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A social premium: Focusing on the ‘S’ in ESG can revitalise buildings
- June 1, 2024: Vol. 18, Number 6

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A social premium: Focusing on the ‘S’ in ESG can revitalise buildings

by Yukihiko Ito

Social asset management is becoming a key driver for revitalising office buildings and improving performance for residential and other property sectors, with the social aspect of environmental, social and governance (ESG) factors gaining increased attention in 2024.

Typically, when ESG is discussed in the context of real estate asset management, the focus is given to the “E” of the environment and the cost-driven approaches to protect asset value, hedging the risks of assets becoming stranded. Making changes to the built environment, though, often involves significant cost because it deals with physical elements, such as hardware and facilities.

But the social side of the ESG equation also has huge potential for investment, with numerous opportunities to take value-driven approaches to enhance tenant experience. In the context of adding premiums on rent and increasing asset value, a “social premium” seems more practical and promising than a “green premium”.

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