Sustainable & Investible
What makes sustainable property a good investment? A range of benefits are there, from an ethical point of view of course — and importantly, also from a financial standpoint.
Green living is not just the realm of hippies anymore and sustainability is no longer just a buzzword. We’re now well into the era where concerns about the future of the environment are part of the mainstream conversation.
The Covid19 pandemic not only disrupted everyday life in significant ways, but also prompted deeper questions about our place in biosphere, our relationship to natural living systems, and how we can have a more positive impact on the environment. In the investment world, backing sustainable property development is a straightforward way to shift or solidify your current activity towards a future-oriented global goal. This is becoming particularly important for many of us with children who are looking to build not just a legacy of wealth but also ensure the next generation has a planetary home they can enjoy, just like we have.
Beyond these moral and ethical considerations, however, there are compelling arguments for sustainable property development as a strategic investment for long-term growth. Firstly, there’s a strong likelihood we’re moving towards a net-zero carbon economy, so being at the forefront of this curve with your investments is a smart way to capture returns from the get-go. Consumer demand for sustainable and energy-efficient building products and properties is already significant—an REA 2021 Residential Consumer survey found that 74% of people thought a good energy efficiency rating was important or very important when buying, building or renting. We know that legislation and supply will adjust in response to this consumer demand so diversifying your portfolio with sustainable property now could prove a good move down the track.
Two key homebuyer groups for example, Gen X-ers and Millennials, consistently rate the environment and climate change as their topmost concerns. Coupled with the rising cost of living and high energy costs, sustainable features are a drawcard for a solid segment of the market that’s rapidly reorienting. And it’s not just a question of quantity. Like in other categories—think Tesla and Patagonia—sustainable products attract a high-quality consumer market who are mobile, savvy and who demonstrate their ethics through their lifestyles and with their wallets.
But what is meant, in terms of properties, by sustainable? There’s no simple answer, but at Propel, the broad principles we look for are efficient, renewable and recycled. This translates into lower carbon footprints and minimal waste, and often into features, initiatives and processes like:
Higher thermal performance, with roof and wall insulation, double/triple glazing
Recycled materials - recycled timber beams, shelving and benchtops are common and often become a feature
Sustainable materials, such as hempcrete and composites in lieu of milled timber
The use of renewable energy sources such as solar, hydro and wind
In the case of refurbishment, reusing what materials we can
The myth is that building sustainably is more expensive or that takes a prohibitively time to recover costs. But very often, implementing smart sustainable measures into a property from the beginning is simple and affordable, sometimes with almost-immediate benefits. Efficiency is an economic term as well as an environmental one, after all — and savings often flow in a direct line from energy into budgets, returns and hip pockets.
In fact, rather than add-ons like energy-efficient appliances, some of the most powerful sustainable strategies are the ones implemented in the design and build, like passive heating and cooling, recycled and sustainable building materials and renewable energy sources. Added to that, some of the most sustainable building materials are also among the cheapest:
Green thermal insulation (wool, cellulose, straw bales)
Structural insulated panels
Recycled metal
Reclaimed wood
Engineered wood
Precast concrete slabs
Bamboo
Cork
Rammed earth
Biocomposites (mushrooms insulation / particleboard)
Living roofs/walls
Where possible, we’re also considering the construction methods so that the full process of the development and investment is built to last with as little negative impact as possible on the environment. This way the benefits—and the value of the asset—keep growing over time.
As experienced and strategic investors we’ve come to sustainable property investment with due diligence, risk management and attractive returns front of mind. For us, sustainable property investment stacks up in the most important ways and that’s why we’re focusing our energy on this growing area. By actively participating in the development of a low carbon economy, we’re not only creating shared environmental capital, but also ensuring the relevancy and value of our assets, which will benefit from lower running costs, optimised value and fewer vacancies as sustainable living becomes the norm.
