French regulations boost European property performance

A version of this article was published in Green Street news.

As asset owners and investors seek efficiencies across their portfolios, many are specifying projects using the highest common denominator.

Whether working to a consistent design standard, having a playbook of key interventions to drive better operational performance, or a strategy to repurpose particular asset types, there are advantages to doing it the same way. Those advantages hold true, even if assets are in different countries.

We’ve noted that more and more clients are taking this approach.

Hollis and GSA

Hollis was engaged by Global Student Accommodation (GSA) to future-proof their portfolio of approximately 50 purpose-built student accommodation sites across the UK and Europe. 

The objective was to position GSA as a market leader in sustainability within the sector by targeting the highest standards of environmental performance. Hollis’ scope included comprehensive energy modelling to develop clear pathways for aligning each asset with net zero carbon targets, as defined by the Climate Risk Real Estate Monitor (CRREM). 

The target was a minimum EPC rating of B across all regions, regardless of minimum regulatory compliance. These energy efficiency interventions were also aligned with occupant comfort and wellbeing requirements, for which Fitwel assessments were undertaken for all sites.

The gap analysis was undertaken for the highest Fitwel rating and innovative yet feasible recommendations were provided to bridge the gap and achieve the desired rating. 

Taking a holistic approach to sustainability, Hollis developed both asset-level and portfolio-wide strategies for GSA. A bespoke dashboard was created so that the client could visualise performance, track progress, and support data-driven decision-making across the portfolio.

Navigating cross-border compliance and delivery

It can be very difficult for investors to navigate the complexities of cross-border compliance and delivery. Managing assets in a consistent way is much more efficient. But rather than taking the lowest possible standard, clients want to align with the strictest regulations across their pan-European portfolios.

The advantage is that it streamlines portfolio management, simplifies cross-border portfolio oversight and future-proofs assets against future regulations.

An example is legislation related to energy performance and carbon reduction

France is leading the way, with regulations including RE2020, Decret BACS, Decret Tetiaire, and Loi LOM. For investors with assets in France and other EU countries, these regulations are the benchmark for excellence because they go beyond compliance for the majority of their other assets.

We’re working across Europe in countries as diverse as Germany, Spain and the Netherlands, and it’s clear to see that the approach in France is filtering through to other locations. 

From an asset owner perspective, it makes complete sense. Just because regulations are softer in one location, it doesn't mean that you should accept that standard as the maximum. Working to higher standards means that you are providing a much better asset overall.

Additional regulatory compliance makes the asset much more attractive

In the short-term, you have an improved sales pitch for tenants. Many of the changes create much better occupier outcomes, such as improved thermal comfort and air quality, and lower running costs.

In the long-term, it future proofs assets as you are already ahead of the baseline for compliance. This can potentially reduce the need to repurpose the asset later down the line, and make it easier to sell them later, significantly reducing risk and improving your chances for better returns.

It also reduces complexity when it comes to reporting from an ESG perspective, with a consistent set of benchmarks used across portfolios.

Working at portfolio level can make a difference

Achieving this is not always simple. Varying planning regimes, skill gaps and fragmented supply chains can delay delivery, especially when working across the EU. That is where working at a portfolio level can make a difference.

Investors are increasingly looking for consistency and confidence across borders. At Hollis, we combine local expertise with a European-wide perspective to deliver just that – Programme Management, which is effectively Project Management at scale. This ensures you have clarity - of governance and accountability, coordination - via integrated project delivery and communication - insightful, engaging reporting.

You need to work with consultants that can go on this journey with you and bring the best in class examples to the forefront, so that you can drive positive results across your whole portfolio.