How does ESG impact the valuation of real estate assets?

ESG factors significantly enhance real estate asset valuation through premium rents, lower risk profiles, and improved brand reputation. Key impacts include:

• Higher Rentals & Faster Lease Absorption: Green-certified properties like LEED or IGBC achieve 5–10% higher rentals compared to conventional buildings.
• Reduced Operating Costs: Energy-efficient designs lower utility expenses, increasing net operating income (NOI) and boosting asset value.
• Resilience to Risks: Properties with strong environmental credentials are less vulnerable to regulatory changes (e.g., carbon taxes) or tenant preference shifts.
• Investor Confidence: Transparent reporting on ESG metrics aligns with global best practices, attracting institutional investors seeking stable returns.

Sustainability measures like solar rooftops or rainwater harvesting further enhance long-term operational savings. This makes ESG-focused properties more liquid and valuable in competitive markets.