| Real estate investors already battered by high interest rates now face the prospect of significant writedowns triggered by new European regulations.
The directive is intended to force property owners to embark on large-scale renovations to improve the environmental credentials of buildings across Europe, and ensure the bloc meets its commitment to the Paris Agreement.For now, refurbishments in the region reduce annual energy consumption by only 1 per cent, according to the European Commission.
By 2033, property owners will need to have renovated a quarter of the EU’s biggest energy-guzzling buildings. Fossil-fuel boilers are out and solar-panel-ready buildings are in.The directive is part of a package of first-ever initiatives adopted in recent years to green the EU economy. Jim Gott, who manages the asset surveillance team at Mount Street, says the current proposal implies an investment need as high as £150 billion .“In a lot of places, you’re going to struggle,” Gott said. “If you don’t hit those EPC targets, it becomes effectively illegal to rent the space. It will affect the capital value of the building.”
“Poorer-quality buildings in secondary locations need expensive capex renovations” and “the sums are getting more difficult to add up”. Demand for green properties by the EU’s biggest companies now exceeds availability by more than 50 per cent, according to a November report by Jones Lang LaSalle