29.05.2023
Sustainability is a big bet that the Cypriot real estate sector must make.
Imperio Director Yannis Misirlis is setting the tone for Cypriot real estate by describing a brand new landscape where sustainability will be the first word on which new developments, investment interest and rental interest will be funded. “In the near future, responding to climate change will be the foundation upon which the sector will be built. The companies that can respond to the new, green demands of tenants, lenders and investors are the ones that will ensure their business continuity, dominate the market and even gain a competitive advantage,” Mr. Misirlis said .
“Big Reappraisal”
Increasing climate awareness and demand for low-emission properties are expected to lead to changes in property prices, a phenomenon known as the “great revaluation”. In this context, energy-intensive buildings will either be devalued or abandoned, and investors will turn exclusively to green buildings. Other properties could be refurbished and upgraded to bring them back to the market.
The landscape is changing
The director of Imperio stressed that abroad for companies operating in the real estate sector, the green “cord” began to tighten. Some states are slow to implement Green Building Regulations. The example of the United States is typical, where, among other things, the mandatory disclosure of information on climate risks and greenhouse gas emissions by involved companies is being promoted. The proposed regulation would affect real estate companies and real estate investment trusts, as well as the vast majority of large property owners in America. Similar efforts are being made at the European level. “Establishing such rules in Europe will accelerate global efforts to protect the environment. However, it should be made clear that regardless of whether the Rules are implemented or not, the transition to green developments is a factor that will lead to a significant revaluation of real estate in the near future or in the long term,” Mr. Misirlis emphasized .
More environmentally sensitive investors
Indicative, after all, is the growing international demand for zero-emission properties. The intense environmental sensitivity of the new generation of buyers/investors ( millennials ) due to the significant long-term energy savings guaranteed by the high energy efficiency of buildings, as well as green loans from banking institutions, are the three main factors shaping real estate developments right now. These factors are already showing up in Cyprus.
In contrast, buildings that are at risk from natural disasters or have a higher emission profile will not be included in the options of investors or tenants due to insurance costs, as well as operating and other costs, with a subsequent reduction in their price. “As investors choose green real estate by reducing climate risks in their portfolios, the attractiveness of real estate will vary based on its emissions and risks, and this will be reflected in capitalization rates,” said the director of Imperio .
In conclusion, Mr. Misirlis stressed that in the new environment that is emerging, real estate investors must understand that their entire existing portfolio must be revised in such a way that it meets modern environmental needs. At the same time, land management entrepreneurs will stand out in this sector, who will demonstrate a quick response and start revising their portfolios in a timely manner, respecting the environment and meeting the new needs of buyers.
