According to the UN, global real estate contributes up to 30 percent of annual greenhouse gas emissions and consumes around 40 percent of the world’s energy. This is why the next big trend in the industry will be to combine its wellness and sustainability components.
Moving forward, the fast-growing business of wellness lifestyle real estate will have no choice but to take into consideration all the requirements destined to improve the wellbeing of our planet in addition to that of the tenants (or the owners).
As a reminder, the UN Sustainable Development Goals (SDG) for real estate are primarily (1) the implementation of integrated water resources management, (2) the increase in the share of renewable energy, (3) the doubling in the global rate of improvement in energy efficiency, and (4) the reduction of the per capita environmental impact by waste management.
For wellness real estate investors, this means the following: They’ll have to focus on both the income component of total returns and the capital expenditures required to integrate SDG goals. The latter will naturally entail a decline of net cash flows, but it is inevitable. Already, an increasing number of real estate funds integrate sustainability into their investment process and asset management. They do so by often offering a 10-year strategy to align the property or portfolio with SDG goals, thus gaining a competitive advantage. Any real estate project with wellness ambitions must place these SDG criteria at the heart of their strategy.