Green real-estate funds in German regeneration: A challenging merger of economy and sustainability

Abstract

The increased global awareness of sustainability has by now also reached the real-estate sector, and this trend will lead to increases in the demand for standards, certifications and, of course, capital market products, but the effects of green buildings on rents and prices are difficult to calculate, owing to the heterogeneity of building types and the lack of long-term experience in the field. Sustainability has long since secured its place in the capital market. Expectations from green-building funds are accordingly very high: people are hoping for higher profits and a positive image for their company, and calculate that building costs are only 2–4 per cent higher than the costs of a conventional property: at first glance, a convincing story. There must, however, always also be place for a strong dose of realism: in the context of the overall market and building activities, volumes have hitherto been measured more in per mille than in percentage figures. In the case of Germany, it will, according to current trends, take about 15 years until the volume of this type of property represents a significant percentage of the whole. The possibility of promoting that evolution can be related to possible state instruments for sustainable constructions and funds. But is there a strong need for this? The majority of the surveyed fund managers are of the opinion that the strongest effect comes from favourable credits. One in four of those surveyed would like to see tax incentives and/or direct funding.