Sustainability is playing an increasingly important role for several property actors

EDC Poul Erik Bech conducted an expectation survey for 2023 which, with responses from over 1,700 decision makers, is the largest market survey on commercial real estate in Denmark. The participants represent all types and sizes of investors and companies. Responses from all parts of the country reflect EDC Poul Erik Bech’s position as a nationwide brokerage company with 19 business centers.

In recent years, the expectation survey has included more questions about sustainability, which has become part of the daily life of several investors and companies. With the increased focus on sustainability, green investments, and even national strategies for sustainable construction, it looks like a category that property actors should deal with both now and in the future. Frank Jensen, Director and Partner, EDC Poul Erik Bech Aalborg, says:

“Sustainability is essential for pension funds, and for them, it is a prerequisite that a new property is certified as sustainable. It is also becoming more essential for other larger investors but not so much for smaller investors. But it will. It spreads like ripples in water; for example, new EU rules signify that financial companies must account for their loans based on sustainability and carbon footprint criteria.”

Green progress
The Expectation Survey shows that there is a green transition to be found among investors and companies. Joseph Alberti, Head of Research, EDC Poul Erik Bech, says:

“More than half of the respondents have answered that sustainability plays a role in their current investment strategy. 28% answered that sustainability plays a role for both economic and ideological reasons, which was 21% the year before. 31% answered that sustainability plays a role either because it makes economic sense or for ideological reasons.”

He continues: “The trend is towards a greener mindset among investors and companies. 34% of the respondents have already optimized the energy of one or more of their properties, which is an increase of 6 percentage points compared to the previous year.”

Despite some uncertainty in the market, there is still a willingness to pay more for a property if it is sustainable. Joseph Alberti says: “Almost 6 out of 10 are willing to pay more for a sustainable property if the location, condition, and cash flow are the same. This is an increase of 12 percentage points from last year’s survey, where 46% were willing to pay more. However, almost one out of four individuals indicate they are still unwilling to pay more for sustainable property, as they do not believe sustainability should impact the price. This could indicate that more people think sustainability is a prerequisite and not something you should pay extra for.”

“There is also an expectation that tenants are willing to pay more for sustainable leases in the future. At least half of those surveyed believe that tenants are willing to pay more for sustainable leases in the future. In particular, it is expected that new leases will be more sustainable, and existing leases will become more sustainable over time.”