Real Estate and Climate Change

India's second largest employer after agriculture is the real estate industry. It is predicted to grow at the speed of 30% over the next 10 years. The greatest impact of property development is on nature as its excessively dependent on the availability of built environment.
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How does the real estate sector affect the environment?

• Growing contributor to carbon emissions
• Consumption of energy resources
• Greenhouse gas emissions originating from buildings
• Land development and deforestation
• Land contamination
• Increase in global GHG emissions
• Raw material consumption for construction purposes

As per the Environmental Sustainability Principles for the Real Estate Industry Industry Agenda by The World Economic Forum:

• The Real Estate sector consumes over 40% of global energy annually
• 20% of total global greenhouse gas emissions originate from buildings
• There is a projected 56% increase in building CO2 emissions by 2030
• A 7% increase in proportionate share of global GHG emissions is expected by 2030
• Buildings use 40% of raw materials globally (3 billion tonnes annually)

Over the years, the industry has received censure from NGO's and several warnings from environmental scientists regarding the matter. Millennial buyers and investors have also voiced their concerns and objections in the unethical environmental practices. In 2019, the publisher FourTwentySeven who is also a reliable provider of market intelligence on the economic risk of climate change, submitted their inputs.

They revealed that 19% of retail spaces and 16% of offices in Europe were exposed to floods and / or an alarming rise in sea level.

FourTwentySeven

There's no doubt that the construction and real estate sectors need to abide by stringent rules and start to initiate real action on their impact on the climate. Investors are also strictly taking the environment into account in their plans. Here's how:

• Intricate mapping of physical risks for current and potential locations/acquisitions
• Including climate risk in all processes
• Investing in mitigation measures for specific assets
• Getting involved in local resilience strategies with the government and policy makers

The construction sector is slowly expanding their knowledge and use of novel methods and materials to control the use of natural resources and consumption of energy. Due to this, more than 700 of the largest companies are now apart of the https://sciencebasedtargets.org/ program that helps transition your business to a low-carbon economy.

The real estate industry is also acknowledging its impact on the environment by slowly introducing sustainable practices within their buildings. There has been a visible shift towards the design of green and more environmentally sustainable developments. 55% of new commercial buildings globally are now "green" as compared to 5% in 2006. The introduction of smart technology is also helping reduce dependency on natural resources and contributing to making a building more energy efficient.

Read our previous blogposts on technology and the real estate industry, Technology and Disruptions.