Boosting Property Values with Energy Efficiency Solutions
Sweden leads Europe in revolutionizing CO2 emission reduction and energy efficiency through smart energy solutions, resulting in increased property value. Building energy efficiency experts comment on innovations all commercial properties should employ.
April 5th, 2024. Inefficient energy usage and poorly managed maintenance systems not only diminish a building’s market value but also deter potential investors. With the recent surge in energy prices, building owners actively seek ways to mitigate energy waste and lower operational expenses. Sweden emerges as a compelling use case, demonstrating the feasibility of implementing such changes, and ultimately increasing property value.
“Sweden can be a successful case study of how a country can curb energy waste and reduce greenhouse gas emissions, which causes investment in green buildings to rise,” says Donatas Karčiauskas, CEO of Exergio, which provides an AI-based, smart building management solution for overall energy efficiency. “It has some of the lowest greenhouse emissions per capita in Europe, thanks to the government’s efforts to ensure that every household has easy access to information on energy-saving measures.”
Exergio’s AI-driven platform offers a solution by optimizing energy usage in commercial buildings, thereby reducing waste and enhancing their market value. This innovative approach is a part of the growing trend to reduce energy wasted by buildings.
Sweden, on the other hand, has introduced a green bonds system that supports sustainable buildings, making them more attractive for banks to give loans and investors to invest in.
“Despite the green bonds system, Sweden’s case is unique since we continuously keep pushing the limits for higher sustainability measures despite the growing progress. By offering lower loans for buildings with low energy consumption and proper certifications (such as BREEAM and LEAD), we ensure that Sweden maintains a certain level of energy efficiency,” says Anders Borggen, a Swedish expert in property management.
“Another unique aspect here is that real estate companies have a larger cost base as they cover more utilities for tenants, making energy-saving measures more impactful on their finances. The total return on properties is another crucial factor since it includes energy-saving investments,” Anders adds.
Therefore, a building’s market value can grow simply due to energy efficiency solutions – and these solutions are required in new buildings in Sweden. Old buildings can also benefit from cost-efficient approaches, avoiding expensive reconstruction while effectively addressing energy waste issues.
“Many elements contribute to real estate value, such as competition, scarcity, new government regulations, and location. However, building owners often forget that operational costs can also be among the key factors determining property value. As energy prices climb, property owners are confronted with a crucial question: How can they cut energy waste and lower building maintenance expenses?,” continued Karčiauskas.
Net yield, a vital metric in commercial real estate, is another pivotal gauge of investment performance for both building owners and investors, not only in Sweden but worldwide. It represents the annual income derived from a property after subtracting operating expenses and vacancies. It’s expressed as a percentage of the property’s market value.
“Even a very small change in this indicator can lead to changes in the value of a building in the hundreds of thousands or even millions of euros in the long term,” emphasizes Karčiauskas.
Efforts to improve buildings’ energy efficiency offer a promising avenue for increasing their value by bolstering net yield indicators. Notably, this can be achieved without the need for extensive building reconstruction, presenting a cost-effective means of enhancing property value in the Swedish market.
“Sweden’s success highlights how optimizing energy efficiency can enhance property value, setting a model for implementation worldwide. Recently, we applied our AI-driven solution to a commercial building complex in Poland. By optimizing the cooling and heating systems for maximum energy efficiency, we enabled the owners to save approximately €80k over 9 months,” explained Karčiauskas.
Exergio has ongoing projects in Poland, the United Kingdom, Ireland, the Czech Republic, Hungary, Oman, Sweden, and Lithuania and is planning to extend its services to Germany and France.
