How the Climate Crisis is Changing the Real Estate Industry
Why Real Estate + Construction have to shift to become Clean-Tech companies? Commoditization of housing? Financial VS unhealthy neighbourhoods?
Before engaging in this article, I thought a lot about the state of actual urban development in the world as we know it today. To engage in this field, I have noticed that despite the pandemic, there are still a large number of protests taking place in aid of climate change, as we can see now what the effects are of our current living situations and urban style of life.
If I look back in time, we have been talking since 1980 about how to shift industries, modes of productions, and supply chains to maintain our population development and land distribution.
If I look back in time, we have been talking since 1980 about how to shift industries, modes of productions, and supply chains to maintain our population development and land distribution. Even before this, we had the Agreement of Rome as a roadmap to maintaining and keeping temperature, biodiversity, and the human species in harmony.
Over 40 years, we have been engaging in talks, conferences, and national engagements across the world on this issue but in fact, all we have done is a lot of Greenwashing initiatives, fake speeches, fancy reports, and a lot of bureaucracy around sustainability that requires science and technology.
This industry is the largest carbon emission and energy consumer player and has been contributing to gentrification and an unequal way of living…
Finally, having that Macroeconomic context which is measured by 1% of the land, it is hosting over 50% of cities, generating over 70% of CO2 emissions, and consuming 60% of the energy consumption, so that’s the heritage we have today, and Real Estate is at the core of the problem. This industry is the largest carbon emission and energy consumer player and has been contributing to gentrification and an unequal way of living, it is time for the industry to attach this problem by investing in Science and Technology to become a Clean-Tech PropTech player.
We are at the point now that immediate action is required. As you also know, the Construction and Real Estate industry is the latest in terms of digitation, affecting technology adoption, and ignoring the problem as the industry is only worried to provide space without considering the consequences of their environmental impact.
Now, I will clarify what my definition of sustainability is. As I am looking to relate climate change with Real Estate, I still think those concepts are very far from the average person, very abstract, general, and intangible problems for consumers and enterprises. We are living within the bounds of the resources we have available, as the future generations can do the same, that definition was given by a Think Tank in the USA, in the 80’s.
The other definition more appropriate for the Real Estate Industry would be: to define an organization that provides space using the latest technologies to deliver zero carbon emissions products. Having both definitions, we are still far from the targets for sustainable living. To achieve Sustainable Development Goals, we can’t deliver “Real Estate as usual”, we only have 9 years until 2030 to maintain emissions, energy, and temperature targets; that’s why the industry has to fight climate change.
How is Real Estate affected by climate change? As I mentioned at the beginning, we just need to look around to realize that we have been building neighbourhoods in a way that produces inequality and unhealthy living. The Real Estate industry has been providing brick and concrete only, but that logic has reached its limits, what Real Estate has to understand is that the challenge of climate change is not being taken into account and that these factors will affect the industry right down to every single construction project or developer.
Real Estate in 2020 is at the core of the problem, if we consider the whole industry as a Country, the industry would be like Country #3 or #4 in terms of pollution (emissions, but let’s say that if you lead a company in the field, then you don’t care or don’t show some altruism, you have other challenges to consider like: New regulations, capital markets allocating funds for the whole cycle in construction and the consumer shift behaviour.
Real Estate companies are at the core of the problem in climate change, facing an environmental, legal, financial, behavioural and consumer shift, as well as technological challenges at the same time.
I am not here to talk about trends or threats, but I am here to say that Real Estate companies are at the core of the problem in climate change, facing an environmental, legal, financial, behavioural, and consumer (commercial, residential and multi-family) shift, as well as technological challenges at the same time. That is going to affect your business now, there will be winners and losers but the change is happening, so here is this new term “PropTech” which distinguishes the old-fashioned from the High-Tech players, and here it is to stay.
Now that I have provided some metrics, and shared some personal concepts to scope the problem, I am going to describe what is the path to fix this and why this should be considered as an opportunity. Science and technology are advanced enough to say that we can measure and invest in hardware, software, robotics, materials, process, to measure and mitigate those risks, even for the properties we have a heritage that requires better management, not only for energy consumption.
I would invite Construction and Real Estate players to look at the whole cycle, from the first materials like lime, bricks, cement to the contract and property management, we have to apply sustainability principles throughout the entire process, including how we choose land, and how we deliver space for commercial or residential purposes.
…we can’t just provide fancy reports, or share marketing tools for greenwashing when in fact, the impact is huge in the long term.
The pandemic has been showing us how painful it is for most of our neighbourhoods in many parts of the world, with the actual Real Estate offer, we have reached the point of non-return, we can’t just provide fancy reports, or share marketing tools for greenwashing when in fact, the impact is huge in the long term. Any Real Estate or construction company would be exempt to adjust as the cost of capital, investors, and customers (large Corporations, Cities and Urban planners are demanding real, concrete solutions in favour of climate change).
Finally, how is Real Estate impacting urbanization? Since I have been presenting a new way for urban development through CityZeen (a startup proving software and drone stations for neighbourhoods to help PropTech companies match demand), the largest industry in the world in terms of asset-class must have an outstanding responsibility in this. We are the ones who make it possible so that families can achieve one of their most important decisions, buying a home, so we are responsible for the future of living, retail, e-commerce, and entertainment.
Urbanization seems like a very political, legal, and unplugged term for the average person, but as private investors, Startups, and PropTech leaders, we have all of the responsibility to deliver more than space.
Urbanization seems like a very political, legal, and unplugged term for the average person, but as private investors, Startups, and PropTech leaders, we have all of the responsibility to deliver more than space. We all need to help consumers match the standards for sustainability, we are the ones who invest and provide innovation for public or private construction. We should lead the way, as we only have less than a decade to keep the 1.5 degrees we need to live as a human species.
The positive side of the pandemic is that reduces friction and increases capital allocation, as we need several alternatives in between slums, low-income housing, gentrified Real Estate (Silicon Valley) and a futuristic smart city whatever projects. Time for a new generation of politician who will have the guts to design housing policy, for now, to achieve Sustainable Development Goals for 2030, the Construction & Real Estate industry has to get serious on this, including stronger regulations on Clean-Tech.
Founder & CEO CityZeen, Co-Founder at Colombia PropTech, Chair Director for FIBREE Colombia, Pioneer member at Blockchain Research Institute (Toronto) and new member at the Founder Institute (Toronto / Silicon Valley promotion 2021).