The Green Land Investor: How to Invest in Sustainable Land

To be a “responsible property investor” means building green. Smart capital growth land investors consider short-, medium- and long-term values of eco-development.

With all the attention on building homes to meet the housing shortage in the UK, an often-overlooked component of the story is how those homes are also likely to be more energy efficient. Aside from serving the higher goal of environmental conservation, those homes become more eminently liveable, warmer in the winter months and less likely to cause fuel poverty to residents.

To build green – even if not at the standards of a LEED certification from the UK Green Building Council or BREEAM, the Building Research Establishment Environmental Assessment Method – can make a lot of sense to an investor, such as those who prefer to put their money into real asset fund investments. In simplest terms, a home with a superior energy conservation measurement is a home that will save money on energy costs over many years into the future. Homebuyers are increasingly sophisticated about looking at such long-term costs and those investors interested in UK land investment are noticing, as are the land developers.

But building green goes beyond just energy savings. Homes and developments can be thoughtfully built with regard to other environmental needs, such as providing natural habitat and community stormwater management. The important point to be made is that while some green building features might be regarded as altruistic, those environmentally sensitive measures can still translate into real value for investors and the eventual owners. Consider the following eco-friendly home development features:

• Save energy – Research by the Sweett Group, a UK property management and construction firm, found that costs related to energy-efficient building have dropped and are now considered inconsequential to building costs, with the small amount of incremental costs related to tighter building envelopes (insulation, etc.) easily offset by energy cost savings within the first few years of occupancy.

• Responsibly balance the built environment with the natural watershed – When a building or whole development affects drainage, it can lead to flooding in vulnerable areas. To instead design a development to neutralise its affect on the watershed can also save homeowners cost and raise the value of homes. Sometimes, the inclusion of natural habitat such as retention ponds, rain gardens and bioswales that are naturalistically landscaped can add aesthetic value to a home and the surrounding community.

• Incorporate alternative transportation modes where possible – The ethos of younger people in particular is to live in bike-friendly environs. Infrastructure for riding and secure bike parking, especially in multi-unit housing, contributes to that. Being in close proximity to public transportation is also a development plus.

• Regeneration and reuse of buildings by repurposing – There are many existing buildings such as vacant manufacturing and warehousing facilities that are sitting dormant. The UK is trying to prioritise “brownfield” building; these are good uses if substance remediation is feasible and the costs of a retrofit compare favourably to new-builds. To the development investor, some such sites are both green and profitable.

• Encourage social interaction – A feature of green building is to create spaces where residents can interact. The extreme version is eco-villages, where car parking is relegated to the periphery, leaving areas surrounding homes safe for pedestrians and children at play. Simply providing pedestrian pavements in a neighbourhood is another means to help residents get to know each other – and to get exercise.

• Improve health and wellbeing in the interior – Interior materials such as paints and carpeting are now available to reduce off-gassing of volatile organic compounds (VOCs), while other measures reduce the presence of mould growth in structures.

Participants in joint venture partnerships generally listen to their topic-experts in such investments. If the market values a greener, more energy efficient home, then a premium can be derived in the sale of such homes – which of course benefits the investor. All investors are advised to speak with an independent financial advisor first to know if real estate fits their wealth management portfolio.

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