By Keith Lucas, Managing Director – Australian Development and Management, Sentinel Real Estate
Calls for sustainable residential developments have grown from a rumble to a roar across Australia, as climate change and social awareness provokes action around the world. With ambitious Paris Climate Agreement targets and social justice reform taking precedence in the political arena, investors worldwide are being motivated to enhance their portfolios through real estate investments that make positive environmental, social and corporate governance (ESG) impacts. For many institutional owners of real estate, ESG has become a key driver of portfolio management decisions, often directly connected to the investors’ own internal ESG mandates. As a result, the current movement towards sustainable residential development appears to be a long-term structural change in the industry.
This focus on sustainable residential development is good for both the planet and the bottom line. As the environmental and social priorities of long-term capital sources such as pension funds, endowments and trusts are driving sustainable outcomes, research also indicates that many consumers will pay a premium to live in housing that reflects their values. According to Apartmentdata.com, “about 80% of apartment residents believe that living in green multifamily communities is good for their health…Younger generations are even willing to pay more for sustainable products and services. In fact, 61% of renters say they would pay more each month in rent for an eco-friendly apartment.”
Drawing on the established US and UK models, Australia’s burgeoning Build to Rent sector proposes unique design and construction opportunities that make the nascent housing product one of the most sustainable in the wider residential market. In addition, purpose-built rental properties operating under a singular management organization with access to institutional capital can execute sustainable decision-making in their long-term operational strategy. This confluence of objectives is unprecedented to date in the Australian residential sector.
As Sentinel expands its Australian development program, making our mark on residential development and management practices across Australia, we are consciously responding to the evolving demands of both investors and renters with respect to sustainability.
BUILDING ON A FOUNDATION OF SUSTAINABILITY
In Perth, Sentinel’s Element 27 is currently setting ambitious sustainability standards for purpose-built Build to Rent properties of the future.
Based on Sentinel’s international experience with this unique asset class, Element 27 was developed to include stylish, yet durable materials to extend the lifecycle of the original investment, support a pet and family friendly community and reduce maintenance for both the resident and the ongoing management. Energy-efficient appliances, double glazing, solar shading, rooftop PV’s, LED lighting and illumination controls, as well as a managed metering network are used to boost energy performance. Furthermore, rainwater capture along with greywater recycling, low-flow sanitary fixtures and central filtration plants are incorporated to reduce water impacts and improve water quality, while enhanced waste stream management supports the development’s high sustainability standards now and well into the future.
Bringing significant managerial resources to the community, we can ensure that future operational practices, amenity offerings, installations and upgrades continue to meet or exceed the high sustainability goals, equitable practices and social engagements sought by both our investors and our residents. These environmental foundations have driven Element 27’s industry leading 8-Star NatHERS rating for a residential property and support its aspirations towards a net zero operational strategy.
Additionally, taking the resident on the sustainability journey is a key step in the evolution of this growing concept. Education sessions on the best recycling practices, exposure to electric car charging stations and access to bike- and car-share programs nearby, along with social activities that create awareness of the community’s sustainable attributes and aspirations are emerging tools in solidifying our residents’ commitment to a sustainable lifestyle and housing choice, even at a premium.
The groundbreaking development has elevated expectations for all future Australian residential projects, including at our own Build to Rent developments under way in Subiaco and Scarborough, Perth and in West Melbourne, Victoria.
A PROPERTY OPPORTUNITY BUILT FOR THE FUTURE
We firmly believe Build to Rent developments will raise the bar for sustainability and equity across the entire Australian property industry.
The alignment of our development strategy with ongoing building management makes it easy to maintain, track, benchmark and publish environmental performance in a way that’s typically not possible in a traditional Build to Sell asset of this scale. This long-term strategy facilitates the achievement of highly sustainable outcomes and essentially incentivizes the building’s ongoing management staff to improve them over time.
Build to Rent is quickly becoming a more desirable lifestyle option when it comes to quality of living and housing security for renters. By instilling a sense of community and pride among our renters, we have enhanced the development’s social benefits and continue to achieve high occupancy. This is not only integral to economic performance and returns, but essential in establishing an inclusive culture around sustainability.
As Sentinel pursues this innovative strategy, we are confident in our ability to achieve significant financial returns and respond to growing investor and public demand for sustainable buildings. We are staking our claim on a sustainable future, built on a foundation of long-term success and experience.