Battle lines drawn over embodied carbon
Making sense of the latest trends in property and economics from around the globe.
4 minutes to read
Embodied carbon
What constitutes a truly green building is a bit of a moving target. The UK’s built estate must hit various benchmarks over the next decade, measured via Energy Performance Certificates (EPCs), but the certificates aren't perfect. They measure a building's potential energy efficiency, for example, not real-world energy consumption.
Attempts to iron out this issue is being joined by an attempt to place greater importance on embodied carbon, so the amount of carbon involved in the construction process. The thinking being - how sustainable is a building with a top energy rating if you had to demolish something relatively serviceable to construct it?
The ongoing disagreement over the redevelopment of M&S on Oxford Street strikes at the core of the issue. Last month Michael Gove paused the project despite the project's architects arguing that their proposals have a 17-year payback for carbon "and will deliver ongoing energy benefits for the next century."
There does seem to be a push towards a more holistic approach to carbon in the built environment, with the Environmental Audit Committee, an influential committee of MPs, issued a damning report yesterday on the government's current policy on embodied carbon.
The group urged the government to introduce a mandatory requirement for whole-life carbon assessments for buildings, incorporated in both building regulations and the planning system. The assessments would calculate emissions from the construction, maintenance and demolition of any building, plus the energy used in its day-to-day operation - similar to systems that already exist in both France and the Netherlands.
Green homes
From 2025 onwards, residential landlords must ensure all newly let properties are rated at least EPC C. For existing lets, the deadline will be 2028.
The number of rental properties in England and Wales that currently fall below that band currently stands at about 3.3 million, and the bill to upgrade them is going to be pretty hefty - £25.7 billion, according to new research from data science company Outra. The estimated average cost of the upgrades is £7,646 per property. We covered the growing influence of energy efficiency on the mortgage market on Wednesday.
We've talked a lot this week about the problems posed by the UK's stock of inefficient homes, but what about the other end of the scale? Anna Ward looked at what homes of the future might look like as part of The Wealth Report 2022 and among the most fascinating examples was the zero-carbon concept home, the Z House, from Barratt Developments.
For the latest edition of our Intelligence Talks podcast, Anna speaks to Oliver Novakovik, technical and innovation director at Barratt to check in on the Z House. He explains how the current inflationary environment is impacting the project, discusses what Barratt has learned from trialling 50 new technologies within the home, and indicates a likely timeline for the UK housebuilder to scale up the technology across new homes nationwide. Listen here, or wherever you get your podcasts.
Residential sales slow
UK residential transactions fell 10.5% to 97,970 in April compared to a month earlier, according to official figures. That's the first fall since the end of the stamp duty holiday.
Activity remains robust - April's figure was still 12% above the pre-Covid five year average - however we do expect activity to continue to ebb towards something resembling more long term norms during the months ahead. Here's Knight Frank Head of UK Residential Research Tom Bill:
“Some buyers and sellers are hesitating as the economic warnings mount but we expect price growth to slow to single-digits rather than go into reverse. Meanwhile, supply is picking up as more owners sense the market may be peaking, which will create a more sustainable balance between supply and demand.”
Monaco
The world’s wealthy are bracing themselves for a new era of higher taxes and lower asset growth as fiscal stimulus is withdrawn and interest rates rise.
That's fuelling home sales in Monaco. Residential sales increased 7% to 440 in 2021, according to the latest data from Kate Everett-Allen. The number of very wealthy residents in the tiny enclave (those with more than US$30m in net wealth) grew 5%, according to The Wealth Report 2022. This latter figure is forecast to rise a further 23% in the next five years.
The €5m-€10m price band saw the biggest increase in sales in 2021 with a 38% jump year-on-year. The neighbourhoods of Monte- Carlo and La Rousse together accounted for 56% of all sales.
Monaco’s government is investing heavily in the Principality’s infrastructure. The Larvotto beachfront has been redeveloped, the Heliport is being extended and a new cable car linking Jardin Exotique and Fontvieille is planned. This will form part of a bigger regeneration project for Fontvieille. By 2027, the neighbourhood will be home to an urban forest, 30,000 sq m of commercial space with 80 stores and a multiplex cinema.
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Elsewhere - Fed officials are expected to make at least three big rate increases over the next few months (NYT), warehouse demand rages on despite Amazon pullback (FT), Sunak statement helps reduce inflation but risks higher rate rises (FT), and finally, US home sellers cutting prices hits highest level since 2019 (Bloomberg).