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Green Premium and Brown Discount: ESG criteria as a driver of financial value in Real Estate

ESG come leva nel Real Estate
Foto di Fahroni via Canva

The property market is becoming increasingly polarised. Sustainability is no longer a matter of brand image or individual choice; it is a structural economic variable that directly impacts profitability, bankability and long-term value.

Market data clearly demonstrate that the gap between properties that meet ESG standards and outdated assets is now tangible and measurable and no longer simply theoretical.

Value that goes beyond sustainability

Analyses highlight two opposing trends that every modern investor must consider.

On the one hand, there is the Green Premium. CBRE Research studies have found that buildings certified to international standards like LEED or BREEAM record higher occupancy rates and rental prices, with average rental premiums between 6% and 9%. Looking at capital value, the difference can reach as much as 14-16% compared to uncertified properties.

On the other hand, the Brown Discount affects properties that are less energy efficient. CRIF Real Estate Services research shows that properties in energy classes F and G suffer average drops in value of 4%, with price gaps of up to €1,000/m² in the most competitive markets.

The real risk: obsolescence

For property investors and funds, the primary risk is no longer the cost of improving efficiency, but rather the risk of early property obsolescence. Properties that fail to meet ESG criteria lose their appeal, become less liquid and encounter increasing difficulties in securing access to finance.

ESG reporting, now reinforced by regulations such as the CSRD, has become essential for securing project funding. Sustainability is now a must for protecting investment value over the medium to long term.

SCI Value’s perspective

At SCI Value, sustainability is an integral aspect of every project right from the initial planning stages. Through our Reverse Value Engineering RVE®, we always begin with the expected final value and break it down into its technical and financial components.

This approach allows us to quantify the real impact of sustainable choices, to turn ESG requirements into opportunities for optimising both hard and soft costs, and to ensure the alignment of budgets, performance and certification targets.

In a market that penalises inaction and rewards quality, technical expertise is a vital asset in safeguarding capital. Sustainability only creates real value when it is woven into the investment figures and managed with strict analytical discipline.