Rebuilding the Future by Investing in Real Estate through innovation, knowledge and sustainability

The future of real estate was the core issue at REInnovation Lab’s annual conference. REInnovation Lab is a research and training platform promoted by Confindustria Assoimmobiliare and SDA Bocconi School of Management

SDA Bocconi’s Ferrero Auditorium hosted the annual conference of REInnovation Lab, the research and training program promoted by Confindustria Assoimmobiliare and SDA Bocconi School of management. The whole day was devoted to discussing the future of real estate, investigating industry transformations and new ways of contributing to economic recovery.

The speakers at the conference were Silvia Maria Rovere, President Confindustria Assoimmobiliare, Andrea Sironi, Vice-President Bocconi University, Alessandro Gavazza, Professor of Economics London School of Economics, Enrico Moretti, Professor of Economics University of California Berkeley, Francesco Zollino, Senior Research Executive Banca d’Italia, Andrea Beltratti and Alessia Bezzecchi, co-directors REInnovation Lab, Paola Cillo, Director Claudio Demattè Research Division and Stefano Boeri, Starchitect. REInnovation Lab’s co-directors Andrea Beltratti and Alessia Bezzecchi presented the results of research at the Lab, which developed in two major directions: creating a platform enabling data regarding commercial real estate transactions to be exchanged safely among the Lab’s partner companies, on the one hand, and designing a sustainability index to measure the impact of social, green and innovation technology factors on the value of real estate assets, on the other.

Breaking down real estate global value added highlighted three points which are new to the researchers: Social Health – health and wellbeing influences the increase of commercial real estate prices by over 12 per cent; the Green variable – Sustainable cities and communities also has a positive impact of almost 6 per cent. Results regarding the Green variable are interesting as well. Climate change risk: a province where climate risk sensitivity is higher than average by # 2 standard deviations has lower prices by 2,7 per cent. The Value Added dimension is composed of two variables: 1) Value Added – Corporate Strategy: companies whose manufacturing is fully based in Italy and whose markets are international have a very positive impact (~12%) on the real estate value of their locations and a higher value than companies adopting other strategies. 2) Value Added – Fair employment and economic growth impacts on commercial real estate prices by over 5 per cent.

Considering the combined effects of the Value Added, Social, Green, Innovation & Technology dimensions, our ESG/Sustainability Index has an overall «weight» of more than 60% on the value of commercial real estate.

Two important new activities at REInnovation Lab were presented during the conference: the launch of REIstat, REInnovation Lab’s platform collecting data about commercial real estate transactions, valuations and rents, and of the “Sustainable Real Estate Investing Award”,rewarding the most sustainable real estate operation according to REIstat measures.
Silvia Rovere, President of Confindustria Assoimmobiliare, thanked all REInnovation Lab’s partners and the members of the Scientific Committee, and said: “I am really proud to say we are at the forefront of Italian academia having created a permanent lab that engages industries, researchers and real estate players in discussion and sharing. We have understood how important it is to forge a training journey that can transfer the innovations in our industry to the young professionals of tomorrow. The real estate sector is undergoing deep change, and new paradigms are emerging to generate change, even cultural change in the way we approach our job. The major revolution we are seeing and working at today is caused by the impact of ESG criteria on the evaluation of investments. It is comparable in significance with the emergence in the 1990s of the financial value of time as the predominant variable in asset valuation. Today the concept of the energetic performance of a building is almost completely outdated and has been taken over by what is called “environmental performance”. This also includes building components to a decisive extent as well as design and construction modes. Thanks to new concepts like building banking and urban mining, we are increasingly moving towards the idea that sustainability must cover the entire life cycle of a building and not only the part concerning its energy consumption. Not only the construction sector but finance as well is increasingly looking to ESG topics, and the whole banking system is going to become more and more aware that financing highly sustainable buildings leads to a significant reduction of allocated risk. Finally, it is important to recall that every European country is working hard to tackle the great challenge of the Green New Deal, that requires 35 million buildings to be renovated by 2030. The Italian PNRR has taken this need into account and devoted significant resources to it. Now we need to focus on putting those projects into practice. I am certain that REInnovation Lab and its Academy are going to give a solid contribution to fully seizing the opportunities in this exceptional historic circumstance.”

Andrea Beltratti and Alessia Bezzecchi added: “The pandemic has revealed a new dimension that has never been explored from the economic point of view and can be usefully examined separately from the other core variables of sustainability. In commercial real estate the latter depends on the systematic interaction of different actors (developers, buyers, sellers, consultants, financers) who must share the common goal of pursuing ESG-compliant investments and work consistently for collective wellbeing.”

The conference, which ended with the graduation ceremony of the REInnovation Academy’s 2020-2021 class, continued in the afternoon with a program rich in discussion panels involving some of REInnovation Lab’s and the Academy’s partners: Avalon Real Estate, BNP Paribas Real Estate, Cattolica Immobiliare, CBRE Italy Credit Suisse, Cushman & Wakefield, Duff & Phelps REAG, Generali Real Estate, Gruppo Risanamento, GVA REdilco & Sigest, Hines Italy, JLL, Prelios and PWC.

SDA Bocconi School of Management