Across the real estate sector, the discussion has often focused on “green” development such as building carbon neutral real estate.  Many traditional lenders have also focused their sustainability initiatives on financing renewable projects. Less attention has been given to develop specific energy efficiency solutions, activities which result in the “greening” of existing brown real estate assets.  However, the market is shifting and in this article we explore the landscape of the financing options available to asset owners and managers to fund these types of energy efficiency projects with examples drawn from the US, UK, Singapore and Hong Kong SAR markets. 

In the first part of our series on Energy Efficiency, we looked at the backdrop and the various factors at play in relation to the target of achieving net-zero by 2050. In this article, we will explore how that backdrop is creating M&A and other transactional activities in the real estate sector, with a particular look at the green premium and how it can present opportunities for investors. We also explore how asset owners can leverage on environmental, technological and energy solutions to harness this green premium.

Against the ambitious backdrop set by the Paris Climate Agreement to reach net-0 by 2050, there is a clear drive by corporations to move forward on their environmental, social and governance (ESG) or sustainability agendas.  As approximately 40 percent of all global emissions are contributed by buildings and construction, the importance of how real estate (both construction of new developments and, perhaps more critically, existing buildings) can be greened is key to meeting these goals.  Coupled with the current global energy crisis, greening real estate and renewable energy options have never been more relevant. This article will look at where the market is in relation to the push for greener real estate and what opportunities or risks are likely to arise. Over the next few articles, we will share our insights about M&A in the green space; green financing and green retrofits in key jurisdictions such as the United Kingdom and Asia with a particular focus on green energy and energy efficiency solutions.