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WASHINGTON, DC—Less than a week after the UK finally left the European Union on 31 January, real estate professionals from across Europe were gathered in Amsterdam for an open and candid exchange of ideas on their industry's priorities in a conference held by the Urban Land Institute.
Brexit was off the formal agenda of the conference, but the winners and losers were a popular topic during the meals and breaks. The big question is unchanged. How many relocations can we expect and where will they go? More granular issues are also exercising minds. Fund managers are listening to rhetoric threatening a low level of alignment between UK and EU policies and asking what that means for those UK assets held in European funds.
Ed Walter
Alongside Frankfurt and Paris, Amsterdam, Dublin and Luxembourg all seem set to be the beneficiaries of Brexit relocations. Amsterdam and Dublin, in particular, are highly thought of for their shrewd positioning as international and business-friendly cities. But an influx of global companies is not an unqualified positive. More high-income residents will inflate the cost of housing in cities like Amsterdam where affordability is already an acute problem.
Climate change dominated discussions at the annual ULI Europe Conference. Amsterdam is an appropriate location for a practical conversation about the risks posed by climate change. The bicycle already has equal status with the car there and moving around the streets requires constant alertness for silent bicycles and less stealthy trams. The balance between bike and car might well be tipped by investment in fast cycle lanes for those coming into the city on e-bikes.
A 'carbon risk real estate monitor' was one of the revelations of the conference. Developed by five pan-European academic institutions with funding from the European Union, the CRREM is designed to pinpoint the date of climate-related obsolescence for each commercial real estate asset (the "stranding year") and quantify the risks and rewards of prolonging conformity to environmental regulations. The CRREM is free unless you've already paid for it through your taxes, said Tilburg University's Dirk Brounen.
Ruud Veltenaar advocated national overshoot days as a test of the industry's sustainability. ULI members were urged to act in ways that delay the point every year when more natural resources have been consumed than can be replaced. The global Earth Overshoot Day, tracked since the start of the 1970s, reached 29 July in 2019. Qatar was singled out as the worst performing nation in 2019, having reached that point on 11 February.
No-one argued with the view from Claudia Kruse of APG Asset Management that only sustainable investments would perform well in the long term. Responsibility and returns were closely interlinked, but that was still not the same as saying social impact would take priority over returns. A poll of delegates suggested that more pressure from investors and stakeholders was the key factor (35%) needed to move social impact investing from dedicated funds to all portfolios. A call for better measurement from 23% was echoed in a demand for consolidation of ESG reporting systems.
The consensus was in adopting targets for carbon neutrality in the built environment by 2050 and in using the United Nations' Sustainable Development Goals as an established starting pointing for testing performance. It goes without saying that climate change is an issue transcending boundaries. It's not something that either the UK or the EU can tackle in isolation. What interested ULI's leadership was the thinking coming out of a continent that might not be the most acutely affected by climate change, but nonetheless takes responsibility for driving what many see as a crisis of inaction.
Ed Walter is the Washington-based Global CEO of the Urban Land Institute
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