less. Thus, the cost is also high for them. In comparison, local materials like cement and sand are much cheaper and easily available. 

#2 - Lack of standardization:

Also, there are no specific standards or codes to monitor this industry. In short, the scope of assessing if the implementation is proper and successful is limited. As a result, some firms might follow, and others may not keep up with the standards. 

#3 - Unawareness of green real estate:

Many builders and people still do not know about this concept. This unawareness hides the already present benefits and makes them invisible. As a result, acceptance of the same yet seems difficult. 

Let us look at some examples and applications of sustainable real estate management to comprehend the concept better:

Example #1

Suppose Samuel is a builder who has developed more than 1200 projects in the United States in the past seven years, which include various properties with excellent amenities. However, now he decided to switch to different techniques to build structures, given the increase in the cost of usually-used materials due to inflation. He knew that if materials of higher costs were used, the cost of upcoming properties would also increase. After analyzing all the aspects, Samuel decided to go for other materials that were cheaper and equally efficient. 

After receiving quotations from many, Samuel chose better alternatives for cement and shifted to using AshCrete, ferrock, hempcrete, and recycled plastic in the development projects. And the post-effect was clearly visible in the later demand. The public loved their choice and saw a significant decrease in the cost as well. Therefore, they found the houses being sold at an effective rate, and hence, they preferred buying them over other developers' projects. This, in turn, boosted the profits considerably. 

Example #2

According to the recent statistical trends as of 2024, almost one-third of the builders in the United States have been found to prefer green buildings. In fact, the records show that 60 % of their development activities comprise green activities. In addition, around 75% of the commercial buildings have applied these tactics and have seen a valuable increase in returns in terms of increased property value. Likewise, 45% of property firms and sustainable real estate funds focus on tenants' awareness of the issues. 

Moreover, a Deloitte survey indicated how eco-friendly approaches were influencing tenants' leasing decisions. It also showed 58% of tenants were likely to terminate their lease contracts if the landlords failed to decarbonize.