Polarisation likely as viability of brown-green upgrades clearer

The market is currently going through a period of transformation during which ‘brown’ assets are being transformed into ‘green’, said Serge Bacconnier, deputy head of Berlin Hyp’s Paris office.

Real estate bank Berlin Hyp is keen to increase the share of green assets in its portfolio and for some time has been a major source of green pfandbriefs for financing the brown-to-green transition.

“It will obviously not work for all the assets, which is a big challenge for the markets.” He said that some assets, which are not very well located or will not comply with the EU taxonomy will probably become obsolete or will be difficult to sell and will therefore become less liquid.

Thus the market is likely to become polarised between such assets and those that are centrally located or in good locations around Paris, such as La Defense.

He said that if the asset can comply with the green agenda it will increase or at least maintain its value. “But the important aspect is that it will maintain the liquidity of assets.”

An issue that we now face is the time it will now take to undergo transformation, especially during this period of of high interest rates and market uncertainty.

“The good thing is, everybody has taken the topic in hand and they are willing to make it evolve,” he said.

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