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Climate changing real estate

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Climate change is reshaping the world in extreme ways, and one industry feeling the heat, quite literally, is real estate.

Cyprus is grappling with the impact of climate change, compelling local stakeholders to adapt to new challenges and embrace the rules dictated by environmental shifts.

The Cyprus Property Valuers Association is organising a seminar in Nicosia on December 8 to proactively address the evolving climate scenario.

The seminar delves into how Environmental Social Governance policies will shape the future of the valuers’ profession, focusing on the challenges posed by climate change for the real estate sector.

One major concern for the industry is the escalating hazards brought about by climate change, subsequently impacting building costs and, consequently, potential buyers.

The looming increase in costs poses difficulties in securing funding, adding a layer of complexity to an already dynamic market.

While the risks of rising sea levels and temperatures may seem like a scenario from a distant or dystopian future, the potential toll on Cyprus’ towns, especially coastal ones, cannot be ignored.

Coastal properties face heightened risks as sea levels rise due to melting ice caps and glaciers, prompting investors and homeowners to grapple with the spectre of more frequent and severe flooding, leading to potential declines in property values and increased insurance costs.

The recent devastating floods in Greece are a poignant reminder of the destructive power of extreme weather events, causing widespread damage to farmland, infrastructure, and livelihoods.

Closer to home, the placement of homes near riverbeds and concerns for coastal areas like Larnaca, Limassol, and Paphos underline the urgency for climate resilience measures in property developments.

In response to the uptick in extreme weather events, industry stakeholders report a shift in geographic preferences for real estate investments.

Areas with more temperate climates and lower vulnerability to extreme weather are gaining traction, leading to the emergence of climate-conscious property markets.

The global focus on carbon emissions has prompted regulators to impose taxes or penalties on non-compliant landlords.

Carbon neutrality

EU regulations further mandate adopting green building policies in the construction industry, accounting for a significant portion of energy consumption and greenhouse gas emissions.

This shift towards energy efficiency and carbon neutrality has implications for Cyprus and Greece’s real estate, particularly for ageing buildings requiring energy upgrades.

If enacted into local law, the new regulations would necessitate zero-emission status for all new buildings from 2028, with specific deadlines for public authorities.

Equipping new buildings with solar technologies and incorporating energy-efficient measures during major renovations will become imperative, in line with the growing demand from climate-aware consumers.

Developers respond to this demand by incorporating green building standards such as LEED certification.

The energy efficiency of a building not only aligns with environmental values but also impacts the property’s overall value, appealing to an expanding market of eco-conscious buyers.

Staying abreast of these changes is crucial for real estate professionals to assess climate-related risks associated with their property portfolios accurately.

While posing challenges, energy efficiency regulations also present opportunities for real estate investors.

Properties suitable for solar and wind energy projects are gaining value, opening doors for collaborative efforts with renewable energy companies to create integrated, eco-friendly communities.

Surveys have also shown that, despite a higher initial construction bill, energy costs can be reduced by 20%-40%, water consumption by 10%-30% and maintenance costs by 10%-15% (thus reducing operating costs by up to 20% ).

It allows paying more expensive rents at 10-20%, compared to a conventional building.

The real estate sector in Cyprus stands at the forefront of climate change impacts, necessitating adaptation for long-term sustainability.

While costs and challenges may rise, embracing green building practices and incorporating climate resilience into developments offer avenues for sustainable solutions that will shape the market’s future in Cyprus and around the globe.

The Property Valuers Association of Cyprus seminar, “The Real Estate Market of Cyprus and Greece – Modern Appraisal Approaches”, takes place on December 8, 2023, at the Head Offices of Altamira, in Latsia in Nicosia.

The Association has curated an extensive presentation on modern valuation approaches and current trends in the real estate market, featuring distinguished speakers with expertise in the field.

The lineup includes professionals spanning various domains, from scientists and researchers to industry practitioners.

Each speaker brings a unique perspective and valuable insights to enhance our understanding of valuations and real estate dynamics.

Subjects include ESG policies and implementation of practices to counter climate change to how AI will affect the future of real estate in Cyprus and the world.

 

The Financial Mirror sponsors the seminar.  

The cost of participation is €60 for members of the Association who have settled their debts for 2023. For non-members the cost is €100.

Subscriptions can only be paid through the JCC website https://www.jccsmart.com/e-bill/28159044