As the new generations are gaining interest in sustainable options for housing, we think investment in real estate should go (and is going) in the same direction.

The following are some reasons why investing in sustainable real estate can be a smart decision, not only because of its benefits to preserve the planet’s resources, but also because of its potential for profitability.

 But first, what exactly is a sustainable property?

A sustainable design, for any type of building, refers to traits that help reduce its consumption of energy and natural resources as well as improve the user’s quality of life.

Some of these traits include the selection of materials used in construction, use of renewable energy sources, carbon footprint, conditioning systems, energy usage, water consumption, intake of natural daylight, etc.

 Many governments have established some standards to certify if a building is sustainable or not. The most known certification is the LEED standard (Leadership in Energy and Environmental Design).

If a construction project makes a smart design that takes advantage of natural light, saves rainwater, has a low carbon footprint, uses quality renewable materials, has natural conditioning systems and is energy efficient, (among other traits) it will likely get a LEED certification.

Investing in Sustainable Property

Now we’ll address the opportunities and risks involved in these investments.

The truth is, that a sustainable construction project will be more expensive to build, but is expected to pay off in the medium to long term, as they have higher rents for tenants.

It is also true that as years go by and ecological agendas are pushed, governments will promote legislation that require more sustainable buildings and eventually fine those who don’t meet certain sustainable standards. In this sense, investors will be encouraged to put their money in sustainable developments.

Evidence shows that sustainable developments benefit from higher cost of rent (tenants pay more), a higher resale value and have lower energy bills (as they are more efficient, they save water gas and light). In addition, these developments tend to be more occupied than conventional buildings.

The main challenge for investors is if they can afford to wait for a medium to long period of time until they recover their investment. As we said before, a sustainable development has many high initial costs that aim at setting the ground for being as efficient and sustainable as possible. This eventually benefit users since they pay fewer utilities, but also assume a higher rent.

 As more millennials start to own or rent property, they will value living in sustainable properties and are willing to pay a higher cost, as they see it as an improvement in quality of life.

Investing Sustainably with Neoterre

Our 30 years of experience made us acquainted with the most ambitious sustainable development projects, so we know the value they have.

We are currently developing many ecological housing projects, and always seek for investors. If you are interested in getting in on any of our projects, leave your contact information below and we will reach out.

 

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