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Transition Pathways: Real Estate

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Many property companies and owners see net zero as crucial to commercial growth, driving action to decarbonise their assets through electrification, energy efficiency improvements, use of lower-carbon materials, and other measures.

HSBC's third instalment of Transition Pathways gauges developers and investors’ sentiment towards net zero across various assets - residential, office, retail, hospitality, logistics and data centres. The instalment also brings together industry insights, sector expertise and recent real estate case studies in the sector to support transition discussions and businesses in the arena.

Transition plans demonstrate action and practical steps against ambition and show regulators, financiers, investors and customers how an organisation intends to reach net zero, often by 2050, across its operations and value chains.

How is the sector transitioning?

How are real estate developers and investors approaching the transition to net zero? What is accelerating their decarbonisation, and what is holding them back? We worked with Kantar to ask 321 companies in 20 markets what the transition means for their business. (Methodology available below).

Commercially important

97%

of real estate companies say net zero is commercially important to their business

Technology is key

56%

say technology developments are accelerating their net zero plans

Capex is rising

39%

are already spending more than 10% of capex on their net zero transition, with 51% expecting to do so in 2-3 years’ time

Blueprints and building blocks: How are property businesses approaching the low-carbon transition?

Switching from gas and oil to heat pumps or direct electricity is critical to reducing emissions from buildings. The sector can help improve energy efficiency of old buildings through better insulation, low energy appliances, efficient cooling and technologies that can help optimise energy use, for example, smart thermostats.

Seb Henbest | Group Head of Climate Transition, HSBC

Building towards net zero

Net zero is an important business goal, but spending and priorities vary by region. Deep dive into the findings now.
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Actions driving transition in the sector

How retrofitting buildings can cut emissions and unlock value

Retrofitting existing buildings is less carbon-intensive than constructing new ones – but it’s still expensive. Why and how should property owners secure financing for upgrades?

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Why embodied carbon is rising up the real estate agenda

Policymakers are increasingly targeting embodied carbon – the emissions generated by the construction, refit or demolition of buildings. How is the real estate sector responding?

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Listen now

Retrofitting existing buildings to make them more sustainable is a growing trend as the real estate industry looks to meet net zero targets. In this podcast we explore how it works, what investors and developers can expect, and what the financials are in the current market, from both a UK and Asia perspective. Listen now on HSBC Talks Business via Apple Podcasts, Spotify or wherever you get your podcasts.
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Our climate strategy

Today we finance a number of industries that significantly contribute to greenhouse gas emissions. We have a strategy to help our customers to reduce their emissions and to reduce our own.

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Explore more insights from experts and industry partners on the global transition, and how we're supporting our clients to act on their sustainability ambitions, driving impact for their business, employees and communities.
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For HSBC’s Transition Pathways survey, HSBC has worked with Kantar, a data, insights and consulting company. The survey is not wholly-representative of HSBC’s customer base and covers respondents across 321 key financial decision makers from businesses operating in the Real Estate sector, comprising Developers (163) and Investors (158) and operated across Residential and Office, Retail and Hospitality and Logistics and Data Centres. Businesses were located in Europe (61, of which 35 were in the UK), Asia (97, of which 43 were in Hong Kong), the Middle East (31) and North/Central America (132). Overall 146 (45%) had a gross asset value below $1.5bn, 67 (21%) had a gross asset value between $1.5bn and $4.9bn and 108 (34%) had a gross asset value in excess of $5bn. 99 (31%) had been established for less than 10 years and 222 (69%) for more than 10 years. Data was collected through an online questionnaire and the survey ran from 5 to 17 July 2023.

In preparing this survey, HSBC has relied upon available data, information and responses given at the time of writing. This report should not form the basis of any third party’s decision to undertake, or otherwise engage in, any activity and third parties do not have any right to rely on it. Neither HSBC nor Kantar accept any duty of care, responsibility or liability in relation to this research or its application or interpretation, including as to the accuracy, completeness or sufficiency of it or any outcomes arising from the same.

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