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Real Estate Experts Expect Wave of Modernization

Sustainability

The EU Taxonomy and ESG directives already require an immediate change of approach for medium-sized companies. In a year or two, the regulatory environment will impose extra burdens and obligations, which will have an amplified impact on companies operating on properties that are more than 10 years old. In the experience of Icon Real Estate Management, a major player in the Budapest office market, the inevitable upgrades are already being outlined and planning has started in many locations.

Buildings are responsible for around 40% of total EU energy consumption and 36% of greenhouse gas emissions from energy. A regulatory environment that encourages reduction and compliance with ESG considerations will require a radical change in the approach of domestic businesses. From 2024, large companies outside the financial sector will have to prepare and publish sustainability reports, while from 2025, listed EU SMEs will also be required to do so.

Sustainability considerations have been taken into account in the design of buildings built in the last few years, so the situation for large companies renting state-of-the-art office buildings is not critical in this respect, Icon notes. At the same time, more than 85% of Europe's building stock is pre-2001, which poses a challenge and a problem to be solved for thousands of businesses in the EU, including Hungary.

In the office sector, there is already a perceptible expectation from tenants to landlords to start technical investments that will mainly promote more efficient use of energy, especially gas, and electricity. Improvement projects have been launched in many properties to preserve property values, but market experience shows that in many cases only the first steps are taken (e.g. replacing lighting fixtures with LEDs), which reduce consumption in the short term but have little impact on long-term sustainability. This requires complex system-level improvements based on automation and IT solutions.

"It is not enough to plug the gaps in the economy with various cost-cutting, modern tools, the issue of office building efficiency needs to be addressed in a complex way. We also need to educate tenants' employees and office users to use energy more sustainably to achieve the greatest possible impact. Energy savings of between 5 and 10 percent can be achieved simply by changing usage habits in a conscious way," said Zsolt Kákosy, senior director of Property Management at Icon.

"Improving energy efficiency must be the primary focus of efforts to achieve the targets set by the European Commission. It is important that the operation of systems for running office buildings is not only linked to the time of day but also to the occupancy of the building. In addition, the installation of intelligent cooling, heating and electricity control systems can also make a major contribution to the sustainable operation of buildings" adds Róbert Flück, director of facility management at Icon.

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