Sustainable building practices were once of little concern to property developers, investors and builders alike. However, today Australia is at the forefront of innovative and market-leading building practices that prioritize the environmental sustainability of a build. A growing interest among informed property investors is how to create a green property portfolio. What was once an obscure concept is now a key concern. Why is this?
According to the UNEP Finance Initiative, a partnership between the United Nations Environment Program and the financial sector, real estate greenhouse gas emissions may reach 50% of CO2 emissions by 2050. Yet, not counting the emotional and intellectual reasons for investing in sustainable building practices, it is the market that is driving this change. Lower running costs of a building, driven by sustainable energy use, is a significant reason for this shift towards green construction.
GRESB (formerly the Global Real Estate Sustainability Benchmark) gave Australia a score of 69, compared to the global average of 56, according to the country’s sustainable construction practices and extent of energy reporting.
As a property investor, you have a vested interest in responding to market forces appropriately. So how do you create a green property portfolio that remains economically viable?
- Invest with builders and property developers that can demonstrate their experience and knowledge in building sustainably and that can point to relatable accreditation, awards or recognition for their work.
- Seek clear information on the savings you can receive by using any given innovation or technology that drives down energy use. Compare different technologies and research well so you know your builder or developer is using the best technology for your job.
- Ensure that any technology built into a building you invest in, not including construction materials, can be easily replaced in the future as new relatable technologies are developed. Environmental construction practices and technologies are always transitioning and improving, so it pays to invest in a building/property that is adaptable when it comes to its energy use.
- Use the Green Building Council Australia for information and news about current building practices that you may want to look out for or suggest in future builds.
- For new or existing properties, research related rebates to your state that you can use to offset the cost of installing sustainable technologies. For instance, you may be eligible for a benefit under the Small-scale Renewable Energy Scheme in Victoria if you invest in solar, wind or hydro technologies.
- Invest in low-cost, less resource-demanding landscape solutions. Work with a landscape designer to create a garden that utilises native plants that won’t require excessive water.
- If your property portfolio includes a property development in construction, be aware of the expected water and energy usage, looking at the design of the building, the materials used and the garden.
- Investing sustainably should not be an emotionally-driven decision but economically driven, where you invest in development and innovations that promise their longevity and use, financially speaking, as well as benefiting the environment.
- Don’t ignore key principles to building a green portfolio, such as diversifying the strengths of a portfolio. For instance, if two properties rely on tourism for growth, consider investing in a property that relies on a separate economy driver, such as a property within a healthy school zone and don’t be afraid to invest interstate, especially if there are opportunities to build green where there may be more rainfall.
- Reflect the savings you create through your sustainability practices in your rental price.