Glasgow’s transition from a heavy industry-based conurbation to a city that has embraced the cause of sustainability, makes it something of a microcosm that illustrates many of the universal challenges of progress to net zero carbon experts explained at Real Asset Media’s COP26 – Investment Opportunities in Urban Sustainability.
“There’s been a renewed spotlight on ESG and sustainable investing over the past 18 months to two years, and ESG and sustainability issues are now front and centre of investors’ strategies and we are seeing big institutions leading the way – like Legal & General, Aviva – setting aside large amounts of capital for sustainable investing in property,” Grant Lonsdale, Glasgow-based senior market analyst at CoStar explained.
That has also been supported by the finance industry as well, he says. Some big lenders are allocating green loans and green financing to projects, and that tends to be aimed at buildings which can meet certain sustainability targets.
“One of the things that the investment industry is grappling with is that, traditionally, it might have looked to development as a way of accessing new assets. Now, that’s actually quite hard to do if you’re serious about your ESG credentials,” said Sophie Chick, vice president, research & advisory services, ULI Europe. “Developing new buildings uses a lot more carbon, a lot more energy than repurposing buildings.”
Retrofitting less energy efficient stock a bigger challenge
Kevin Rush, director of regional economic growth, Glasgow City, said that retrofitting less energy efficient buildings is one of the bigger challenges that all cities will face. “We’ve not seen the drop off in demand that we thought we would, but I worry that there might be a series of properties that suddenly are left, and in the more challenging parts of the city.”
Alisdair Gunn, project director, Glasgow Innovation District added that, “in terms of existing stock there’s an opportunity there for investors to come in and retrofit some of these existing buildings. We have quite a good stock of real estate ready for that investment.”
Buildings from the 60s and 70s had a good shell and core, said Roddy Yarr, executive lead sustainability, University of Strathclyde. That just needs to be repurposed, he added.
“The buildings that we’re building are a lot more highly serviced, which is great but it’s complex. The tech has moved to the stage where we perhaps overthink some of our buildings.”
Rush says that financing is still the biggest challenge for sustainability. “Investors always want to see a return. But a lot of the types of projects, even the ones that we have in the Greenprint, require public sector enabling infrastructure first of all, so the private sector but will come later.