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26


The impact of sustainability on value


Towards a net zero carbon world


The next wave of sustainable buildings are going beyond BREEAM and are targeting net zero. Currently there are no net zero carbon office buildings available in central London. It is only a matter of time before central London buildings are targeting and achieving this, if landlords and developers are serious about their commitments to more sustainable real estate in the capital.


The great unknown is how much does it cost to deliver. A survey by Ramboll8


illustrated


that there is a general perception within the real estate sector that sustainability measures are expensive to implement, with two-thirds believing that it is more expensive to build a sustainable building.


Evidence from overseas typically shows that increased capital expenditure is associated with highly sustainable building, but this can be justified by the higher long-term performance. A 2019 report from the Canadian Green Building Council9


demonstrates that on average a net zero carbon building requires an 8% capital cost


premium but that mid- and low-rise offices offer the highest positive returns of 3% over a 25-year life cycle, compared to an average of 1%. This uplift in capital expenditure is supported by research from the Centre for Sustainable Energy10 which suggests the additional capital cost to achieve net zero carbon is between 5-7% for non-domestic buildings.


It has been estimated that, the real estate industry consumes 50% of all materials used globally11


and this is something that the sector is


starting to address in future builds. The circular economy (or cradle to cradle principles), while uptake is not yet widespread, is increasingly being applied to the real estate sector. The Netherlands are ahead of the game, having set itself a target of having a 50% circular economy by 2030 and to be fully circular by 2050. Reuse and recycling of materials used for construction and fit-out make sense and ultimately should help a building retain its value, via the value of the raw materials and improve the environmental credentials of the


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