ULI’s seven principles to avoid the risk of stranded assets
A new report from the Urban Land Institute (ULI), supported by C Change and Net Zero Imperative, outlines the key barriers to decarbonisation, presenting seven guiding principles that address asset stranding risk.
In Europe alone, approximately €1.5 trillion worth of property is at risk of devaluation without deep retrofitting to meet tightening energy and carbon standards, underscoring the urgent need for scalable, sector-wide solutions to accelerate decarbonisation and preserve asset value.
Failure to decarbonise buildings risks economic asset stranding, with older, inefficient building stock at higher risk. Risk factors include the cost-and-viability impacts of regulations concerning minimum energy performance standards, and disclosure rules; shifts in investor and occupier demand for sustainable buildings; physical climate risk from extreme weather and rising temperatures; and structural market trends such as demographic shifts and remote working increasing the risk of obsolescence.
“The decarbonisation of real estate is not solely an urgent climate imperative, it can become a social one too”, said Lisette van Doorn, CEO, ULI Europe. “This provides the potential for decarbonisation be a catalyst for very real social and economic revitalisation. However, this requires a totally different mindset from all stakeholders involved.”
The seven guiding principles outlined in the new ULI report are: first, a mindset shift, meaning an approach to decarbonisation that shifts from a pure cost focus to an investment focus that generates a return on that investment. Second, clarity on who benefits, who pays and who leads; third, an integrated, place-based vision that recognises that decarbonisation is not solely about reducing emissions.
The fourth principle regards governance and collective ownership, as decarbonisation at a neighbourhood scale needs governance structures that align interests, release investment, and embed long-term accountability. The fifth principle is the need to build a business case for successful urban development, and the sixth is cyclical value creation, requiring a coherent placemaking vision that coordinates public and private investment, enabled by equitable mechanisms to distribute cost and benefits.
The seventh and final guiding principle is systems thinking across scales: a systems-level approach to decarbonisation that holistically integrates strategies across scales – across building, neighbourhood and city.
These universally applicable principles are based on the findings of leading, multidisciplinary experts who participated in a recent Advisory Services Panel conducted in Berlin, which provides objective advice on land use and urban development challenges, and delivers strategic recommendations informed by sustainability, resilience and community well-being.
This Panel focused on two place-based case studies with a higher stranding risk: Buckower Höfe, a large-scale affordable housing estate in Berlin’s Neukölln district facing significant energy inefficiencies and socioeconomic issues, and the Kurfürstendamm commercial district in west Berlin, which faces increasing vacancy rates and declining asset values.
