Sponsored Content produced by: Javier Meseguer, General Manager Southern Europe at Drooms
Sustainable investments are increasingly coming into focus, so that a realignment can take place within the real estate industry in terms of the development, management and administration of properties. Complete data sets form the basis from which companies can remain future-proof.
With the entry into force of the EU disclosure regulation and the EU Taxonomy regulation as part of the "European Green Deal" in 2021, the European Union is increasingly demanding improved visibility for the issue of sustainability. In this way, risks can be identified at an early stage and climate targets achieved. Compliance with ESG guidelines provides investors with an insight into the extent to which a company acts sustainably, among other aspects. This ensures that targeted and considered investment decisions can be made in relation to shares, investment funds and real estate funds. As a result, however, the pressure on the real estate industry is being ramped up. In addition to the EU directives, Spain has set itself the target of reducing greenhouse gas emissions by 23 percent by 2030 as part of its climate change and energy transition laws. To this end, around 5 million square meters of building space are to be renovated every year. In addition, plans have been drawn up in relation to a new regulation for the introduction of a new certification procedure for the energy efficiency of buildings.
As such, sustainable investments are coming to the fore, in particular for transaction processes related to the buying and selling of real estate assets. After all, before every purchase the onus is on the buy side to carry out due diligence with the aim of carefully analysing, checking and evaluating the property – also with regard to sustainable investments. But how can investors be sure that any given real estate asset is ESG-compliant and therefore a sustainable property? Data is the key. It forms the basis from which this question can be answered. Because data delivers insights into the ecological footprint of real estate assets. In doing so, sustainability becomes a measurable construct for the first time.
Digital platform for increased transparency
During the sales process for a real estate asset, relevant documents and papers must be collected in advance. The biggest challenge in this regard is that databases and information are usually found in different places. Valuable information is isolated in what are known as data silos and can only be viewed by certain user groups. To avoid this rather awkward set-up, virtual data rooms offer an efficient and, at the same time, secure solution. They enable all essential data to be made accessible quickly and transparently on a single platform using innovative technologies such as Artificial Intelligence (AI). The advantage of virtual data rooms is that complete real estate portfolios can be administered and sold digitally from a single place. Users are therefore able to obtain a detailed overview, anytime and anywhere, of all relevant information in addition to identifying areas of potential and weakness in terms of ESG conformity. This is not only an efficient solution, but also an exceptionally sustainable one, with no additional technology needed and a completely paperless process.
A Drooms study from 2021 covering the trends, needs and challenges in the real estate asset management industry across Europe lays bare the advantages of virtual data rooms: just under 90 percent of Spanish survey respondents identified a significant benefit in terms of improved data control and experienced a marked increase in efficiency on the back of this. Digitalising documents therefore leads to more streamlined business processes and paves the way towards greater sustainability in the asset management world at the same time.
Fulfilling ESG criteria with the help of digitalisation
ESG requirements and the resulting disclosure obligations and reporting are based on a wealth of data. A well-maintained data structure is therefore indispensable in order to present reliable information for ESG reporting. To achieve this, the relevant information must be collected, structured, stored in databases and continuously updated. Only in this way do users receive transparent information about all ESG-relevant documents, which in turn allows them to take the appropriate action.
Investments in new technologies for increased digitalisation
Digital transformations are essential in order to remain economically successful as a company in the market - especially with regard to sustainability. However, according to the Drooms survey, the real estate industry still has some catching up to do when it comes to digitalisation. Overall, 60 percent of the Spanish survey participants admitted to a lack of knowledge about existing technologies. The industry is at least keen to act and invest more in new technologies with the aim of meeting increasing demands: around 80 percent of real estate experts in Spain expect an increase in the budget for new technologies to be likely to very likely over the next two years.
Digital applications are the key to transparent and professional ESG reporting. There can be no doubt that, for an increasing number of firms, digitalisation is a key feature of future-oriented corporate governance in an increasingly data-driven world.