Home > Inrate Study: Sector Analysis on Housing

Inrate Study: Sector Analysis on Housing

Sep 23, 2018

There is a strong demand for capital to finance green real estate buildings today. Green buildings constitute attractive direct or indirect investment opportunities both for private and Institutional Investors such as pension funds looking to diversify their asset management and allocate a part of their assets to direct real estate investment.

Main developments and trends
Urban population growth is a major global trend with critical relevance for the housing sector. Not only is the urban population expected to double from 2010 to 2050, but it is also ageing, particularly in developed countries. The global urban material consumption will grow even faster than the population and resource requirements could grow from 40 billion tons of raw materials in 2010 to nearly 90 billion tons by 2050. The increasing material demand will make recycling and use of secondary materials more competitive compared to raw material extraction.

Impact of the housing sector
Construction materials make up around half of the world’s overall material use. The use phase of buildings is the most energy and CO2 intensive phase of a building’s life cycle, mainly due to heating and cooling energy demand. In total, the construction industry and the buildings sector account for roughly 35% of global final energy consumption and 40% of global energy-related CO2 emissions. Considering that more than 100 million people worldwide work in the construction industry, labor conditions, particularly in construction but also in resource deployment and demolition of buildings, can have large impacts on health and welfare.

Moving towards sustainability
Modular design is the key to a sustainable housing sector. Modular buildings are easy to disassemble: their elements are prefabricated offsite and can later be re-used in other projects. While modularization generates substantial financial savings (construction costs, time to completion, waste management), it also extends the life of materials.

Financial market infrastructure provider SIX announced today the launch of a new climate data offering, aimed at supporting investors in reporting and monitoring of climate factors, and in climate-related investment and risk decision making.

The climate data sets, from various data providers in a range of industries, will provide clients with modelled and reported emissions data, covering over 33,000 companies globally, and bringing together multiple data sets on regulatory, historical and forward-looking climate impacts from providers including MSCI and Inrate. SIX also announced that it has recently entered into an agreement with environmental disclosure platform CDP to offer access to its global Greenhouse Gas (GHG) Emissions Dataset across various industries.

According to SIX, the new data sets come as investors increasingly require ESG and climate data to monitor investment decisions and to meet growing regulatory disclosure requirements, including the EU’s SFDR and the U.S.’ upcoming SEC Climate Disclosure Rules.

Martina Macpherson, Head ESG Product Strategy and Management, Financial Information, SIX, said:

“Understanding, measuring and managing climate risk and opportunities, as well as the impact that these can have on investment decisions, is a critical area of focus for market participants and policy makers alike. As more climate risk monitoring and reporting is required globally, the cost of compliance is increasing – both in operations and in terms of specialist ESG resources. SIX works with established providers of basic and specific ESG and climate data in the market.”