The real estate market in 2024 represents an interesting combination of challenges and opportunities: changing interest rates and respect for the environment will be key factors to monitor as we move into the future. In this in-depth review, we look at the endless opportunities represented by rural development.
Why invest in an environmentally sustainable way in real estate?
The real estate market is evolving, and more and more investors are looking for opportunities that are not only profitable but also environmentally friendly.But what are the levers we can rely on to deem this a worthwhile investment?
- Energy efficiency: investing in buildings with energy-efficient heating, cooling and lighting systems. This not only reduces operating costs, but also contributes to the reduction of carbon emissions.
- Green renovation: acquiring existing buildings and renovating them with sustainable materials such as wood, recycled glass, and eco-friendly insulation. This can increase the value of the property and make it more attractive to environmentally sensitive buyers.
- Low-environmental-impact buildings: investing in development projects that follow sustainable building standards, established by LEED (Leadership in Energy and Environmental Design) certification. These buildings are designed to minimize environmental impact and maximize energy efficiency.
- Renewable energy: acquiring land or buildings for the development of renewable energy facilities, such as solar panels or wind turbines. These investments can generate long-term revenue and contribute to the transition to a low-carbon economy.
- Sustainable mobility: investing in real estate projects close to public transport infrastructure or with spaces for bicycles. Sustainable mobility is an increasingly important factor for buyers and tenants.
- Buildings capable of adaptive temperature control: with climate change underway, investments in buildings designed to withstand extreme events such as floods, droughts, or storms are crucial. These buildings may be more attractive to forward-looking buyers.
- Environmental certifications: investing in properties with environmental certifications, such as BREEAM (Building Research Establishment Environmental Assessment Method) or the WELL Building Standard. These certifications demonstrate a commitment to sustainability and occupant health.
Updates are continuous, so keeping a keen eye on trends and innovations in the industry is critical to seizing these opportunities.
What it means to act in an environmentally sustainable way.
Farms play a crucial role in our ecosystem and in the production of resources, mainly food and wine. Investing sustainably involves a long and complex process that is anything but simple. We have tried here to outline some highlights, those fundamental prerequisites for an agricultural typology to be considered sustainable and respectful of the environment:
Adopting efficient irrigation systems, solar energy and responsible use of fertilizers are important steps to reduce the need for resources such as water and energy.
To preserve the health of the soil and respect biodiversity by reserving areas of vegetation that can be habitats for insects and wildlife, it is incumbent to cultivate following the principles of organic farming, which eliminates the use of pesticides and chemical fertilizers. This is also possible thanks to the system of crop rotation: changing crops over the years prevents soil depletion, keeps the soil alive, prevents the absorption of toxins, and thus reduces the need for pesticides.
As can be imagined, for this system to work, the user must respond positively to the new form of production. This is why it is foundational to involve the community and, consequently, the consumers in the local market, opening direct sales that not only can reduce the environmental impact of transportation, but that also guarantee the quality of the goods purchased. The optimal level in the implementation of these practices is acknowledged through the issuance of certifications such as the organic label or the certificate of sustainability. The reduction of greenhouse gases through low-emission technologies (such as precision agriculture that uses sensors and drones to optimize production and reduce waste) or respect for animals in the case of livestock farms are among the necessary conditions.
Technology at the service of regenerative agriculture.
Environmentally sustainable agriculture is a commitment to a green future. Farms that adopt these practices not only protect the environment, but also their own economic sustainability. This is why regenerative agriculture – an approach that goes beyond just food production – was born.
It is based on principles and practices designed to restore and improve the health of agricultural ecosystems, including soil, water and biodiversity.
In addition to what we have already mentioned, once the primary conditions of environmental respect are established, there are some new solutions that preserve the land.
Among others, reducing the use of mechanical means so as not to affect the soil can be a start, and this is also possible with residues or cover crops that help protect the soil from erosion and improve its fertility.
Preparations such as compost of organic origin can be used to defend plants from pests, excluding synthetic chemicals while enriching the soil.
Another solution might be to make sure that water drains away, to avoid stagnation that could create unhealthy aquifers, and varying the presence of plants in the same area helps to improve the balance of the entire ecosystem.
In summary, regenerative agriculture is a set of practices that aim to regenerate the soil, enriching it and making it capable anew of producing healthy, quality food, without exploiting and depleting it. It is an important step toward a more sustainable and resilient agricultural future.
Knight Frank's Rural Report 2023-24: business opportunities and changing buyer attitudes.
Knight Frank's Rural Report 2023-24 is an annual analysis that explores current and future opportunities for businesses, people, and the planet in rural areas. In this article, we will examine some of the report's key findings, focusing on environmentally friendly business opportunities and how buyer attitudes have changed, now demonstrating greater awareness of green issues.
Agriculture and land management.
The report reveals the importance of sustainability in agriculture. Farms that adopt sustainable practices, such as responsible use of water resources and reduction of environmental impact, can benefit from financial incentives and increased buyer confidence. Investment in these clean energy sources, such as solar panels, can, in fact, generate income for landowners and contribute to the transition to a low-carbon economy.
We might think that investing in natural capital to safeguard the planet by offsetting emissions or creating new ecosystems is, apparently, all the rage: in actual fact, these are measures that have their roots in the 1990s, when the 1997 Kyoto Protocol committed signatories to reducing greenhouse gas emissions to certain levels by 2012.
Change in buyers' attitudes.
Buyers are showing increasing interest in rural properties, seeing them as ideal places to live and work. The pandemic has prompted many people to seek properties surrounded by open space, fresh air and contact with nature. This has resulted in increased demand for such properties, creating new opportunities for sellers. This factor, added to an increased awareness of the environmental impact of their real estate choices, has meant that those properties with sustainable solutions, such as the use of renewable energy, are increasingly attractive to buyers.
Knight Frank's Rural Report 2023-24 thus underscores the importance of a sustainable approach for rural businesses and the growing interest of buyers in environmentally friendly properties.
According to reports in the fourth edition of the Knight Frank Farmland Index, which looks at market value in the UK, the average value of bare farmland increased by 2% in the last quarter, surpassing the £9,000/acre mark. Industry studies predict that this trend may be flattening out, with demand, however, remaining buoyant.
The position of the European Commission regarding rural development.
The European Commission has a clear vision regarding rural development. Knight Frank's Rural Report 2023-24 emphasizes the importance of a sustainable approach for rural businesses and the growing interest of buyers in this type of real estate. In addition, the
European Commission has set out a long-term vision for the EU's rural areas to 2040, identifying actions to make these areas stronger, more connected, resilient and prosperous.
In terms of specific policies, the EU's Common Agricultural Policy (CAP) is a key tool for supporting rural areas, as it provides financial support to farmers to ensure the production of high quality food, preserve the environment and support communities, environmentally friendly farming practices, soil conservation and biodiversity. The goal: to preserve natural resources for future generations.
The CAP seeks to ensure fair treatment for farmers across the EU, reducing regional disparities and promoting social and economic cohesion to maintain stable agricultural markets, prevent crises and promote the competitiveness of European agriculture.
Market forecasts are positive, so much so that they lead to believe that prices and sales volumes will recover, despite a nearly 6% decrease in the prices of country homes in 2023, which was in any case less than the 7% decrease forecasted for the same year.
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