Almost 90% of real estate’s key decision-makers now factor a move towards a low-carbon economy into their investment strategies, according to the Urban Land Institute.
A recent ULI survey found 89% of those questioned bring transition risks to a low-carbon economy into their decision-making as decarbonisation moves up the agenda in investment strategy.
Some 60% of investor and manager respondents to the C Change survey said transition risks were “nearly always” or “often” affecting acquisition decisions, with 61% adding that this has resulted in acquisitions not going ahead and 54% having allocated assets for disposal due to the aforementioned risks.
On the other hand, 64% of those surveyed said they recognised the benefits of incorporating transition risks to “meet future demands of investors”. Nearly half said they recognised the benefits in terms of meeting future demands of occupiers.
Lisette van Doorn, chief executive of ULI Europe, said: “We can see that transition risks have already become a significant factor in investment decision-making, adding a new layer of risk analysis to an already challenging market.
“Industry headwinds from high interest rates and inflation have driven the investment market in Europe into a period of quasi stagnation. With a lack of transactions, there is a lack of clarity on how much is currently being done within the industry to incorporate transition risks into decision-making. The results of our survey indicate that many in the industry are using this time to get their houses in order, preparing for renewed market activity.
“It would be advisable for the rest to also be prepared for a different market when transaction activity picks up again – this is our call to action.”
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