The COVID-19 pandemic has forced many to reconsider the link between environment, society, good governance and profit. That has sharpened minds on the need for greater focus on ESG criteria and investments. Many also now see the disruption as an opportunity to rebuild greener economies.
Recovery for the real estate sector will likely be slow, uneven and erratic. However, there is still significant capital sitting on the sidelines waiting to be deployed, and real estate continues to prove itself a strong, defensive and long-term move.
Take a look below or download the full report to see what KPMG leaders from around the world think about the industry's shift towards ESG considerations and the importance of stakeholder trust.
Sander Grunewald
Global Head of Real Estate Advisory, KPMG International, Head of Real Estate Advisory
KPMG in the Netherlands
While the pandemic may have put some ESG projects on pause in the short-term, I am confident that ESG is here to stay. In part, this is because there is real demand for purpose-driven investment products. But it will also be driven by large investors who now must make good on promises made over the past few years to move towards more sustainable products and investments.
Andrew Weir
Global Head of Asset Management, Global Chair of Real Estate, KPMG International, Regional Senior Partner, Hong Kong (SAR), Vice Chairman
KPMG in China
There is little doubt that demand for ESG-linked real estate investments is growing. Before the pandemic, about 25 percent of global assets under management were viewed through a sustainability lens. In the next three years, I suspect that proportion will rise to 75 percent or more. This is a top-down strategic priority for many investors, business owners, regulators and tenants and it is not going away.
Jacy Li
Head of Real Estate
KPMG in China
We must remember that, on the regulatory front, ESG is no longer a ‘nice-to-have’. More than 35 stock exchanges around the world have already issued (or are in the process of issuing) ESG reporting guidelines. All signs suggest that investors, particularly foreign private equity funds, are placing much more focus on ESG data when deciding where to invest.
Hans Volckens
Head of Asset Management and Real Estate,
KPMG in Germany
I agree that ESG is here to stay. And regulated investors are under pressure to increase their proportion of sustainable assets. The problem for owners is that upgrading buildings often requires significant capital — something that is in rather short supply at the moment. While the need to deal with ESG has increased dramatically, so too has the complexity. COVID-19 and its potential negative impacts on real estate markets worldwide will most likely increase this complexity further.
Sarah Sipilä
Director, Global Strategy Group
KPMG in Finland
Some real estate owners are finding ways to make significant changes without spending significant capital. A holistic approach is needed, deploying more sustainable designs and material choices, modular and offsite construction methods, energy efficiency solutions, and other technologies. Ultimately real estate owners need to deliver on their ESG promises, but will need to find ways of doing it without breaking the bank, especially in the economic downtown related to the pandemic.
Sarah Hayes
Partner, Deal Advisory Real Estate
KPMG in the UK
I believe that lockdowns made people much more aware of the environment, sustainability and cleanliness. Tenants aren’t just looking for buildings that are sustainable and energy efficient — they want them to be smart, clean and to promote wellness. Owners are going to need to engage in some new partnerships and collaborations in order to meet these evolving tenant needs.
Régis Chemouny
Partner in Charge,
Real Estate and Hotels sector
KPMG in France
Real estate assets account for around one-third of greenhouse gas emissions which puts a large burden on the industry to participate in the response. But being socially responsible does not necessarily mean forfeiting returns. Indeed, ESG brings with it real corporate social responsibility (CSR) opportunities and significant potential to unlock access to green financing instruments for asset development. And it makes assets much more appealing to a society that increasingly values the benefits of sustainability.
Nigel Virgo
Head of Real Estate
KPMG Australia
The sustainability agenda was historically driven by climate change considerations. The pandemic has brought new priorities, such as renewed appreciation of public green spaces for exercise and increased support for local cafes and shops. Large corporate occupiers now want landlords to explore frictionless (no-contact) building access solutions such as mobile apps or no touch lifts and doors. We expect ESG and health to be front of mind for both consumers and companies, shaped by the ‘we’re all in this together’ ethos.
Gregory Williams
Americas Lead, Asset Management / Building, Construction & Real Estate
KPMG in the US
Addressing tenant needs has always been a critical success factor in real estate, and COVID-19 is driving the need for smarter, more environmentally friendly spaces. Our continuing challenge is to validate market demand — in both investment and leasing decisions — and to demonstrate a higher level of return for these assets over the long term.
Lorne Burns
National Industry Leader, Building, Construction & Real Estate
KPMG in Canada
COVID-19 has helped people recognize how interconnected they were with society around them. And it has made it clear that the resilience of the social construct has a massive influence on the way communities respond to this pandemic. I expect COVID-19 will make people focus much more on the ‘social’ part of the ESG equation going forward.
Sidharth Mehta
Partner and Head of Building, Construction and Real Estate
KPMG in the Lower Gulf region
Ever since the 2008 global financial crisis, the government and regulators in the UAE have been focused on enhancing governance over real estate investment and development. While COVID-19 may continue to impact the real estate market, investors are aware of the various initiatives undertaken by the government, including the Central Bank of the UAE. These measures are likely to encourage investments in the long term
Jun Okamoto
Partner, Global Strategy Group
KPMG in Japan
Improved air quality due to lockdowns has made real estate companies recognized the value of ESG. In Japan, ESG is recognized as a process to achieve the SDGs. Realization of social value and economic value is also becoming a commitment. I believe that real estate companies will take responsibility as a member of society that provides environmental and social infrastructure.
Chintan Patel
Partner and Head of Building, Construction and Real Estate
KPMG in India
Governance has greatly improved in India over the past 5 to 10 years, not only at the government level, but also at the boardroom level. We have seen India steadily climb up the scale in ease of doing business. And we have seen a much greater focus on governance within the boardroom and greater quality from service providers. Obviously, there is still room to improve. But material progress is certainly being made.