In the case of the property and construction sector, we wanted to find out how far the sector has come and what challenges it faces on the sustainability journey.
Concepts such as sustainability, energy efficiency or decarbonisation are already part of the lexicon of many sectors. In the case of the property and construction sector, we wanted to find out how far the sector has come and what challenges it faces on the sustainability journey.
Starting with real estate, Pedro Rutkowski, CEO of WORX – Real Estate Consultants, seems to have no doubts about the sector’s growing concern for sustainability, giving the example of Urban Rehabilitation Week, where developers, builders and building materials companies spoke about their concerns and presented solutions: “It’s a joint effort that should involve all the players in the sector.” In terms of concrete actions in the sector, we would highlight the commitment of building owners to real estate sustainability certifications, increasing their value and improving their positioning in the market: “The major investors know that sustainable buildings are more attractive and profitable.”
Nuno Marques, Director of Advisory Services at Engexpor, seems to agree with this. He not only confirms the commitment that already exists in the sector, but also notes that sustainability is now at the centre of action: “We are a long way from the days when the ‘sustainability’ of buildings was restricted to optimising air conditioning systems to reduce energy consumption, installing lower consumption taps or separating waste. Making property more sustainable means promoting healthier and more comfortable buildings for users, with construction that has a lower environmental impact at a viable cost for the investor. Basically, it means balancing three fundamental components: society, the environment, and the economy,” he adds. This “awakening to sustainability” is partly due to the Paris Agreement and the “European pressure for decarbonisation through the Green Deal”: “There is, in fact, political and social pressure for economic transition that is moving the Portuguese market”. The reflection of these policies and ESG (Environmental, Social and Corporate Governance) in the property market has awakened the sector to “sustainable construction certification systems”, integrating environmental concerns into buildings, “attesting to the commitment of companies and projects to environmental sustainability”, while making property “more interesting in the eyes of investors who choose to invest with less risk”.
When it comes to sustainability, Vítor Amaral, president of the Portuguese Association of Condominium Management and Administration Companies (APEGAC), believes that the sector is still at a very early stage: “We all know the lack of quality in our construction and this has to be taken on board, even as a starting point for the process of sensitising society and particularly the technicians involved in the construction sector, from designers to contractors. “In his opinion, this sector has been “trailing behind” the measures created or imposed and the greater sensitivity of society: “We can’t dissociate the mediocre quality of construction from the main objective of property developers, which is profit, as well as from the economic conditions of Portuguese families, which encourages construction at lower costs, suited to our economic reality”. Still, “we are beginning to realise the need to build better and with environmental concerns, by investing in more sustainable materials and forms of construction”.
For his part, Manuel Reis Campos, president of the Association of Civil Construction and Public Works Industrialists (AICCOPN), looks at the commitment and concerns that the sector has placed in sustainability: “The Construction and Real Estate Sector has seen this new paradigm as one more opportunity to demonstrate its resilience and quality.” Thus, the transition to more sustainable development models is already common practice in many companies in the sector: “The projects promoted and implemented to respond to the transition to the “Circular Economy”, within the scope of the effective management of construction and demolition waste and its valorisation, the development of the market for secondary raw materials and the incorporation of recycled materials in public and private works contracts; the assessment of the life cycle of buildings, materialised in the design of projects that already take into account “future” deconstruction in new construction; “Modular Construction” and the creation of tools based on BIM – Building Information Modelling – for circular construction models, are some of the examples”.
Aline Guerreiro, founder of the Sustainable Construction Portal, believes that the word sustainability is part of the lexicon, but that doesn’t mean that it is truly applied: “Most companies related to the sector take advantage of the word ‘sustainability’ to sell, without really living up to its meaning”.
As a result, there aren’t many concrete actions known in this regard: “There are some real estate agents who organise webinars on the subject, but they’re still very limited,” she says.
“It’s important to create more housing, but without putting aside the requalification of existing housing, because this is where our population lives”
In terms of difficulties, Pedro Rutkowski believes that sustainability is the sector’s great challenge for the coming years: “It is urgent to look at this issue with the seriousness it demands and rethink property assets, not only by converting existing ones, but also by designing new buildings from scratch with these concerns incorporated.” The CEO of WORX – Real Estate Consultants adds that the parameters for financing already consider the sustainability performance of buildings, so there’s no way not to look at this issue: “It’s in the owners’ interest for their assets to be sustainable, and there’s also pressure from the tenants themselves for buildings to be more efficient.” In this journey, he believes that the Governance has a key role to play: “Governance must speed up these processes and create incentives for developers and investors to want to invest in sustainable property, so that we can work together towards the energy transition.”
