PL

The price of going green

Residential
Residential developers are currently able to sell entire portfolios despite the rise in construction costs and housing prices. So it would seem there’s no reason to take on the extra costs of sustainable construction. Will the booming market slow the adoption of green practices?

Green certificates are now very common on the commercial real estate market. Developers, investors, property managers and tenants have all come to expect them. You simply can’t even consider putting a new office block on the market without BREEAM, LEED or Well certification. When it comes to warehousing and industrial complexes, such certificates are becoming ever more common – and it’s not only the largest players that have adopted ESG standards. A large number of residential developers have also joined this green elite, but unlike their commercial counterparts they’re not under corporate or legal pressure to take on the extra costs of erecting zero-emission buildings, nor are they experiencing huge demand for such product. Has the sector’s approach to green construction changed recently? And, if so, how enthusiastically has it done so?

From the commercial to the residential world

Develia provides one example of a residential developer that ensures its projects are BREEAM certified. “BREEAM was developed in the UK in 1990 and is today the most popular system in Poland for rating buildings for their sustainability and the quality of life they offer their users,” explains Tomasz Kaleta, the director of sales at Develia. He also points out that the system was originally intended for commercial developments. “As time went by, it turned out that some of its criteria were universal and could be applied to different types of buildings. In 2000, a modified certificate was created for residential buildings,” he says. Yareal is another developer that uses this certification for its residential buildings. However, Jacek Zengteler, the general manager at Yareal, points out that certifying a building is a long, costly and complicated process. “We start with the assumption that projects developed in line with ESG principles are worth the extra effort. A BREEAM certificate confirms that a project has a limited adverse impact on the environment and that it is indeed of a higher standard than a typical development. Yareal certifies all of its residential projects – and this has now been done for 40 of our buildings,” he reveals. Each time it’s done, the process takes a few years and requires that many conditions divided into ten separate categories are met and checked by an independent assessor. “Detailed and continuous supervision begins at the design stage and covers the construction management, the quality control of materials, limiting pollution, waste management, transport and also energy management. Points are also awarded for innovation, user health and well-being, the greenery and the best use of land and water,” lists Jacek Zengteler.

Changing uses

The Polish Green Building Council (PLGBC) has also introduced its own Green Home certificate for the residential sector. “We want to ensure at least the same living standards in new homes along with systems that are more climate neutral,” explains Dorota Bartosz, the sustainable construction director of the PLGBC. “Residents – or the buildings’ users – and potential buyers are becoming increasingly aware of environmental issues. They expect sustainable solutions and also that action is taken to protect the planet,” she adds. She also points out that residential developments are turning into places where social contacts are formed. “They serve a different purpose than they did twenty years ago. Now, they are places for spending your free time, where social groups and organisations thrive,” she explains. To fulfil all the necessary certification requirements you must, as Dorota Bartosz points out, do everything to ensure the project is sustainable – from ensuring the building is highly energy-efficient and uses renewable energy sources that not only result in lower user costs but also benefit the environment, through to reduced CO2 emissions. “It’s also important to ensure that the rooms have decent acoustics and air quality. We also pay attention to rainwater and its micro-retention. The use of natural building materials with a reduced impact on the environment, as confirmed by an EPD certificate, should be an integral part of the design and the construction,” she insists, adding that analysing a building over its full life-cycle shows that its entire carbon footprint and the use of low-emission materials has a clear impact on this. The quality of the construction work is also assessed, which includes the monitoring of building material waste and how it’s recycled. “The local surroundings around the development are also important as well as preserving the local biodiversity, which means protecting the local fauna and flora,” adds Dorota Bartosz. At the moment, a number of single-family homes are at the pre-certification stage. A Green Home certificate is awarded once all the required criteria are met and the building is handed over for use. Dorota Bartosz is convinced that the certificate is perfectly suited to the solutions and conditions that are currently shaping the residential construction market in Poland.

