Green is gold when it comes to real estate

COMMENT They say timing is everything in real estate and when I reflect on Art-Invest Real Estate’s first three years operating in a post-Brexit environment and through the pandemic, I have never once questioned our decision to expand our European business into the UK. On the contrary, it felt natural to provide our capital partners with cross-border access to our innovative investor-developer capability across our core sectors – in particular, offices. In fact, these disruptors, appear to have been a force for long-term good by accelerating change and focusing corporate behaviours on elevating ESG to one of the top three positions, if not the first, for investment criteria. The re-rating of ESG presents a significant opportunity for us as developers to address the inherent supply and demand imbalance of high-quality offices. There is simply not enough office space that performs to the high environmental standards demanded by investors and occupiers – both of which are striving to meet more ambitious sustainability targets. Grey is old, green is gold The demand is already evident from increased capital allocations, and we expect this trend to continue. The flipside, however, are the challenges presented by legacy grade B “grey” stock and there is potentially a lot of it – this poses a genuine Darwinian moment for the office sector as it polarises between the two, as we like to describe it “grey is old, green is gold”. It is right the industry is rising to the ESG challenge but equally it is important we are transparent in our approach and realistic in our expectations to maintain trust. The rapid ascendency of ESG criteria has brought with it a fair degree of scepticism around “greenwashing” which will need to be addressed. Art-Invest Real Estate adopts a “manage to sustainability” strategy in all its projects, where we triangulate the needs and values of capital, occupier and community to ensure we deliver sustainable benefits to all. It is certainly not easy, but has proven to be a successful formula, especially given the increasing value of ESG criteria which does seem to have brought about greater alignment between these key groups. We recognise the importance of our role and responsibilities to key stakeholders where, ultimately, we are all seeking the right way to, literally, build change. In Munich, at our Die Macherei scheme we were not afraid to take a risk on an undiscovered location of the city. We knew the place had all the right ingredients to thrive but needed a catalyst. We delivered six high-quality office buildings and have seen an up-and-coming new city district emerge. Awarded the LEED Gold award for sustainable neighbourhood development, the scheme has been celebrated by its new occupants as a place that perfectly complements employee satisfaction and workplace environment, promoting diversity and encouraging creativity with its carefully curated mix of uses. The ‘wow’ factor Our collaborative partnership-based approach to urban regeneration development has been instrumental to our success in Germany but also at our first strategic UK acquisition, Canada Water Dockside, where earlier this year we secured consent on one of London’s largest planning applications. When I first visited Canada Water it was a genuine “wow” moment – such a unique and exciting opportunity, in fact it is in one of the most peaceful and natural settings where I now undertake most of my “walk and talk” meetings, despite being located less than 10 minutes from Bond Street, and I always return to my office decompressed and more acutely aware of the environment required to thrive, excel and achieve a good work/life balance. Canada Water Dockside is a Bjarke Ingels masterplan, delivering three iconic, sustainable buildings for the offices of the future, in a natural landscape which would entice even the most avid “work from homer” to return to the office. The scheme will meet the discerning investor-occupier-community ESG demands, and it’s reassuring to have aligned neighbours in British Land’s Canada Water Masterplan. I am sure the debate of the future of the office sector will continue but much like our “long on the UK” commitment when we established our business, we are equally committed to “long on green offices” given their enhanced performance for investors, occupiers and the community. Ali Abbas is managing director of Art-Invest Real Estate UK Photo: Art-Invest Real Estate