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Green buildings: The future is already here

yiannis misirlis

By Yiannis Misirlis

Sustainable investments and green financing are at the heart of real estate

One of the greatest challenges for the real estate sector is sustainability and the creation of green buildings. The major issue of climate change, on the one hand, and the setting of global targets for a zero-carbon future, on the other, make it increasingly necessary to develop environmentally-friendly buildings.

We are going through a period of great change in the field of land development and what entrepreneurs in the industry should understand is that future projects not incorporating sustainability elements are doomed to become unsustainable and unprofitable. Internationally, there is intense pressure on landlords, tenants and banks, as well as real estate financers, to act in a way that leaves the smallest environmental footprint. The sources of equity are affected, while soon we can expect to see the impact on debt sources as pressure from investors leads investment managers to set targets for the energy performance of buildings. At the same time, the European Central Bank is stepping up its claims on financial institutions for proper climate risk pricing, whether it be debt or bonds.

Under these circumstances, sustainable investment and the rise of green financing will soon be topics for discussion in all markets, including Cyprus.

Lenders have already begun to stress the emerging economic risk of carbon dioxide emissions, as well as the climate risks associated with the construction of conventional buildings. It is now clear that these factors will be taken into serious account in the future during the loan process of a project, a phenomenon which has already begun in Cyprus. Properties with a lower climate impact will be rewarded through better lending terms.

It is worth mentioning that progress is already being made in Cyprus in the adoption of measures related to green development. But much remains to be done.

An equally important issue in the transition to green growth is the existing buildings, as most of what will be the built environment of the future has already been constructed. Therefore, in addition to future constructions, emphasis should be placed on the energy upgrade of older buildings. Of course, this process entails additional costs for the state, but the long-term benefits – financial and not – are much greater.

It is now more than clear that the future is closer than ever for the real estate sector. That is why all stakeholders should work hard to move in a green direction. It is necessary to make smart decisions, set precise goals and constantly monitor the operational performance of buildings. Awareness, the right information and the right planning will bring the desired results, possibly in less than a decade.

Yiannis Misirlis is the Director of Imperio, Deputy Chairman of the Cyprus Land and Building Developers Association (LBDA), member of the Board of Directors of the Cyprus Chamber of Commerce and Industry and Chairman of the Real Estate Committee

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