Capital Markets and Sustainable Real Estate: What Are the Perceived Risks and Barriers?

Abstract

This paper examines the perceptions of the real estate capital market players regarding green buildings. Through an online survey of lenders, equity investors, and developers, the study collects and analyzes their opinions on the incremental costs and benefits of energy-efficient projects, as well as the importance of various risks and barriers. While the majority of the respondents believe green buildings should have higher value, they are also concerned that this expectation might not materialize if space users (i.e., tenants) are unwilling to pay extra rent for the benefits associated with green space. Generally, the respondents believe that the lack of consumer awareness of these benefits, along with lack of incentives, is a major barrier to the growth of green development.