Two-thirds say that energy efficiency is top of the list for tenants
Almost nine in ten (89%) of property investors are increasing their spend on sustainability across their portfolio, according to Handelsbanken’s latest annual Property Investor Report.
The report, which surveyed 200 UK real estate investors, property management professionals and landlords, found that the vast majority of respondents plan to spend more on energy efficiency measures, investing in long-term strategies to future-proof their investments.
High demand for energy efficiency
The respondents said that stronger energy-efficiency ratings (EPC C and higher), were the most requested sustainability feature from tenants, cited by 66% of those surveyed. This is ahead of the regulatory requirement to improve properties to EPC ratings by 2030.
But property investors are also reacting to demand for other sustainability measures. EV charging was cited by 50% of respondents, smart meter or smart home technology by 47%, and solar by 43%.
Fewer tenants happy to pay extra
However, the report found a big fall in tenants willing to pay a premium for greener buildings, down from 92% in the previous report to 68% this time, suggesting such features are becoming a standard expectation for tenants.
Renters were found to be more likely to pay extra for green properties in Wales (79%), Scotland (78%), the West Midlands (76%), and London (75%), while tenants demand for stronger EPC ratings was reported by investors with properties in the North East of England (80%), the South West of England (79%) and London (77%).
Richard Winder, head of sustainability at Handelsbanken, said: “Climate change had already become a mainstream commercial consideration for property investors. But further energy price shocks, weather extremes and the tumbling cost of clean technologies have only made the case more compelling and urgent.
“Regulations will continue to tighten towards net zero, but it’s market demand that’s accelerating action today. Tenants are placing greater value on buildings that are efficient, comfortable and resilient. Investors are modelling how their assets will perform over the next decade or more, with the future cost and availability of insurance added into the mix. This is all driving rental and valuation outperformance for more sustainable buildings, and we expect this trend to intensify.”
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