A joint statement from COP28 reiterated the importance of land management and nature in combating the climate crisis and biodiversity loss.
Given the UK’s non-domestic property stock now accounts for 23% of overall operational carbon emissions in the built environment, it is a theme in which the Scottish property industry has a crucial part to play.
However, this comes at a time where investment in commercial property is relatively low and the future of certain types of assets remains unknown, making it challenging to know where to focus energy and investment.
The market demand for “green” buildings is continuing to grow, driven by companies seeking to align property with their sustainability goals. This presents a clear opportunity to the industry, while wider uncertainties remain.
Certain parts of the property sector may stand at a crossroads, but the importance of sustainable practices is one consistent thread that the industry can continue to get behind in the year ahead.
There are steps and practical measures that various stakeholders in the industry can adopt to drive meaningful change. From developers to investors, and from property managers to tenants, each has a role to play in shaping a sustainable future for Scotland's property landscape.
First, green building practices must be embedded in the property developers’ strategies for 2024. Sustainable property can lead to significant long-term financial gains; buildings tend to have lower operating costs than traditional buildings due to their energy-efficient features. When prioritised, the investment will come. Sustainable buildings translate into higher profits for investors as they can save on expenses, such as electricity bills and maintenance costs.
For existing properties, retrofitting them to be more energy-efficient is another solution. For example, at a time when the purpose and use of the office is going through such significant evolution, there may be no better time for Scottish businesses and commercial property owners to reconsider the office spaces we already occupy. Repositioning and refurbishing existing buildings to meet the evolving needs of office spaces allows developers to reuse building materials and bring back to life historic buildings, which can, in turn, reduce emissions significantly when compared with a new -build.
Properties which are unable to demonstrate positive environmental and sustainability credentials are likely to see valuations suffer. However, a proactive and consistent approach to managing and improving the environmental impact of new and existing buildings can guard against the risk of accelerated obsolescence and protect investment values.
Governments, investors, consumers and others are homing in on sustainable practices, with occupier and operator decisions increasingly being driven by net zero commitments and mandatory disclosure requirements. Therefore, the Scottish property sector must not take its foot off the pedal. Focusing on sustainability will be key to creating lasting opportunities for the Scottish real estate sector throughout 2024.
Lisa Frost is a partner within Morton Fraser MacRoberts’ real estate team
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