EUROPE - European subsidies offer "fantastic potential for investors" in sustainable real estate, according to Tatiana Bosteels, head of responsible property investment at Hermes Real Estate, which manages portfolios for investors including the BT pension scheme.

Speaking at an Expo Real session on the shift from sustainable assets to portfolio management, she pointed to EU plans to spend €1.5bn meeting climate-related targets over the next five years, with potential additional funds of €40bn to €50bn for specific projects.

Her fellow panellists remained convinced the private sector would drive sustainability in the sector.

Frank Hovorka, director of sustainable real estate at Caisse de Dépôts, offered evidence in the long debate over the mooted premium for sustainable real estate.

He said he had brought down the asking price of a recent acquisition by 5% over doubts about the asset's lifespan - and that in some cases tenants had made sustainable improvements a condition for extending their leases.

Most leases are difficult to negotiate, said CBRE UK deputy managing director Michael Creamer.

"If you really want to be green, someone has to pay for it," he said. "The landlord doesn't get the benefit, and the tenant doesn't want to pay for it.

"Bigger companies can afford it better. Most businesses are small and they're still in cheap, cost-saving mode. Additional expenditure won't be meeting their requirements."

Tenant engagement will also be critical to the evidence base for performance measurement, according to Reinhard Kutscher, management board chairman at Union Investment Real Estate, which completed data analysis of its 300-asset portfolio in May.

"Some data you can only get from tenants, which means you have to work with them to convince them it's useful," he said.
In an earlier session, Erasmus University professor Michael Braungart urged the real estate industry to ditch "green-speak" in favour of a focus on quality.

"What you do with all this eco stuff, this green stuff, is make your customer your enemy," he said. 

"You're spooking your customer. It's a design problem, not a moral one. It's about quality, not Mother Earth."