SUSTAINABLE DEVELOPMENT
SUSTAINABLE DEVELOPMENT
Although global attention has somewhat shifted away from sustainability, influenced by Trump-led anti-Environmental Social Governance (ESG) sentiment in the US, it remains a cornerstone for BTR developers. An overwhelming 98% of those we spoke to emphasised its importance in shaping funding strategies.
Bela Zavery, Partner and expert in Real Estate and Build-to-Rent, explains:
In a new era where ESG and Diversity, Equity and Inclusion (DEI) initiatives are more topical than ever, the focus on sustainability in building development is crucial. Sustainable practices enhance asset performance, boosting the long-term value, efficiency and profitability of a property while fostering thriving communities.
This is where financial benefits are derived through mutual community and investor engagement. Sustainability and profitability can go hand-in-hand, gaining greater support from local communities and revitalising areas in need of regeneration, including key worker schemes. While profit remains a key driver, it's clear that successful projects now depend on meeting ESG criteria.
Placemaking and profitability
The parallels of placemaking and profitability are clear. Placemaking is integral to sustainable development, transforming neighbourhoods into vibrant, inclusive, and resilient communities. This approach not only enhances the quality of life for residents but also provides significant financial benefits for developers and investors.
Bela Zavery adds: “By engaging with local communities and incorporating their needs and aspirations into the development process, placemaking not only fosters strong community support but also unlocks potential for growth. This support can streamline planning processes, reducing delays and costs, and enhance profitability. Importantly, it creates a sense of ownership and pride among residents, improving wellbeing and quality of life. Factoring these elements into your business plan can significantly increase financial growth. Successful projects can deliver substantial benefits to the community while still underpinning profitability.”
In fact, almost all (95%) of BTR developers stress the need to balance profitability with creating tangible benefits for local communities and nearly a quarter (23%) say it helps build trust and reputation.
Almost all (95%) BTR developers stress the need to balance profitability with creating tangible benefits for local communities.
Nearly a quarter (23%) say it helps build trust and reputation.
Net zero commitments and challenges
Taking a closer look at sustainable initiatives, almost all developers (95%) consider net zero commitments important in their decision-making. However, challenges include the high upfront costs of sustainable materials and technologies (39%), balancing sustainability goals with profitability (39%), and a limited availability of skilled contractors for green projects (38%) [Q18]. Additionally, 34% identified regulatory uncertainties as a key challenge, highlighting the complexities BTR developers face in integrating sustainability while maintaining financial viability.
Almost all developers (95%) consider net zero commitments important in their decision-making.
Identified regulatory uncertainties as a key challenge, highlighting the complexities BTR developers face in integrating sustainability while maintaining financial viability.
Value to society
Placemaking and regeneration development schemes are crucial in fostering vibrant, sustainable communities. However, such ambitious projects often require substantial funding, which is where private investment becomes indispensable.
Without it, many housing and regeneration schemes in underserved areas would struggle to get off the ground. Nearly three quarters of developers (74%) agree that private investment is essential for these projects [Q5]. Respondents explained that this funding not only covers the majority of finance for such projects in the UK (26%) but also drives efficiency and innovation (18%).
Nearly three quarters of developers (74%) agree that private investment is essential for these projects.
One other area for consideration is later living. As the population ages, developers think the BTR model can support this type of scheme, but overcoming financial viability issues (39%) and ensuring affordable rental options (37%) are crucial.
Bela Zavery concludes:
Despite the shifting global focus and challenges, BTR developers are leading the way by addressing the inter-relationship between profitability and positive impact, while also navigating the complexities introduced by the Building Safety Act, rental reform, and changes in taxation – such as the loss of multiple dwellings relief.
One of the ways they do this is by showing grassroots level support to the local communities in which such schemes are based. This could be key worker schemes or increased local amenities – schools, medical centres and the like – all of which help foster positive feedback and support from local communities during the planning process, instead of objections.
This proactive approach is reshaping the industry in a positive way, demonstrating that creating thriving communities is not only viable but essential for a prosperous future. By leveraging community support and private funding, these projects drive social and economic progress and foster resilient and vibrant communities.
