Globally, buildings account for a significant amount of current greenhouse emissions. Buildings cause carbon emissions estimated to be around 9 billion tons. This is about 18% of the global carbon emissions rate. Positive changes in how buildings handle energy, water, electricity and construction materials will affect huge drops in co2 emissions worldwide. Furthermore, building for longevity ensures buildings stand the test of time, reducing the need for repairs or replacements.
These positive changes are well underway with the Paris Agreement in 2015. The agreement (signed by 200 nations) aims to cut all greenhouse gas emissions to a net-zero by 2050. Net-zero means a radical change across the entire economy. It means ceasing the use of fossil fuels and other sources of emissions wherever possible. Where not possible, every ton we emit must be matched by a ton removed from the atmosphere.
Given these imminent radical changes, it is very pertinent for Build to Rent (BTR) developments to embrace sustainability and development longevity. Sustainability & longevity are not only beneficial to the environment but, if done correctly, can actually increase profits.
Proven Correlation of Sustainability and Profit Increase
Oxford University research confirmed that Environmental, Social and Corporate Governance (ESCG) practices lead to greater profit as a result of higher efficiency of operating costs. This is applicable to the Build to Rent sector in the UK, to ensure a better reception of the schemes with the shift to environmentally-friendly buildings.
The integration of sustainable construction principles in the construction of BTR developments provides financial benefits to the investor. It reduces the cost of production, increases productivity, efficiently uses materials, appeals to the younger generation and minimizes waste.
Research has shown that companies that best manage their environmental and social impact, and have better governance practices, are more profitable in the medium- to long-term. Investors are advised to encourage ESCG practices in the construction and management of their Build to Rent schemes.
Reduction in Construction Costs
It is generally assumed that sustainable construction is a very expensive build plan when compared to conventional building. However, the cost of sustainable construction varies depending on factors particular to each project.
Although sustainable construction materials may cost more than conventional materials, such materials in the medium- or long-term pay for themselves. This happens through the efficiency of operation and energy savings. To benefit from this, Build to Rent investors and developers can enter into long-term partnerships with sustainable material providers.
According to World Green Building Trends, the international market for sustainable construction projects has grown significantly. It has recorded a 60% increase in the last ten years. With the recent rise in demand for sustainable buildings, the manufacturers of green culture materials can now afford to reduce overall cost, due to economies of scale i.e. spread of production cost over a large number of goods.
Also, with most Western governments’ introduction of tax credits and grants to green-certified buildings, the burden of extra cost has largely been lifted from investors and developers.
Appeals to Next Generation of Renters
In the last decade, there has been a heightened focus on the health of the global environment. More people are aware of the responsibility to our environment in the face of global warming. This generation and the next generation are the most environmentally conscious yet.
The integration of sustainability in Build to Rent developments will not only do the environment good but also attract young renters who care about our Earth. These millennials are prioritizing homes that are environmentally friendly over more affordable dwellings with no sustainability. According to the annual resident survey conducted by NMHC, respondents say they are willing to pay an extra $32.64 a month to live in an apartment building that has earned a ‘green building’ certification.
Reduces Operating Costs
Operating costs are the expenses that facilitate the day to day running of a business. Operating costs are an important aspect of any business, they are the lifeblood of the business. They account for nearly 70% of the lifetime costs of a building. Meaning that any increase or reduction in operating costs of a BTR would have a significant impact on the overall profit margin.
Sustainable building systems are known to boost operational efficiency through efficient management of water. This is done by equipping buildings with systems that recycle water and collect rainwater for cleaning use. The use of solar and wind systems are sustainable means of harnessing natural renewable energy. This also significantly reduces building energy expenses.
Also, waste can be minimised through the use of eco-friendly and recyclable building materials, without compromising on quality or structural integrity. The installation of well-insulated windows, walls, ceilings, and pipes ensure there is little or no waste of energy and water.
Overall, the integration of sustainability practices in every stage of building development and management is bound to ensure operational efficiency. This results in the reduction of operating costs – leading to a higher return on investments for the investors.
Conclusion
Sustainability and development longevity are no longer issues in a box-ticking exercise, but real targets. All businesses within the UK must achieve these goals, or perish. The fact that sustainability & longevity can now actually increase profitability means investors or developers should give sustainable practices their full attention.
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