The Winners and Losers of Energy Efficiency in the London Real Estate Market

The Winners and Losers of Energy Efficiency in the London Real Estate Market
The Winners and Losers of 
Energy Efficiency in the 
London Real Estate Market

Energy Efficient Commercial Office London

The overall value of real estate assets in London has seen a fall recently, with rising interest rates, higher borrowing costs, and decreasing demand. However, against this seemingly bleak backdrop there are key opportunities emerging for landlords and REITs who already meet Energy Performance criteria, or those who are willing to retrofit their spaces – and significant risks for those who delay.

With conclusive evidence that since 2019 there has been an accelerating sales price gap for similar buildings with and without sustainability ratings, which now stands at 25% for London offices, the need for upgrading buildings to offer high-quality, amenity-rich, and energy-efficient offices has never been more urgent. The demand for these spaces will only increase now hybrid working has settled and companies revise their net zero targets.

Under the UK Minimum Energy Efficiency Standards (MEES), commercial buildings with an Energy Performance Certificate (EPC) rating of less than B by 2030 will be unable to legally lease their buildings. Further, research from Deloitte found that 80% of London offices do not currently meet these standards and significant refurbishments are required to prevent energy-inefficient offices from becoming stranded and unable to be leased. For those ahead of the curve the rewards are clear to see. With a squeeze on supply as some delay in meeting energy efficiency standards that by 2030 will be imperative if a portfolio is to remain active and producing the highest yields possible, it is more vital than ever to secure future-proof commercial assets whose market appeal will endure.

Published: April 20 2023
Author: Alexandre Piechaud

Energy Efficient Commercial Office London

A Turbulent Property Market Can Provide Opportunities

Downbeat economic forecasts can present opportunities in the property market
Downbeat economic 
forecasts can present  
opportunities in the 
property market

Property Investment Office London

Commercial property price falls can present opportunities in the property market, allowing healthy companies to boost their portfolios . The outlook for Britain’s commercial property market has rapidly deteriorated over recent months, with swift interest rate rises and downbeat economic forecasts combining to prompt a widespread decline in commercial property prices that is set to persist over the short term.

While this may seem like bad news for companies operating in the sector, their are opportunities in property market and in fact present opportunities to the likes of Unica Capital.

Our solid financial position allows us to take advantage of falling asset prices to boost the size, breadth and quality of our portfolio in order to capitalise on a long-term commercial property strategy.

If a recession takes place, this could lead to a slowing rate of rental growth, lower occupancy levels and higher default rates. With recent acquisitions reaching £300M over the last year, consisting primarily of Prime AAA office accommodation and with little to no exposure to mature, low-yielding London offices, Unica’s portfolio consists of high-quality assets that are likely to perform well during, and after, an economic downturn.

Our office properties, for example, are energy efficient and well located in central London’s most desirable locations, including Westminster, Victoria, Soho, Mayfair and the City. These are locations that are likely to experience robust demand even during a period of economic decline. Similarly, our retail assets are situated in the prime shopping centres of Oxford Street, Mayfair, Soho and Westminster – areas that are less likely to be vacated by major brands who are seeking to rationalise their portfolios as online retailing grows in popularity, but who still want a flagship or high-profile physical presence.

With energy efficiency, prime location and high-quality spaces a focus, coupled with a strong financial position, even in what looks like turbulent times there are opportunities to be had that are likely to be very rewarding for investors.

Published: April 13 2023
Author: Chloe Roussel

Property Investment Office London

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