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Retrofitting for net-zero will have to be borne by investors
Investors - NOVEMBER 16, 2021

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Retrofitting for net-zero will have to be borne by investors

by Marek Handzel

Investors will have to bear a large brunt of the cost of retrofitting buildings in order to help funds achieve net-zero targets.

Jose Pellicer, head of investment strategy at M&G Real Estate, says that investment managers are not being honest if they pretend that “money is going to come from the sky” to upgrade properties into greener assets.

Pellicer has dubbed retrofitting for net-zero purposes as “defensive capex”, as it acts as a measure to combat depreciation. “This is not what I would call ‘offensive capex’, which achieves rental growth. It may be, but that is not my base case,” he explains. “It is spending that is needed to keep a building fit for purpose. And what has happened with the ESG agenda is that depreciation has got faster. [This cost] needs to be borne by investors. The money is not going to come from the sky.”

Pellicer says that in reviewing M&G Real Estate’s portfolios, the manager has put its assets into three b

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