Investors who ignore the green credentials of their acquisitions could find their building is worth no more than a plot of land when it comes to selling, former Morgan Stanley global joint head of real estate investing John Carrafiell has warned.
In his opening comments at the 5th annual PERE Forum: Europe in London today, conference chairman Carrafiell said that while many investors had stopped prioritising the environmental sustainability of their investments in favour of the “yield scenario”, public sector authorities in most major cities would still tighten regulations despite the global economic downturn.
He said: “People have forgotten about the green issue. It was “the” topic 18 months ago. I can tell you the Mayors of major cities have not forgotten that they want their buildings to be more green.
“Many people are buying assets on what they believe is an attractive yield scenario. I’m not sure they are thinking about what that asset is going to look like in seven years time when they are looking to sell and gain a profit. What they will probably be looking at is a piece of land and not a building.”
Carrafiell said investors that did not heed warnings about future regulations could find themselves increasing the capital expenditure on their assets to ensure they abide with regulations come the time they are enforced.
“This is just an example of how people can be lured into what could be a very attractive investment in the short term without looking at some its long term issues.”
For more on green real estate investing, see the June issue of PERE magazine.