Want sustainable buildings? Invest strategically in smart technology

Strategic investment, innovative technology, and collaboration are essential for achieving sustainability and value goals in the real estate sector, according to a new report from Colliers. The  report Realising ESG Performance: The Value-Driven Transformation of Europe’s Built Environment [registration] claims to provide insights into how the real estate industry can embrace sustainable buildings and comply with regulatory demands while creating long-term value.

The report explores the impact of Europe’s changing regulatory environment, highlighting key directives such as the Corporate Sustainability Reporting Directive (CSRD) and the EU’s energy performance standards. By using best practice case studies, it also emphasizes the growing importance of smart technologies and active asset management, as well as the opportunities and challenges of retrofitting older properties.

Damian Harrington, Head of Research, Global Capital Markets & EMEA, remarked: “The ESG landscape is shifting rapidly, and our research shows that investors now view sustainability as crucial to the long-term value of their assets. As regulations become stricter, real estate professionals must adopt more sustainable practices to remain competitive. Whether through renewable energy integration or the use of technology to measure building performance, the focus should be on adding tangible value to real estate portfolios, increasing asset liquidity, and meeting stakeholder expectations.”

The adoption of smart technologies is central to this transformation, offering data-driven insights to meet both regulatory and market demands while improving sustainability performance in real-time.

“Technology is key to unlocking the potential of ESG in real estate,” said Andy Mercer, Head of ESG at Colliers EMEA. “Smart building systems, renewable energy installations, and data monitoring tools are crucial for optimizing resource use and meeting ambitious sustainability goals. These strategic investments can lead to significant sustainability improvements.”

However, the report also highlights that progress will often be gradual, with change happening incrementally through the collaboration of property owners, tenants, and service providers.

“ESG in real estate is no longer just about regulatory compliance,” explained Sam Addison, Head of Project Management, Occupier Services EMEA. “It’s about leveraging the opportunity to generate long-term value through collaboration and strategic, incremental improvements. “Smaller, phased upgrades enable property owners to spread the cost of ESG investments while realizing immediate savings. From retrofitting existing buildings to modernising energy systems, small steps lead to significant gains in both sustainability and asset value. Our report outlines a roadmap for property managers to achieve these outcomes without large upfront expenses.”

Key recommendations for the industry include:

• Incremental steps for transformation: Implement small-scale improvements, such as optimizing building systems and lowering boiler temperatures, to achieve long-term sustainability.
•  Invest in measurement and transparency: Invest early in monitoring tools and building management systems to track energy use, identify areas for improvement, and ensure compliance.
• Contextual ESG strategies: Tailor sustainability plans to specific locations, factoring in local infrastructure and renewable energy options to enhance outcomes.
• Beyond energy efficiency: Go beyond energy efficiency by focusing on reducing embodied carbon, minimising waste, and improving air quality to strengthen sustainability efforts.
• Recognise asset limits and plan exits: Accept that some properties may not meet higher standards and create exit strategies to strengthen overall portfolios.
• Leverage best practices: Use proven frameworks like Colliers’ ESG Playbook and collaborate with experts to ensure sustainability investments enhance property value.
• Focus on collaboration: Align ESG strategies through close cooperation with tenants, investors, and service providers to achieve shared sustainability goals.
• Invest in smart technologies: Adopt smart systems and renewable energy solutions for real-time monitoring, energy optimisation, emission reduction, and ESG compliance.
• Phased retrofitting: Manage retrofitting costs through phased upgrades, starting with impactful improvements such as LED lighting and HVAC system modernization.
• Prioritise regulatory compliance: Ensure properties meet evolving ESG and energy standards to avoid penalties and ensure long-term viability in an increasingly complex regulatory landscape.