The gap between buildings that are capable of being brought up to current ESG standards and those that are not.
“There will be a march towards newer buildings, buildings that are recently developed or buildings that are four or five years old,” says Brian Gaffney, director of Dublin-based property consultant Murphy Mulhall & Partners.
“There is a growing disparity in the market in Ireland whereby investors won’t look at older buildings because they don’t meet ESG requirements or, on the flip side, to bring a building up to the ESG credentials that they require there’s a huge cost involved.”
This disparity is being exacerbated by the current economic headwinds, Gaffney said. “Because of inflation and the cost of getting a a 15-16 year old building to modern standards is restrictive in some in some cases and so investors can’t get the figures to stack up.”
Gaffney said that some investors will not even look at buildings that are over 10 years old because they will not be able to obtain funding from their backers.”
He added that the problem is only going to get worse. “There’s going to be a lot more criteria to be met by investors in terms of ESG and it’s going to become more prevalent over the next few years.”