Benchmarking Sustainability in Real Estate Portfolios

Benchmarking the sustainability of real estate portfolios is nerve-racking but essential for the industry. We show how it can be done.

In addition to the well-known key figures, regulators and owners require their property managers to provide increasingly more detailed and comparable reports on the energy consumption and energy efficiency of their properties. These reports are driving valuation and upcoming decisions on investments in these properties such as heating systems or insulation.

Collecting the current energy and water consumption of a building is done by the provider. There are approximately 900 electricity providers in Switzerland. Scoring energy efficiency requires a common benchmark and classification of the property. The complexity increases in properties with mixed use like office space, residential flats and a retail store within the same object.

Most properties of a portfolio have a decade-old history of investments, improvements and defects that influence the current and future energy efficiency and attractiveness of the object. Classifying and evaluating the construction record can be difficult, especially if previous owners had an incomplete or unreachable archive of this information.

Operating and owning properties is most often a process involving various people, companies and interests. For example, owners want to preserve and increase the value, revenue and attractiveness of their asset by gathering more data and insights about it. Property managers, on the other hand, try to optimise their operating costs by reducing administrative overhead and outsourcing services, such as third-party facility management.

The inherent many-to-many relationships between owners, operators and properties is further complicated by each involved party defining their own report preferences, conventions, formats and processes. The complexity of this problem is increased even further by different legal bases, regulations, certification standards, metrics and industry norms.

Tackling these problems results in various approaches to solutions. IT is part of but not the only aspect of a sustainable and scalable solution. For example, buying and deploying a new software tool that imposes key figures and one specific report format will not be acceptable in the long term, but must be flexible enough to meet changing demands. It’s all about the process of how the whole sector and its regulators proceed in further developing, adapting and improving solutions to an evolving challenge.

As part of the Swiss real estate sector, Zühlke offers various services to discover, evaluate, deliver and operate these solutions.

Digitalisation is enabling various players to store and manage their data in individual solutions. The real estate sector has plenty of tools and solutions for specific problems at hand. The most efficient players manage to integrate different solutions into their superordinate processes by reducing friction and data silos whenever possible. This results in interdisciplinary synergies and competitive advantages.

Interaction

Property managers and owners can provide each other with user-friendly and efficient access to relevant data and information through web portals and API’s to visualise and tailor the joint processes. In an ecosystem of different service providers and other players, strategies leveraging synergies win.

Prediction

Building on the integration and aggregation of comparable data and processed information of a portfolio, the next challenge is to determine where to invest in improvements of existing and new assets or even divest properties to further develop the portfolio. Asset managers need to assess the potential, risks and effects of such investments on the property’s attractiveness in the markets of buyers and renters as well as the impact on taxation or overall regulatory perspective of the property, which again depends on heterogenous and dynamic contexts.