Andreas Andreou
Accelerating the transition to a green economy is a no-brainer. It is no coincidence that it accounts for 36.3% of the total budget of the Recovery and Sustainability Plan and is only marginally second to the strengthening of the resilience and competitiveness of the economy, of which its share of the budget is 36.4%. In other words, both are of equal importance.
The three main sub-categories of Green Economy are first, climate neutrality, energy efficiency and the penetration of renewable energy sources Second, sustainable transport. And third, smart and sustainable water resources management. The total amount that will be spent for the transition to the Green Economy amounts to € 447.6 million within the period of 2021-2026.
an investor who buys today should consider the long-term factors based on the above scenarios so as not to become exposed. This is sure to sustain him in the game of investments.
The public sector is committed to this transition and will result in a direct impact on the private sector. Inevitably, the program will bring changes in the way we design, build and view our buildings. It is important for all of us to know this, especially those who are directly involved in the sector, either as investors, or as consultants, or as intermediaries, etc.
Below are some examples that show that upgrading the requirements for green growth will change the scene in the field of real estate, especially buildings, which in turn increase the complexity in the decision-making stage - and especially investment decisions.
But before starting with examples, it's worth noting that the policies for the transition to a green economy are implemented gradually, usually by setting milestones that mark the points of change. So we have, for example, state governments announcing that they will ban the circulation of conventional motor vehicles from one year onwards and car manufacturers announcing that they will stop the construction of such vehicles from a certain date onwards.
On another front, Britain announced that from 2035 it will ban the sale of conventional heating burners (gas and oil) and so from then on the only source of heating in new installations will be through heat pumps. In this case, we need to clarify one thing. Prohibitions that will bring about radical changes in our lives concern milestones beyond which the sale and installation of existing applications will be prohibited.
It is not a requirement to replace all existing applications with new ones. So if, for example, you have a gas or oil burner to heat your home and the state tells us that from 2030 it will ban the sale of such burners, you will not have to change your burner in 2030 if it is working properly. But just in case it breaks down somewhere from 2030 onwards and you do not find spare parts to maintain it, the only option that exists (at least so far) is that of the heat pump.
Something similar will happen with cars. If the sale of conventional motor vehicles is banned from 2030 and you buy a new internal combustion vehicle on December 31, 2029, you will not have to go the next day to buy - say - an electric car that meets the new restrictions. You will be able to enjoy it normally for as long as you want and you are able to maintain it.
This of course does not deprive the state of the right to "punish" you through taxes because you have an oil burner to heat your home or you have a preference for internal combustion engines.
But changes are coming and will be consolidated and it will be the new norm. What impact can they have on our real estate investment decisions?
Buildings that are fully adapted to the new requirements will have huge comparative advantages over those that lag behind. This will have a direct impact on prices resulting in an increase in the price gap between these two categories. The downside for the cheaper category is that it does not mean that they will be more tempting.
The new buildings will have very good to excellent energy efficiency, will utilize the use of renewable energy sources, will have advanced lighting and shading automation systems, will have electric car charging facilities in each parking lot within their perimeter, will be able to store energy, just to name just a few.
Applying this to existing buildings will be expensive and may still result in a less than adequate building compared to newer ones.
The high upgrade cost embedded in a low purchase price, to the extent that it will almost equal a new one, will make it unattractive as an option. Moreover, if requirements and criteria are set as to which properties can be rented, then inevitably some properties will be placed outside the investment market.
Therefore, an investor who buys today should consider the long-term factors based on the above scenarios so as not to become exposed. This is sure to sustain him in the game of investments.
