For many assets a deep energy retrofit – a renovation of a building addressing all these components – will be needed. Our analysis of deep energy retrofit cases in office buildings indicates that the lower the energy consumption intensity before a retrofit, the higher the costs will be of reducing energy consumption intensity even further.
It is important that companies in the listed real estate sector address the challenges associated with energy consumption intensity policies and allocate capital accordingly. While manageable overall, we find that the additional CAPEX needed is not equally distributed among the sector’s companies. Some real estate companies seem better positioned for the energy transition than others, which might not be fully reflected in current stock price valuations.