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Archive » January 2021 » Sesg Real Estate and the impact of green building certification

Sesg Real Estate and the impact of green building certification

Andrea Beltratti, Alessia Bezzecchi
January 2021 - n. 1
Keywords: Real Estate, Esg, certificazione ambientale
Jel codes: Q50, Q57, R30

Sustainable and Esg-compliant Real Estate is of paramount importance to both investors and policy-makers. Investors interest has induced rating companies to introduce Esg rating in their product portfolio, and this is a strong motivation to Real Estate players to better understand the trade-off between Esg-induced revenues and Esg implementation costs. After a review of existing applications of Esg to the Real Estate sector, we present a Monte Carlo simulation methodology and apply it to a Real Estate investment project. Using the results of a meta-analysis covering the results of 70 academic papers published in the main international Real Estate journals, we consider impact ranges for six indicators that are highly relevant in investment valuation and simulate 5,000 times the ten year business plan of the project. The simulation results show the substantial increase in the net present value and internal rate of return associated to the presence of environmental certification.

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