The European Parliament recently passed a new bill that aims to tackle climate change by reducing carbon emissions.
This new legislation has significant implications for the real estate markets of Cyprus and Greece, where there is a large stock of buildings over 30 years old that requires energy upgrades.
If and when these are enacted in local law, these new regulations will require that all new buildings be zero-emission from 2028, with the deadline for new buildings occupied, operated, or owned by public authorities in 2026.
All new buildings should be equipped with solar technologies by 2028, where technically suitable and economically feasible, while residential buildings undergoing major renovation have until 2032.
Importantly, residential buildings would have to achieve, at a minimum, energy performance class E by 2030 and D by 2033 – on a scale going from A to G, the latter corresponding to the 15% worst-performing buildings in the national stock of a member state.
If a building does not meet these energy performance criteria, it will not be possible to mortgage it or transfer its ownership.
Cyprus and Greece have a large stock of old buildings that do not meet the new energy efficiency standards set by the European Union.
In Cyprus, for example, around 70% of the buildings were constructed before the 1980s, while in Greece, the figure is around 55%.
According to a recent survey, around 154,000 buildings in Greece were constructed before 1919, and 324,700 buildings were constructed between 1919 and 1945.
Around 573,250 buildings were constructed between 1946 and 1960, and 639,475 buildings were constructed between 1961 and 1970.
These old buildings require significant upgrades to meet the new energy efficiency standards, and it is expected to have a momentous impact on the local real estate markets.
It could result in higher costs for homeowners and landlords, as well as for buyers and renters who are looking for more energy-efficient properties.
The cost of renovating a building to meet the new energy efficiency standards can be high, ranging from several thousand euros to tens of thousands, depending on the size of the property and the extent of the renovation required.
For example, in Cyprus, the cost of renovating a building to meet the new energy efficiency standards could range from €7,500 to €30,000, depending on the property size.
In addition, the new regulations could result in a decline in property values for buildings that do not meet the new energy efficiency standards.
Furthermore, the new regulations could affect the demand for older buildings that are not energy efficient.
This could have a compelling impact on the local real estate markets, as many of these older buildings are located in popular tourist destinations and form a significant part of the economy.
The new regulations could also have repercussions on the construction industry in Cyprus and Greece.
With the new regulations in place, construction companies will need to focus on building more energy-efficient buildings, which could result in higher costs.
This could lead to a decline in the sector if the constructors are reluctant to invest in more expensive projects.
On the other hand, the new regulations create opportunities for various stakeholders in the real estate market to take action towards compliance and sustainability.
Property owners and landlords can take advantage of financial incentives to invest in energy-efficient upgrades and renovations for their properties.
Banks and financial institutions can create financing options and products that support these investments (Sustainable Finance), such as green mortgages or loans that offer reduced interest rates for energy-efficient properties.
Real estate developers and construction companies can incorporate sustainable building practices into their projects, giving them a comparative advantage since the demand for such buildings is rising.
Moreover, real estate agents can inform their clients about the benefits of energy-efficient properties and guide them towards making sustainable choices.
By embracing these opportunities, stakeholders will not only comply with the new regulations but also enhance their reputation and brand value, increase the value of their properties, and contribute to a more sustainable future.
Ask Wire can assist the sector’s stakeholders in three ways.
First, by mapping where these properties are located according to their age.
It will facilitate targeted financing and marketing initiatives by financial institutions, energy providers, and those offering energy efficiency-related services.
Second, working with the Technological University of Cyprus, the company has developed an innovative model that assesses the energy performance of residential buildings using some intuitive inputs.
The model can be used to assess properties en masse, allowing banks to score the energy performance of their collaterals and use it to generate leads for new, green loans.
Third, by the end of the year Ask Wire will launch its own ESG assessment framework that will allow real estate owners to manage their buildings according to international standards, improving their efficiency, helping the environment, and adding value to their tenants and their portfolio.
By Pavlos Loizou, CEO Ask WiRE