PEEB Report: Business Models for Green Buildings

Green buildings are already on the way to becoming global practice for residential and non-residential buildings. Real estate actors around the globe have developed business models to build profitable businesses around green buildings.

“New construction needs to address the needs of future generations,” says Michael Bauer, Partner at Drees & Sommer, one of Europe’s leading real estate consulting companies. “In buildings with lifetimes of 40+ years, future customers place increasing value on environmental performance, health and well-being. To achieve high quality buildings, energy efficient building design and technologies are essential tools. Certification is one of the signs of quality that translates technological achievements into economic value for the developer. This often offsets the additional time and cost required to achieve certifications”.

Commercial and office buildings in central urban locations currently make up the vast majority of certified green buildings in Germany 3. The trend is similar in other countries. Businesses want to reduce their occupancy costs (which include energy costs) and increase productivity – and green buildings can help them achieve both.

According to Michael Bauer, “Profitability remains the main risk from the project developers and real estate companies’ perspective.” Yet while higher costs (actual or perceived only) are still a top barrier, this constraint is actually decreasing in importance. “Sustainability is also a strategic orientation – expected by many clients. To attract the increasing number of sustainable investors using sustainability criteria to place their investments, demonstrating detailed knowledge and management of energy performance helps real estate companies attract additional financing” – according to Michael Bauer. As pension funds and other investors are looking at greening their portfolio, the trend will unfold dramatically in the coming years. The Programme for Energy Efficiency in

Buildings (PEEB) developed this publication to serve as an inspiration for actors along the green building value chain to adapt and expand their activities. We would like to thank the many contributors from the buildings and construction industry for their valuable insights in the development of this publication.

Have a look: www.peeb.build/business-models-report