“If we do the right things we’ll make money damn near automatic,” said Nike Executive Rob Strasser in 1977. These words are a blaring differentiator in today’s market. An increase in responsible investing and a crackdown on ESG regulations have meant that ESG is no longer just the right thing to do but rather essential to financial success.
This is no different in the real estate sector, where recent surveys have highlighted ESG as key to increased financial success.
Knight Frank’s 2025 survey found that 63% of investors cite undertaking ESG for enhanced returns while CBRE reports an increase in willingness to pay premium for sustainable real estate. Non-compliant properties will become obsolete, with the mounting interest rates, inflation and geopolitical tensions further hindering the sector.
With the real estate prime season upon us, it is now time to reflect on the top trends as sustainable real estate is becoming core to profitability.
PropTech
A term that has been thrown around a lot recently in the real estate industry, Proptech is simply the incorporation of technology to help businesses and individuals manage real estate. Between 2025-2032, Proptech is projected to achieve a compound annual growth rate of 11.9% with a value surpassing $88 billion by 2032.
The sector consists of three main areas: smart homes, sharing real estate and real estate fintech (financial technology). It is an easy, quick and relatively affordable way to implement sustainable practices. Some of the most popular examples of proptech include:
- Big Data: Large data sets allow businesses to identify trends and formulate strategies to assess targets. This can be used to evaluate consumer needs and form more accurate property evaluations.
- Artificial Intelligence (AI): AI is spreading like wildfire. Within real estate, it makes the customer experience more streamlined, allowing for virtually signed contracts, property viewings and communication. It has become essential for property selection, valuation, and predictive investment.
- Internet of Things (IoT): These are tools that allow communication between smart devices for smart real estate. Being able to monitor habitual trends such as energy usage are invaluable for more efficient real estate management.
And here are two rising Proptech trends:
- Tokenization of assets: Blockchain technology is enabling the tokenization of real estate assets, allowing for real estate to be managed and invested like stocks for international investment.
- Cryptocurrency transactions: Though still uncommon, cryptocurrency is entering the ESG space with an increasing number of real estate businesses conducted with Bitcoin and Ethereum. This trend is expected to grow, especially in high-end luxury real estate.
Sustainable Infrastructure
Sustainable infrastructure is the number one growing trend in real estate, demanding a premium across the market. It is now essential to remain competitive within the market. This is heavily influenced by regulations and certification requirements.
Green Certifications: There is a growing demand for buildings with green certifications such as BREEAM and LEED. Both developers and tenants are increasingly prioritizing sustainable buildings as they prove more efficient and demand a premium.
Pressure to become more energy efficient is huge, with regulations and certifications demanding more and more efficient buildings. These have the added benefits of increased premiums and decreased maintenance costs.
Common sources of energy- efficient methods include:
- Renewable energy in the form of solar panels and wind energy. Look for companies with long warranties and proven brand confidence. Popular companies include: REC Group, Q Cells and Siemens Gamesa.
- Reusable materials in construction to lower building costs and increase heating efficiency. For the most sustainable and reliable sourcing of materials, aim to work with local companies or some larger companies like Holcim and Veolia with global networks.
Watch out for opportunities to partner with businesses producing excess sources of energy. Real estate developers are increasingly partnering with tech companies to use excess heat from servers as a source to reduce energy costs.
Investors who adopt green features early may benefit from higher demand, increased property value and tax incentives. Whilst the upfront costs of retrofitting will be high, the long-term returns and savings are estimated to be high.
Top Tip: To evaluate whether the sustainable investment in question is profitable for your business, establish a Green IRR (Internal Rate of Return) to assign value to each potential strategy.
Related Articles: How Blockchain Technology Is Changing the Game in Real Estate | European Real Estate Projected a 4.6% Growth With Sustainability Focus | The Growing Importance of ESG in Real Estate: Trends and Financial Benefits
Resilience and Climate Adaptation
Real estate considering climatic events like floods, heatwaves and storms is not new. However, resilience has gained traction, with insurance companies now requiring real estate to show more long-term resilience to changing climate.
European cities are implementing climate resilience plans and investing in climate-resilient buildings that include flood-resistant and heat-resistant properties:
But why should I invest in resilience when the area I operate in does not experience extreme weather events?
The main reason is financing. Green bonds and sustainability-linked financing are becoming more common in real estate projects, encouraging and requiring developers to incorporate climate-adaptive features for their buildings for better rates.
The more resilient and adaptable a real estate is, the greater the longevity on the market.
Social-Focused Real Estate
Most employers now offer hybrid working, putting pressure on commercial properties and demand to make workspaces more social. Surveys suggest that expansionary activity will be a top expectation over the next five years. Forming build-in flexibility will be key as businesses manage hybrid working and redesigning spaces to better meet user-expectations.
There is a higher emphasis on flexible work spaces that induce a collaborative atmosphere. Employees demand environments that are social. Real estate with these qualities create a healthier culture and gives businesses the opportunity to create an atmosphere that reflects the kind of people it wants to attract and retain.
With less new space coming to the market and availability concentrated in less desirable buildings and locations, competition for the best space will continue to intensify. Companies are looking to move away from hubs to more suburban areas where smaller offices provide savings and potential for more manageable sustainability retrofitting costs. Demand for more social offices requires real estate to meet sustainability demands in order to attract and retain talent.
Common Trend: Many commercial real estates are being re-purposed or converted to mixed use to adapt to the changing hybrid work market. As the balance between commercial and residential real estate shifts, it is worth considering diversifying portfolios to ensure longevity to business.
Doing the right thing: the only way to stay afloat
Doing the right things has become the road to profitability in the current changing market. ESG is now central to real estate operations and development, with sustainability demands and customer demands dictating the market. Real estate businesses require deep focus on providing sustainable credentials to not only attract investors but also enhance returns as doing the right thing is the only way to stay afloat in the future’s market.
Editor’s Note: The opinions expressed here by the authors are their own, not those of impakter.com — Cover Photo Credit: Miguel Picq
