Contents
Contents
Overview
The real estate sector is at a critical juncture as it navigates the imperatives of Environmental, Social, and Governance (ESG) principles. With 2023 being registered as the hottest year on record, the urgency for corporate and government action on climate change is reaching new heights, pushing ESG activities at the forefront of all stakeholders.
One of the key drivers of this shift is the evolving regulatory landscape. Starting January 1, 2024, the EU's Corporate Sustainability Reporting Directive (CSRD) mandates organizations with over 500 employees to report in compliance with stringent sustainability regulations that encompass a broad spectrum of ESG factors, from greenhouse gas emissions to human rights and biodiversity. Furthermore, investors, banks, and tenants are exerting pressure on the real estate market to align with ESG principles. ESG due diligence has become standard practice in investment decisions and property selection, while tenants are increasingly taking ESG considerations into account when choosing their future locations. Sustainability is no longer seen as a "nice to have", but a "must have" component for all real estate stakeholders.
In response to these pressures, the focus is shifting towards measurable, quantifiable ESG performance.
Stakeholders should prioritize investments in digitizing and automating greenhouse gas emissions measurement while implementing energy reduction strategies.
As we move closer to 2030, there is increasing urgency to cut emissions by 45% to meet the Paris Agreement's goal of limiting global warming to 1.5°C. This means that the urgency to decarbonize the real estate sector is mounting. Since about 80% of today's buildings will still exist in 2050, retrofitting and repurposing existing buildings for energy efficiency and sustainability will be paramount in addressing the climate emergency.
Certifications in Romania
Romania saw another solid year in terms of certifications. In total 178 certifications were issued last year, 128 LEED and BREEAM certifications (mostly the latter) plus another 50 for WELL Healthy Safety and Access4you. If we were to keep track of all of them, not just the green certifications, than 2023 undoubtedly would be another record year, more than double in size when compared to the pre-pandemic period.
The jump in BREEAM certifications is on account of some major portfolios seeking validation, like CTP, VGP on the industrial side and PENNY on the retail side. Other major landlords seeking certifications for their whole portfolio at least for a wide number or properties include CPI with Access4you and AFI Europe, Paval Holding and Portland Trust obtaining WELL Health-Safety qualifications. The latter were much more visible last year, as other office landlords/projects also sought this qualification.
Certifications in Romania in 2023 by type
Source: Colliers
Certifications in Romania in 2023 by sector of property
Source: Colliers
Otherwise, we want to emphasize that relative to previous years (especially the period before the pandemic), 2023 had, much like 2022, a pretty widespread distribution of certifications, whereas prior to this period, it was mostly office landlords that accounted for the bulk of certifications. Indeed, in 2023, some 40% of the certifications were related to office projects, still the biggest share, but we also had roughly around 33% from industrial and more than 20% from retail. All in all, a more balanced year that does highlight the widespread adoption of certifications for all types of real estate developers as such meeting increasingly higher standards will make or break a real estate project’s long-term survivability, its ability to attract tenants, to be able to get a bank loan or to find a new investor.