Sustainability Core To Investment Strategy As Greystar Future-Proofs Irish Resi Portfolio

Sustainability has become so central to Ireland’s residential investment and development market that it is considered in the same light as financial metrics when evaluating new schemes, according to Greystar Ireland Development Director Ward Frisby.

He said that this is not only being driven by corporate responsibility and increasingly stringent legislation but also by the need to future-proof housing investments, with capital providers anxious to ensure that they do not have to shell out major capital expenditures down the line. 

Frisby, a panellist at Bisnow’s Dublin Property Pulse: State of the Market event on 19 March, said that demand for greater corporate transparency has also helped accelerate the embedding of environmental, social and corporate governance policies in development.

“We see that through each of our investment, development and operational phases within the wider industry, and specifically in investment opportunities presented to us today versus even two years ago,” Frisby said.

“In the short term, we'll see a greater emphasis on future-proofing schemes to react to the new opportunities and obligations that are evolving,” he said. “This is probably where we need to see the true digital capability of assets to capture and record data across more areas. 

“I'd like to think we'll see a greater focus on data gathering during the construction phases as well.” 

U.S.-headquartered Greystar has become a major player in the Irish residential market, having launched the business in July 2019 with the acquisition of Dublin Landings from Ballymore International Developments and Oxley Holdings. It has made several other acquisitions in Dublin and in February was given the go-ahead by An Bord Pleanála for a €180M build-to-rent scheme on grounds around Dalguise House on Monkstown Road, south Dublin.

Frisby said that the days where sustainability was seen as an additional challenge for real estate investors are over, although he cautioned that for investors right now, more stability in the Irish market is being offset by the unknowns from global issues, notably the unprecedented number of elections worldwide, even though the Irish population may not go to the polls until March 2025.

“It feels like the new interest rate environment has bedded into the market with a general acceptance that it's going to be higher for longer,” Frisby said. “We hope this [stability] will lead to more activity in the market in 2024.

“But we have to be mindful that there are some headwinds, especially given that so much of the world's population will go to the election polls in some form or other this year. But we hold a very positive outlook for Ireland.”

He said political change will create a lot of headlines over the next 12 months, which may influence public confidence positively or negatively.

“It also raises the possibility of policy change,” he added. “In Ireland, we all realise that there is a major structural imbalance between housing supply and demand. So potentially from a certainty and policy direction, any delays in enacting key legislation has a real potential to further impact the situation, specifically things like the extension of the development levy waiver scheme and the current rent caps structure.”

In terms of who is driving sustainability, investors, developers and occupiers are all pushing the agenda.

“I think we could rightly say that it starts in response to a social need,” Frisby said. “And maybe that is given an initial voice by occupiers and users or end users, while investors and developers are clearly working in tandem with that. We’re responding in real time to those needs.

“Developing any sustainable community is beneficial for not only the occupiers and residents and owners and future owners but also for the business. That's especially true for a company like Greystar because we are long-term owners and operators of buildings.”

Greystar has set targets across each of its ESG objectives and has set new enterprise climate and energy-efficiency goals for 2030 and 2040. These include piloting sustainability property technology to help optimise heating, ventilation, air conditioning and data collection; rolling out new smart irrigation technology; empowering team members through leadership development training; and piloting a new diversity, equity and inclusion mentor programme.

“In terms of implementation, we have an ESG tracker in our investment memos, and the important thing is that all of these actions are measurable,” Frisby said.

“ESG is just part of the business, quite honestly, in the same manner that all other investment metrics are looked at and inform our decision-making. In reality, ESG influences our estimation of future value in the same way that we consider future income and future operational costs.”

Frisby will be a panellist at Dublin's Property Pulse: State of the Market, which takes place at the Radisson Blu Royal Hotel, Dublin, on 19 March.