Lenders are starting to give more favourable terms on loans for environmental, social and governance-focused real estate projects.
The emergence of this “green premium” is “a clear message to those still dragging their heels on ESG”, said Ian Malden, head of valuations at Savills, as the agency launched its Financing Property 2020 report.
“The gulf between the financing available to projects at either end of the ESG scale is set to rapidly widen,” Malden added. “Those that fail to take heed will at some point face issues accessing finance, resulting in limited options and punitive borrowing terms.”
Until now, lenders have tended to impose stricter terms on loans for projects that do not show ESG benefits, Savills said – rather than offering better terms to those that do.
Now, the team said, a greater number of lenders are developing financing packages specially for green projects. “Lenders are now at the stage of being able to make the shift to rewarding exemplary projects with better terms, rather than just penalising those that clearly don’t follow sustainability principles,” Malden said.
To send feedback, e-mail tim.burke@egi.co.uk or tweet @_tim_burke or @estatesgazette
