In the drive towards sustainable asset performance, the availability and quality of data has become central to decision-making. Investors, asset managers, and financial institutions rely on data to evaluate environmental impact, assess risk, and identify opportunities in the transition to a low-carbon economy.
However, the current state of data availability across the real estate market presents significant shortcomings, making it difficult to accurately connect financial activities with environmental impact and asset performance. So, what’s the true value of data and what are those shortcomings?
The Cost of Data Availability.
Some current data models in real estate rely heavily on estimated emissions data, rather than actual measured figures. This results in inconsistencies, inaccuracies, and ultimately poor decision-making. These estimates often use broad industry averages, which fail to account for specific asset characteristics or operational efficiencies. Consequently, financial stakeholders may struggle to draw precise correlations between investment decisions and real-world environmental outcomes. Without robust data, investors cannot accurately track the sustainability performance of assets, which limits their ability to meet regulatory and market expectations.
Poor data quality doesn’t only affect sustainability reporting but has tangible financial consequences. If property owners and investors lack detailed energy and emissions data, they may struggle to identify inefficiencies, leading to higher operating costs and reduced net operating income. Over time, this can negatively impact asset valuation, net asset value and attract fewer buyers or residents who are increasingly prioritising green buildings.
Data Coverage and the Risks.
Gaining access to comprehensive and comparable sustainability data is critical for market transparency and informed decision-making. Investors need reliable data to assess risk, compare asset performance, and align portfolios with ESG goals. Without a standardised approach, different reporting frameworks can lead to discrepancies that hinder progress in sustainable finance. One of the most effective ways to improve data reliability is through industry standardisation and benchmarking. Frameworks such as GRESB and SFDR are helping establish common ground in reporting, making it easier for investors to compare assets. By aligning with these standards, companies can improve transparency and attract capital focused on sustainability.
Accurate asset performance data is essential in mitigating stranded asset risk. Properties that can demonstrate sustainability performance through verifiable data are less likely to be deemed obsolete in a rapidly evolving regulatory and investment landscape. Investors who leverage high-quality data can proactively address inefficiencies, implement improvement strategies, and future-proof their assets against environmental risks. For example, buildings that consistently underperform in energy efficiency metrics are at a higher risk when it comes to trading as energy performance regulations tighten. However, with real-time data, asset managers can identify areas for improvement, optimise energy use, and enhance asset value, thereby reducing exposure to stranded asset risk.
Leveraging Data through PropTech for Value Creation.
PropTech is a powerful way to bridge this gap between data coverage and comparability, and in doing so also boosting efficiency and operational performance. Utopi are at the forefront of enhancing sustainability data by providing granular, real-time asset performance insights. Through Smart IoT-enabled data solutions, Utopi collect near real-time energy consumption, water usage, and carbon emissions data at the asset level. This eliminates reliance on estimates and enables property owners to measure and manage their environmental impact with precision.
But where is the real value of this quality data:
- Asset Valuations – High-quality consumption data is increasingly influencing asset valuation, but without quality PropTech gaining access to that granular data can be time consuming and costly. An example of best practise was Harrison Street Real Estate and CBRE, they leveraged real-time consumption data from Utopi to drive awareness across their UK and Irish PBSA assets. This awareness led to engagement and the reduction in energy consumption, it enhanced asset performance and increased investor confidence. By demonstrating actual reductions in energy consumption and emissions, 15% energy savings to be exact, HSRE were able to improve asset desirability, ultimately leading to higher valuations and stronger market positioning. They generated a 9x ROI with an asset value increase of £17 million. See the case study, here.
- Industry Benchmarks and Sustainable Certifications – Reliable asset-level data is also crucial for obtaining industry benchmarks and sustainability certifications such as GRESB, BREEAM, Fitwel and many more. These certifications enhance an asset’s marketability, attract sustainability-focused investors, and help ensure compliance with evolving regulations. With PropTech on your side, gaining the data needed to score highly on these certifications like water use, carbon emissions, resident engagement, is simplified. See more information, here.
- Accessing Green Finance and Regulatory Compliance – The growing green finance market offers significant opportunities for assets with strong sustainability credentials. Regulatory frameworks such as the EU Taxonomy and SFDR require detailed sustainability disclosures, which can only be met with high-quality, granular data. High-quality data not only enhances eligibility for green financing but also helps secure better loan terms and lower borrowing costs. Ultimately, better ESG performance means lower capital rates. See more on SFDR, here.
Accessing quality, granular asset-level data delivers a range of benefits, from enhanced asset performance and valuation to regulatory compliance and access to green financing. More importantly, it plays a critical role in reducing investment risk, particularly the threat of stranded assets. By improving data comparability and transparency in sustainable finance, stakeholders along the value chain can make informed decisions that align with both financial and environmental objectives.
In an increasingly competitive real estate landscape, high-quality sustainability data is no longer optional – it is essential for long-term success.