For Nuno Marques, decarbonisation in real estate must take a “holistic approach”, covering the entire life cycle of an asset. For Engexpor’s Director of Advisory Services, the sector’s actions will have to involve “reducing the carbon embodied in the construction phase, through the acquisition and application of more sustainable materials”, avoiding “waste”. Good asset management will make it possible to “increase its utilisation period” and thus “promote the transition to a less carbon-intensive economy”, he points out. In order to achieve the goal of reducing emissions by 55% until 2030, the sector must take into account that “it is not enough to reduce consumption in buildings, since the impact of consumption in terms of emissions also depends on the impact of primary energy production charged to the grid, which feeds the buildings”. That’s why it’s crucial to “also invest in cleaner energy production and Portugal is on the right track”, he argues. Accelerating the sustainability journey thus depends on construction methods, which could be the key to accelerating the decarbonisation of real estate: “As well as promoting the transition to the circular economy, industrialisation also responds to the challenges of a lack of labour and raw materials.” He warns, however, that “legislation” is the most effective way forward: “By tightening legislation, it forces more and more companies in the sector to see sustainability as a priority.”
As for the challenges facing the sector, Vítor Amaral emphasises the need to change mentalities about how people want to live and what they consider to be quality of life: “The future depends largely on our past, because we won’t be able to achieve the levels of quality of life that are demanded today without changing the legacy they left us.” By way of example, the president of APEGAC recalls the lack of concern about thermal insulation, acoustic insulation, renewable energies or the use of rainwater and wastewater: “The truth is that three million homes didn’t respect any of this when they were built. Reversing the situation is the great challenge, because new construction is already being directed towards these precautions, especially with the new generations of architects, civil engineers, contractors and developers.” The state also always has an important role to play, given that “we are a country with great asymmetries and a population that, for the most part, lives in serious financial difficulties”. However, “it’s not just with one-off measures” that the problem will be solved: “It’s important to create more housing, but without putting aside the requalification of existing housing, because this is where our population lives.”
Manuel Reis Campos, meanwhile, defends the need to “actively involve all participants in the construction value chain: from designers to end users of construction products, policy makers, public and private contractors, construction companies, material suppliers and academia”. That’s why it’s important to create conditions that enable “the construction, rehabilitation, conservation” and “maintenance of buildings and infrastructures”. The focus should be on “promoting and disseminating cultural and business practices” in the field of innovation, evolving towards “Construction 4.0”, in which the consumer plays a fundamental role in “implementing sustainability practices”.
Aline Guerreiro believes that the great challenge for construction is to make it “truly” sustainable, “using natural materials, bioclimatic architecture and focussing on rehabilitating and improving the existing housing stock. There are houses, but they aren’t in good living conditions.” In this sense, the founder of the Sustainable Construction Portal believes that the concept of sustainable construction is based on “accelerating the knowledge of all those involved”. And government bodies have a “preponderant obligation” and must “impose rules” so that people start building properly: “Licences must make the author of the projects directly responsible, but for this there must be precise and appropriate supervision of the construction, making municipalities responsible for effective construction in accordance with what has been designed.”
The next 10 years
For the CEO of WORX – Real Estate Consultants, the next few years will be about assertioning real estate sustainability: “The market increasingly values quality, and the future has to start being mapped out now.” With regard to property investment funds, Pedro Rutkowski notice that most of them will be required to “acquire assets with sustainability certifications” in their regulations, which will bring a “new paradigm” to the investment market.
Although the efforts being made are generating very positive results, Nuno Marques believes that the process of decarbonisation and the transition to “green” real estate will inevitably have to involve digitalisation, robotics and industrial construction: “The future will have to be sustainable across the board.”
Vítor Amaral looks to the future of the sector with optimism and, at the same time, expectation: “Knowing that it’s a short time for all Portuguese to have decent housing and to implement the measures that sustainability requires.”
For Manuel Reis Campos, the transformation of the sector towards Construction and Rehabilitation 4.0 has high growth potential, as it generates “significant gains in productivity, cost reduction and waste reduction”, as well as “accelerating construction times”. However, this technological advance has high initial costs: “The government must incentivise and stimulate this evolution,” he says.
Aline Guerreiro believes that if the regulations remain as they are, “sustainability will still be a long way off to be achieved”.
Article published in Ambiente Magazine on 10th July 2023
