How much we pay for energy, maintenance and tax on our buildings largely depends on how sustainable they are. The more sustainable, the lower the cost. Anyone can save thousands of euros a year on energy costs through insulation or power generation with solar panels – precisely why sustainable buildings are known as ‘the green gold’.
Sustainable buildings very attractive in financial terms
Erik Steinmaier Head of Estate Advisory
Non-sustainable buildings, by contrast, face ever-rising costs. The financial drawbacks look set to become even more numerous in the years ahead, as many countries have introduced carbon taxes and more fiscal measures are expected to be imposed on buildings that aren’t sustainable. This is likely to push the total cost of ownership (TCO) of non-sustainable buildings ever upwards, while sustainable buildings’ TCOs keep falling, making their financials very attractive indeed.
So what makes a building sustainable? To assess sustainability levels, the Dutch government uses five major sustainability criteria: energy efficiency, use of materials, health, user quality and future value. Using these indicators, it arrives at an estimate of a building’s sustainability and developers only need to take on board these criteria to turn an immediate sustainability profit.
ABN AMRO acts as an advisor in this process, our collaboration with OVG being a case in point. The international project developer and sustainability leader was commissioned by its client Deloitte to combine two office locations and create a new, highly sustainable building in the Amsterdam Zuidas business district (near the city’s Free University). ABN AMRO ended up financing this major project after completing the advisory exercise. The project has since been built and has won high praise as one of the world’s most sustainable buildings.
Energy efficiency, use of materials and user quality are criteria most people will be able to identify when it comes to sustainability and buildings. Health is a lesser known criterion, but is measured on a number of indicators, such as noise levels, ventilation and sunlight. But why? What advantages does this bring?
Research has shown that sustainable buildings – better ventilated, sound-proofed and with just the right amount of daylight – can help reduce absenteeism and increase labour productivity. Statistics commissioned by the Ministry of Social Affairs and Employment suggest big financial rewards.
Just think, if sustainable buildings cut absenteeism by 1%, Dutch employers stand to save €2.6 billion a year. This works out at around €400 per employee per year.
Taking a broader look at sustainable buildings, location also comes into play and has a particular bearing on a building’s future value. Business parks tailored to a specific company and built close to motorways are not sustainable. These types of buildings are particularly prone to office vacancy as the location is not future-proof; most companies would rather move to different locations. Offices aren’t sustainable and don’t earn their upkeep if they aren’t used. If located in areas where people live, work, shop and travel, such buildings are indeed more sustainable. The area around a central station is a good example, as buildings are less at risk of vacancy and therefore more future-proof. For investors, this is key information: it helps predict how quickly buildings will be let or sold.
Project developers typically approach banks to fund their projects and ABN AMRO receives such loan applications every day. Sustainability considerations take centre stage in our deliberations, as the pros are undeniable. Sustainability fits the way we live and work today, and at ABN AMRO we feel that sustainable buildings are the new standard.