Climate action as a driver of innovation
In addition to energy and transport, the focus is on the building sector, which is responsible for some 30 percent of total CO₂ emissions in Germany. The aim is to make existing buildings nearly climate-neutral by 2050, with emissions to be reduced by 80 to 95 percent while final energy consumption declines 50 percent. The necessary energy will then come from renewable sources. At the same time, the potential for efficiency will be increased and renewable energy sources will become more attractive than fossil fuels.
Time is ticking
Not much time is left to develop the appropriate instruments and solutions. Banks and insurance companies have long been concerned with risks related to climate change. The issue attracted far more attention following a speech by Mark Carney, the Governor of the Bank of England and Chair of the Financial Stability Board, to the Lloyd’s insurance group in September 2015. In it he referred to analyses by the UK Prudential Regulation Authority, which in its “Climate Change Adaptation Report” raises the question of whether climate risks can cause the financial markets to falter, in other words, whether such risks can be systematically destabilising. Carney’s answer is clear: yes.
This is because political action to reduce CO₂, court cases involving people affected by climate change and losses caused by extreme Property investors now include climate risks in their investment decisions. According to the Global Real Estate Sustainability Benchmark (GRESB), 90 percent of the 750 global property managers and funds it covers, with real estate assets of $2.8 trillion, take climate risks into consideration. One instrument for this is certified green buildings. But there have already been improvements in the arsenal used by fund, asset and investment managers to ferret out CO₂ offenders In the US, professional building owners use the Web-based software Measurabl.
Evaluating climate risks in a portfolio
Union Investment is already using a tool developed together with DENEFF to assess the climate risks to which its property portfolio is exposed. During a pilot phase, some 170 buildings were reviewed to determine their climate conformity up to 2050. Ten properties were filtered out, and they are undergoing energy monitoring to identify potential savings. The buildings will be fitted with the necessary meters and data control will be handled in cooperation with the property manager Apleona.
Depending on the size of the property and the building services already in place, the costs of initial installation are between €30,000 and €100,000; operating costs each year will be about €10,000. “Given the energy savings of up to 25 percent per building per year and the possibility of effectively reducing CO₂ emissions, those investments will pay for themselves in the future,” says Jan von Mallinckrodt, Head of Sustainability at Union Investment Real Estate GmbH.
Use of stranded asset risk analysis has also increased awareness of technical building services. In addition to standard due diligence, every property acquired by Union Investment in Germany undergoes a special building services check to determine whether the automation systems already in place can continue to be used. If acquisition of a building is being considered but the building services need to be modernised, this is included in the budget calculation. The services in buildings already in the German portfolio are also monitored this way. The aim is for the building services of the entire portfolio to be brought up to modern standards.
Use of building automation systems
The new Phoenix Contact building in Bad Pyrmont is a showpiece for how buildings may operate in the future. The building electronics company demonstrates the benefits of its modern building automation systems (known as “building IoT”) in 71,000 square meters of production, development and office space. An integrated energy supply ultimately makes a separate heating and cooling system unnecessary. This allows smart networking of all buildings with different power generators and the cogeneration plant. All data is compiled and processed centrally in real time in the IoT-based building management system known as Ecosystem Emalytics. “Existing buildings are also helping make the leap forward into the age of the smart building,” affirms Frank Schröder, Head of Facility Management at Phoenix Contact.
Efficiency and sustainability
Smart buildings have long been a reality for Martin Rodeck, Executive Managing Director Germany of OVG Real Estate. The Grand Central Berlin building, under construction since July 2017, is OVG’s third digitally networked office building to use smart technologies for climate-compatible, user-friendly operation. The first property of this kind was The Edge in Amsterdam – which has gained an international reputation – and it is to be followed by The Pier in Hamburg’s Hafencity. And CA Immo is constructing a “concrete genius,” the freestanding building known as Cube Berlin, right next to the city’s main train station for an institutional investor.
“The key word is efficiency,” says Rodeck. “And investors are interested in another aspect, which can’t be emphasised enough: sustainability. Digitisation is creating new requirements at a lightning pace, and all investors want to know that their buildings will still be able to fulfil market requirements after a few years have passed.” This means that climate risks can also be seen as a major opportunity for promoting innovations in the real estate industry.
An article by:
Dagmar Hotze, real estate journalist specialised in future issues
A long version of this article was published in the real estate magazine places&spaces (01-2018). You can read this and many more articles here: www.raum-und-mehr.com/en