Sustainability

In the context of real estate, sustainability means planning, constructing, operating, and managing buildings and properties in a way that meets the ecological, social, and economic needs of the present without compromising the ability of future generations to meet their own needs. This three-pillar model-environment, society, and economy-forms the foundation for all modern sustainability concepts in the construction and real estate industries. For owners, buyers, and investors, sustainability is increasingly becoming an economic imperative, not just an ethical choice.

Environmental Sustainability in Real Estate

Environmentally sustainable real estate minimizes energy consumption, utilizes renewable energy, and employs eco-friendly building materials. The energy performance certificate is the key tool for assessing a building’s energy efficiency; it classifies buildings from A+ to H. Other factors include the ecological footprint of building materials (gray energy), rainwater management, soil sealing, and biodiversity on the property.

The Building Energy Act (GEG) sets minimum standards in Germany for new construction and renovation. It stipulates that new heating systems must be powered by at least 65 percent renewable energy. These requirements will be gradually tightened in the coming years, which owners of older buildings should factor into their modernization plans early on.

Social and Economic Sustainability

Socially sustainable real estate offers healthy indoor air quality, good sound insulation, accessibility, and affordable rents. Well-connected, functionally mixed-use neighborhoods with local amenities, schools, and green spaces are more socially sustainable than monofunctional housing developments on the outskirts of cities.

Economic sustainability means that a property retains its value over the long term, incurs low operating costs, and allows for flexible uses. Buildings that combine all three dimensions are more attractive to tenants and buyers in the long run and achieve higher market values. Conversely, buildings with poor energy performance and a high need for renovation are increasingly being valued at a discount on the market.

Sustainability and Property Value

The link between sustainability and property value is now well-documented empirically: Energy-efficient buildings (Classes A and B) command purchase price premiums of 5 to 20 percent in German cities compared to comparable buildings in Classes D through F. With rising energy prices and regulatory requirements (EU Buildings Directive, GEG), this gap is likely to widen further.

Investors who invest in energy efficiency and sustainable features today are securing the value of their properties for the coming decades. Particularly relevant is the concept of “stranded assets”: buildings that cannot meet future regulatory requirements due to a lack of energy efficiency risk losing significant value or becoming unsellable. Those who do not renovate now run the risk of achieving significantly lower sales proceeds later.

Green Finance: Sustainability and Financing

Sustainability also has implications for real estate financing. Banks are increasingly offering “green mortgages”-loans with more favorable terms for energy-efficient properties. The European Central Bank and national banking regulators are urging banks to integrate sustainability risks into their risk models. This means that energy-inefficient properties could be harder to finance in the future or face higher interest rate premiums. Conversely, KfW subsidy programs for energy-efficient renovations are attractive and sometimes include repayment subsidies.

Practical Tip for Property Owners in Nuremberg and Franconia

In Nuremberg and the metropolitan region, many existing buildings from the 1960s and 1970s have significant energy efficiency upgrades needed. Those who renovate now-insulation, heating system replacement, solar thermal, or photovoltaics-not only increase living comfort but also improve the energy efficiency rating and thus the property’s resale value. At the same time, attractive subsidy programs from KfW and BayernLabo are available.

We advise you on which measures offer the best cost-benefit ratio for your specific property. In doing so, we take into account the current market situation in the region, foreseeable regulatory developments, and available subsidies-ensuring an investment decision that is economically sound today and sustainable tomorrow.

Frequently Asked Questions

Is an energy-efficient renovation worth it before selling?

That depends on the individual case. Smaller measures such as replacing the heating system or insulating the roof are often worthwhile, as they noticeably improve the energy efficiency rating and thus the market value. More extensive renovations do not always pay for themselves entirely through the sale proceeds-in such cases, an individual calculation is advisable, which we will perform together with you.

What energy efficiency rating should a property have to be competitive on the market?

Today, Class C or better is considered the minimum standard for competitive marketing in urban areas. Class E and lower result in price reductions or prolonged marketing times for buyers. Starting in 2030, EU regulations are expected to mandate minimum standards for all buildings.

How can I find out how to improve my property in terms of sustainability?

An energy audit conducted by a certified energy consultant (an energy efficiency expert on the BAFA list) provides you with a detailed overview of weaknesses and recommended measures, including a cost-benefit analysis. The consulting costs are partially reimbursable under certain subsidy programs.

How does sustainability affect rental income?

Energy-efficient apartments are more attractive to tenants due to lower utility costs. The so-called “warm rent” comparison shows that tenants in energy-inefficient apartments often pay more overall despite lower base rent. Landlords of energy-efficient apartments also experience fewer vacancies and can charge higher base rents when re-leasing.

What certification systems exist for sustainable real estate?

Various sustainability certifications exist for residential and commercial real estate: the DGNB certification (German Sustainable Building Council), the LEED certification (Leadership in Energy and Environmental Design, U.S.-based, internationally recognized), and the British BREEAM system. These certifications evaluate buildings based on ecology, economy, social quality, technology, and process quality. In the commercial real estate sector in Nuremberg, DGNB certifications are becoming increasingly important, as institutional tenants and investors require proof of sustainability for their own ESG reporting. These certifications are still less common for private residential buildings, but interest is growing with the increasing importance of EU taxonomy and green finance.

Sustainability Obligations for Institutional Real Estate Owners

For institutional real estate owners-funds, insurance companies, REITs, and larger portfolio holders-the regulatory landscape has changed significantly since 2021. The EU Taxonomy Regulation and the Sustainable Finance Disclosure Regulation (SFDR) require financial market participants and real estate companies to measure and report on the sustainability performance of their portfolios. Buildings intended to be marketed as “green” investments must demonstrate that they meet certain climate protection thresholds and do not have significant negative impacts on other sustainability goals. For medium-sized real estate companies in Nuremberg and Franconia that work with institutional investors, ESG reporting is thus increasingly becoming a requirement rather than an option. We are observing this trend in the metropolitan region and support property owners in analyzing their portfolios from a sustainability perspective.

Back to the Real Estate Glossary.