The real estate sector is experiencing a major shift towards sustainability, driven by a combination of regulatory pressures, changing tenant preferences and the urgent need to decarbonize the built environment, and this is driving a strong focus on sustainable investing. attractive to asset owners.
Proof of this is that one of Australia's largest pension funds recently made an underlying investment in Fidelity International's newly launched €200 million ($214 million) climate-focused real estate fund. from investors like Rest Super.
“Real estate is now optimally positioned for the impacts of climate change,” said Barry Chan, head of private asset specialist sales for Asia Pacific (excluding Japan) at Fidelity International. Asian investors.
The Climate Fund's strategy is underpinned by market dynamics and trends that are reshaping the real estate investment landscape.
andrew lil
rest
“With logistics real estate trading at attractive rates and demand for energy-efficient facilities increasing, this strategy will drive up rental yields and property values, accelerating the path to a carbon-neutral economy, while increasing We believe this will lead to financial benefits,” said Andrew Rill. said Resto Super's chief investment officer.
Opportunity for price revision
There have been significant price changes in the logistics real estate sector, which Fidelity's Chan attributes primarily to interest rate movements.
“The brown logistics building is currently trading at an attractive entry point of 20-30% below its 2022 peak valuation,” he said.
Addressing concerns about occupancy reductions, Chong noted that growth in manufacturing, retail, and supply chain recovery measures are partially offsetting the decline in demand.
The move presents an attractive opportunity for investors to acquire assets at attractive valuations and reposition them to capture the growing demand for sustainable and energy efficient buildings, he said. Ta.
“Through a comprehensive renovation, investors will be able to build a modern, high-quality, sustainable warehouse that can operate with net-zero carbon,” Chung explained.
“The aim is to capture the accelerating demand for green buildings and significantly increase capital value.”
demand exceeds supply
Chong said the fundamentals behind the theory of climate-focused real estate investing include, among other things, the growing demand for sustainable real estate and the limited supply of such assets in the market. .
barry chan
Fidelity International
He said: “Between the growing demand for green space and the short supply of it, the dynamics of occupancy and the ability to increase rents mean that they are very attractive.”
“A significant reset in pricing from 2022 onwards means there is an opportunity to take advantage of willing sellers who may be forced to accept higher yields as a liquidity premium in depressed trading markets.” said Chong.
“Therefore, a key enabler is to free up capital to fund sector transition.”
Regulatory tailwind
Climate-focused real estate investment strategies are also supported by changes in the regulatory environment and tenant preferences.
Chung expressed confidence in the long-term viability of this approach.
“The regulatory developments that underpin our climate impact strategies are unlikely to change course. In fact, European regulators are 'doubling down' on decarbonization plans,” he said.
Beyond regulatory compliance, market-driven dynamics are increasingly shaping tenant demand.
“We're seeing evidence that tenant demand is trending in the same direction,” Chung said.
“The years for large companies to commit to net zero carbon are shrinking from 2040/2050 towards 2030 (and beyond). We believe this is an important goal because we know that we cannot achieve it.'' It is a tailwind for our climate impact strategy. ”
As more companies commit to ambitious net-zero targets, demand for sustainable and energy-efficient logistics space is expected to soar.
“Climate-focused real estate investment strategies are well-positioned to meet this growing demand, offering investors the opportunity to align their capital with the transition to a low-carbon economy.” Chung said.
Haymarket Media Limited. All rights reserved.
