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Sign in Sign up for a FREE subscriptionEuropean real estate decarbonization costs increase but remain achievable
AEW released its updated research report on climate-related risk in the European real estate sector, based on 196 prime market segments across 20 countries and five sectors. This latest report focuses on climate-related transition risk and predicts a nearly 30 percent increase in annual required capex to meet decarbonization targets to 19 basis points. It is anticipated that this will be achievable for investors, given AEW’s projected annual return of 8.8 percent across all European prime sectors for the 2024–28 period. This compares to an estimated 15 basis points of annual required capex in AEW’s September 2023 report.
This increase in required investment to meet decarbonization targets is driven by three factors:
The current energy intensity of European buildings is 31 percent behind schedule compared to the Paris Agreement targets as incorporated in the CRREM pathways on average. This will require the industry to adopt steeper pathways to catch up with