by Pavlos Loizou, CEO of Ask WiRE
The European Parliament recently approved a new bill that aims to tackle climate change by reducing carbon emissions. This new legislation has significant implications for the property markets in Cyprus and Greece, where there is a large stock of buildings over 30 years old and requiring energy upgrades.
''In Cyprus, the cost of renovating a building to meet the new energy efficiency standards can range from EUR 7,500 to EUR 30,000''
If and when incorporated into local legislation, these new regulations will require all new buildings to be zero emission by 2028, with a deadline for new buildings occupied, operated or owned by public authorities of 2026. All new buildings will be required to be fitted with photovoltaics by 2028, where technically and economically feasible, while residential buildings undergoing radical refurbishment have a deadline of 2032.
The most important parameter is that residential buildings should achieve, as a minimum, energy efficiency class E by 2030 and D by 2033 - on a scale from A to G, with the latter corresponding to 15% of the worst performing buildings in a Member State's national building stock. If a building does not meet these energy performance criteria, then it will not be possible to mortgage it or transfer its ownership (i.e. sell it).
Cyprus and Greece have a large stock of old buildings that do not meet the new energy efficiency standards set by the European Union. In Cyprus, for example, around 70% of buildings were constructed before the 1980s, while in Greece the figure is around 55%.
According to a recent survey, there are about 154 000 buildings in Greece constructed before 1919 and 324 700 buildings constructed between 1919 and 1945. In addition, about 573,250 buildings were constructed between 1946 and 1960, and 639,475 buildings were constructed between 1961 and 1970.
These older buildings require significant upgrades to meet new energy efficiency standards and are expected to have a significant impact on local real estate markets. The new standards could result in higher costs for homeowners and
owners of large tracts of land, as well as for buyers and renters seeking more energy-efficient properties. The cost of renovating a building to meet the new energy efficiency standards can be significant, ranging from several thousand euros to tens of thousands of euros, depending on the size of the property and the extent of the renovation required.
For example, in Cyprus, the cost of renovating a building to meet the new energy efficiency standards can range from EUR 7,500 to EUR 30,000, depending on the size of the property and the extent of the renovation required. In addition, the new regulations could lead to a reduction in property values for buildings that do not meet the new energy efficiency standards.
In addition, the new regulations could affect demand for older buildings that do not meet the new energy efficiency standards. This could have a significant impact on local property markets, as many of these older buildings are located in popular tourist destinations and form an important part of the local economy.
The new regulations could also have an impact on the construction industry in Cyprus and Greece. Under the new regulations, construction companies will have to focus on constructing more energy-efficient buildings, which could lead to higher costs. This could lead to a decline in the industry if builders are unwilling to invest in more expensive development projects.
On the other hand, the new regulations create opportunities for various stakeholders in the real estate market to take action on compliance and sustainability. Homeowners and owners of large tracts of land can benefit from financial incentives to invest in energy-efficient upgrades and renovations to their properties. Banks and financial institutions can create financing options and products that support these investments (Sustainable Finance), such as green mortgages or loans offering reduced interest rates for energy-efficient properties. Property developers and construction companies can incorporate sustainable building practices into their projects, which will give them a competitive advantage as demand for such buildings increases. In addition, real estate agents can inform their clients about the benefits of energy-efficient properties and guide them towards making sustainable choices. By embracing these opportunities, stakeholders will not only comply with the new regulations but will enhance their reputation and brand value, increase the value of their properties and contribute to a more sustainable future.
Ask Wire can help industry stakeholders in three ways: First, by mapping where these properties are located based on their age. This will facilitate targeted financing and marketing initiatives by financial institutions, energy providers and those offering energy efficiency-related services. Secondly, in collaboration with the Cyprus University of Technology (CUT), the company has developed an innovative model that assesses the energy efficiency of residential buildings. The model can be used to mass rate properties, allowing banks to rate the energy efficiency of their collateral and use it to generate potential customers for new, green loans. Third, by the end of the year, Ask Wire will launch its own ESG rating framework that will allow property owners to manage their buildings to international standards, improving their efficiency, helping the environment and adding value to their tenants and portfolio.
[This article was translated from its Greek original]