A Fund managed by Swiss Life Asset Managers UK Limited

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Decarbonising the real estate sector: entering the decade of implementation

In this series of blogs, Christi Vosloo explores the pathway and subsequent challenges to achieving net zero carbon in real estate.
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ESG & Thematic Investing

A key part of our decision-making process is to invest in accordance with defined investment themes that we believe will lead to out-performance. Many of these themes have strong links to sustainable investment.

 

We analyse and track these changes in order to guide our investment strategy. To achieve this, we have adopted a thematic research program, grouping identified trends into overarching “themes”. We analyse how society and businesses are being influenced by these themes, which gives us an understanding of what these changes mean for tenant demand over the long-term and the implications for real estate. 

 

We have identified five themes, which provide more tangible guidance about how to apply these changes to real estate. Locations or assets, which are aligned with one or more of the following themes are expected to be able to meet tenants’ requirements over the long term.This knowledge combined with in-depth local market intelligence underpins our investment strategy and give us conviction in our transaction and asset management activities.

Thematic investment strategy

Understanding the themes that are underpinning sweeping occupier demand changes

1) Connectivity

Transport infrastructure projects have a major impact on property markets and accessibility is key to occupiers. While physical connectivity is an important driver, digital connectivity – both speed of connection and access – is also growing in importance. This digital need is driving the requirement for stable access to power but “power connectivity” will also increasingly be needed to support the shift to automation.

ESG Impact: Public transport - proximity to public transport reduces car borne journeys. Access to labour – nearby labour pool reduces number and length of journeys.

 

2) Communities & Clustering

This theme reflects the importance of business and individual networks. For individuals, the desire for integration in a community is a social need. Industry clustering continues to gain in importance, as businesses continue to favour being part of a community in order to access skilled staff, shared resources and support networks.

ESG Impact: Promotes social elements such as diversity, cross business engagement and fostering community.

3) Consumer & Lifestyle

It is crucial to understanding who consumers are – reflecting the change in population structure due to e.g. ageing population – and how their attitude, demands and behaviours are evolving. In an environment, where consumers are placing a greater emphasis on value - both of time and money - convenience and experience gain in importance. Taking these changes into account, employers are using their real estate as a differentiator by providing and engaging, high quality workplace which has a range of working and social environments to attract work talent.

ESG Impact: Attracting staff - Green Space within and near to assets. Also promotes inclusion of biophilia within work space and encourages attention to wellness issues.

 

4) Change & Disruption

This is a broad theme and the most fluid, as it covers everything from political & economic change through to changes in e-commerce. Impact of further technological change is analysed, taking into account that it has enabled employees to become a more mobile workforce. The growth in big data, which brings the ability to analyse large data sets to understand how we use the built environment is likely to have a significant impact for the real estate sector as well and is part of this analysis.

ESG Impact: Flexibility and Adaptability – adds to resilience and reuse.

 

5) Climate & Environment

There is a growing emphasis on health and wellness in the society. Being resilient to shifting weather patterns and providing environments that meet the expectations of consumers looking for a more sustainable future is key. The desire to decrease one’s carbon footprint is combined with growing demand for access to green spaces, reduced city congestion and lower levels of carbon emissions and water use. Green power sources and smart metering are becoming standard in a building.

ESG Impact: Clear links to assets that are environmentally friendly.

 

 

Related Pages

Latest Insights

Thursday 11 January 2024
Charities & Endowments Team host Insightful Property Seminar in Cambridge

Last week, our Charity and Endowment team had the pleasure of hosting an insightful property seminar in Cambridge in the Upper Hall at Peterhouse.

Find out more
Insights.2
11/12/2023
PITCH Investor Update – December 2023

The current point in the market arguably represents the start of a new cycle, with the difficulties over the past year reflecting the painful adjustment away from a long period of ultra-low interest rates
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18/10/2023
2023 Results for The Global Real Estate Sustainability Benchmark (GRESB)

We are delighted to announce that the PITCH Fund has received its 2023 GRESB results, with PITCH gaining an additional “Green Star” from 2022, to achieve a four “Green Star” status. The Fund’s score has increased by over 10%, achieving 83 out of 100, and ranking 5th in a peer group of 100 participants.

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Please contact James Lloyd, Georgina Lockwood or Charlotte Cook

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James Lloyd
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Georgina Lockwood
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Charlotte Cook
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The value of investments may go down as well as up, and investors may not get back all or any amount originally invested. Income or other returns from investments are subject to change and may be lower than estimated. Past performance is not a reliable indicator of future performance.

Property Income Trust for Charities

A Fund managed by Swiss Life Asset Managers UK Limited

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