EDITOR’S COMMENT: Today – 22 April – is Earth Day. A day first celebrated in 1970 to demonstrate support for environmental protection. It is a day where real estate companies around the world will be showcasing the steps they have taken forward on their journey to meet net zero carbon goals. It is a day to celebrate some big steps, but also to reflect on how far we still need to go.
The way we operate around the world will need to change dramatically if we are to really have an impact on climate change. Our need to embrace technology even more will grow, a shift in how we do business, how we trade and how we transact will all have to transform.
This is shown in exclusive figures gathered by EG this week revealing the massive impact that the inability to fly has had on international investment into London. Figures from Savills reveal that cross-border investment into the capital from Europe, the US, Asia and the Middle East fell by almost two-thirds in the first three months of the year when compared with Q1 2019 – the nearest comparable quarter in which we hadn’t heard of Covid, let alone felt its impact. The £800m of investment is even down on Q1 2020, when global markets were starting to feel the effects of the pandemic. Almost £1.5bn of investment from outside the UK was spent in London then.
Of course, in a quarter in which the theme has most definitely been one of ‘wait and see’, the fact that London is still attracting £800m of overseas investment is encouraging. But what the fall-off reveals to me is that our investment markets are still very much tied to the traditional ways of doing business: that we must go and see and touch a building before we decide to buy it. I completely get that. It’s a big decision no matter how deep your pockets are (and whether they are your pockets or somebody else’s), but surely with the rapid transformation that Covid has only served to accelerate, our dependency on travel and meeting in person should be reducing.
The level of data collection there is across the real estate sector, coupled with the maturation of AI and its use, should be helping investors all around the world make decisions on buying (or divesting) properties without the need to necessarily see them, surely?
Real estate is often quoted as being responsible for 40% of carbon emissions but, if we think honestly about the whole supply chain, that percentage is probably woefully under-representative. Add air travel, taxis and all the rest of it to the equation, and I’d guess the sector bounced up to above half.
Which leads me to a conundrum. Everyone wants the world to re-open, we all want deal flow to pick up – there’s plenty of dry powder out there, and it being spent in the UK would be great for the economy – but most of us also want to do our bit to help slow climate change. How we couple those two things will require greater trust in data, tech and international advisers. It will require a change in mindset too. A change that does appear to be trickling through (£800m of investment still happened without mass international travel), but needs to accelerate if we can truly celebrate progress on this Earth Day – and every other.
- Talking of celebrations, don’t forget that Team EG is planning on bringing the industry together (in an environmentally-conscious way) for the EG Awards this October. Entries are now open – but not for much longer. We have 20 awards for you to enter and can promise only the very best party for those that are shortlisted. Don’t miss your opportunity to be celebrated. All categories and criteria are available at https://www.egi.co.uk/egawards2021/categories/
To send feedback, e-mail samantha.mcclary@egi.co.uk or tweet @samanthamcclary or @estatesgazette