Internal standards

Another way of caring for the environment when developing a project is internal supervision and assessment. One example of this is Echo Investment’s Eko Echo standard. “Along with all the legislative issues surrounding ESG reporting, this standard was devised as a result of our analysis of our clients’ questions and the surveys we have carried out,” explains Dawid Wrona, the sales director at Echo Investment. “The growing environmental awareness of those looking to buy homes and the desire for such features with a confirmed positive environmental impact led us to realise that the changes in how we design our buildings should be structured, easily understood and measurable,” he adds. He also insists that this is particularly important when the public discussion about the future of energy in Poland has generated an increasing awareness of environment issues, including among the older generations. “This means that every buyer and not only younger ones are coming to expect that developers will build estates that are as self-sufficient and sustainable as possible,” he says. But why hasn’t Echo Investment opted for a much more well-known certificate, such as BREEAM, that has been modified for apartments? Dawid Wrona points out that such assessments were originally developed for commercial real estate. “They have been adapted for residential projects, but they don’t meet all the expectations of the client and they don’t address the issues they really care about. Each concentrates on a particular area, such as construction, energy or usage issues. Our system quantifies all the important questions that are most often asked by our clients and puts them all in one single place,” he explains. He also points out that his company has devised a system that is clear and can easily be understood by everyone. “Certain issues in the Echo Eko standard are well-defined and there’s no room for interpretation or stretching certain points. Either a project meets the criteria or it doesn’t,” he claims. He believes that implementing the Echo Eko standard doesn’t delay the project development, but the planning stage requires a lot more work and takes longer.

What the client wants…

According to developers, it’s the expectations of buyers that make up one of the reasons for the implementation of green solutions, and this is happening despite the huge demand and the faltering supply in all sectors of the market. Despite such an imbalance of power, buyers are still picky and simply won’t choose apartments that don’t fulfil green standards. This includes both those looking for somewhere to live and those looking to invest. “Over the last few years, we have seen a huge increase in awareness among our buyers of environmental issues. They are seeing more importance in how the developments they are interested in effect the natural environment, as well as how the green areas are managed and whether the developer has employed non-standard solutions to raise the comfort of living,” says Tomasz Kaleta of Develia. Jacek Zengteler of Yareal makes much the same point: “Above all, our buyers are interested in properties with enhanced standards and comfort,” he says. According to Echo Investment’s figures, what was most important for buyers in 2021 was a place to exercise outdoors for both teenagers and adults, water management on the grounds, a creative playground for children as well as gardens, balconies and areas to relax and socialise. “According to our client satisfaction polls, 34 pct regard whether their home meets high environmental standards as important. Interest in this is growing rapidly: in 2020, only 26 pct of those polled regarded this as important,” says Dawid Wrona.

The world becomes greener

These days, it’s rare to find a real estate project – whether it’s an office, residential or warehouse building – that doesn’t have green features. According to Agnieszka Mikulska, a residential market consultant at CBRE, environmental questions are not only decided by a developer’s voluntary strategy, but also by regulations at both the European and the national level. “These regulations are heading towards sustainable development and zero emissions. For example, buildings that are now under development are subject to more stringent regulations regarding their energy efficiency than previously. These result from the WT 2021 technical standards,” she explains. “Policies are also being implemented to encourage the greater energy efficiency and security of buildings already in use. Slowly, the market is moving towards embracing sustainability. For some companies developing environmentally-friendly buildings is part of their strategy and an important part of their image,” she says. She does, nonetheless, admit that the certification levels for residential buildings are low and that this doesn’t seem likely to change in the near future. “In the cheapest market segment, adopting environmental features might not be attractive to buyers, since it raises house prices. Future savings from usage have less impact on purchasing decisions than the current expense of their own contribution and the interest rate charged,” explains Agnieszka Mikulska.

Despite all this, it’s clear that the adoption of green certificates is a definite trend on the residential market, and although it isn’t maybe as strong as in other sectors, it is one that is consistently and inevitably going to grow, unaffected by any disruptions to the supply and demand.

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