June 18 : New research by re:sustain, the science-based technology platform which optimises the energy consumption of real estate assets, highlights the challenges posed by European insurance asset managers due to investment in buildings with poor energy efficiency. Re:sustain surveyed 80 European real estate insurance asset managers in the UK, Germany, France, Netherlands, Spain and Italy, with a combined AUM of €117 billion.
Over half (52%) of respondents said that between 10% and 30% of their commercial real estate portfolio has poor energy consumption i.e. that which is materially above expected energy benchmarks for that asset type and location. One third (34%) said between 30-50% of their portfolio was performing above expected benchmarks and 14% said that more than 50% of assets in their portfolio are poor performers.
Devaluing assets
As a result, all respondents have stranded assets in their portfolios – properties experiencing reduced capital value, leasing or future liquidity due to energy performance. Over two fifths (43%) have seen their stranded assets decrease in value by 20-30% over the past three years and a further 31% said they had seen values decline by 30-40%. Furthermore, over the next five years, 30% expect to see the number of stranded assets to increase by 5-10% and 35% predict an increase of between 10% and 25%.
However, the majority (96%) of those surveyed have plans in place to improve the energy efficiency of their real estate portfolio, with 78% targeting energy consumption reductions of between 10% and 30% across their portfolios over the next three years.
The challenges
The complexities of managing and coordinating landlords and tenants is cited as the most pressing challenge facing European insurance asset managers investing in real estate when it comes to improving the energy efficiency of their real estate assets. According to the research, this is even more difficult to navigate than access to capital, the significant investment needed for modernizing systems like HVAC, lighting, and building management systems and the impact of increasing construction costs.
When asked about the greatest challenge they face with tenants when it comes to driving improvements in the building’s energy consumption, 75% of respondents cited getting tenant buy-in for these changes, followed by changing tenant behaviours to help reduce energy use (58%). A third (34%) said the greatest challenge is keeping business disruption to a minimum for occupiers and 29% cited coordinating upgrades in multi-tenant buildings.
Over two thirds (68%) of respondents said that business disruption to their tenants or occupiers is such a significant barrier that it has become a reason not to proceed with building upgrades and improvements.
Technology offers quick and lower cost ways to improve energy performance
When asked about the plans their business has to tackle energy efficiency across its real estate assets, 75% of respondents said that technology which can optimise a building’s systems to reduce energy usage remotely will have the greatest impact, ahead of investment in new building management systems (61%) and new lighting and HVAC systems (50%).
When asked the main advantages of technology when it comes to improving energy efficiency of buildings, 74% of respondents said it delivers faster results than retrofits or upgrades, 60% said it is less disruptive – and 59% say it is cheaper than upgrading or retrofitting.
Almost half (49%) of insurance asset managers say technology helps to protect their assets’ value, while 46% say it is easier to secure tenant buy in compared to upgrading a property.
The quick and impactful results delivered by the effective deployment of technology is endorsed by research which showed that almost seven in 10 (69%) of insurance asset managers in Europe with real estate investments plan to increase the amount they spend on technology over the next three years to improve energy efficiency across their portfolios.
Commenting on the research Katie Whipp, Chief Business Officer at re:sustain, said:
“Our research highlights that the extent of real estate assets affected by poor energy performance is no longer a future risk – it is already being priced into asset values.
“The findings make clear that a material share of portfolios are underperforming on energy, and that this is translating directly into value erosion and increasing liquidity risk. For insurance asset managers in particular, this creates a clear tension between protecting long-term income and managing near-term execution risk.
“The challenge is not a lack of intent or capital – it is the complexity of delivering change in live, multi-tenant environments without disrupting income. As a result, we are seeing a shift toward solutions that can improve performance quickly, with minimal operational impact. The ability to optimise assets in use – without major intervention – is becoming critical to protecting value and maintaining portfolio resilience.”
re:sustain was founded in 2021 by scientists who recognised that while data was being collected about real estate energy consumption, it wasn’t improving usage. To solve this problem, the re:sustain team developed innovative technology which uses collected building management system data to create a highly calibrated digital twin of each building – an accurate model that reflects real asset performance. This dynamic thermal model allows for precise simulations and analyses, eliminating guesswork and enabling targeted interventions.
The proprietary re:sustain engine processes the digital twin data and the BMS data to identify inefficiencies and improvement opportunities, whilst calculating potential carbon savings. This remote approach allows for targeted optimisations and detailed mechanical insights on existing systems, reducing energy use, carbon emissions, and operational costs in support of sustainability goals—all without requiring Capex from asset owners or business interruption for occupiers.
To date, buildings using re:sustain technology have enjoyed 37% average annual energy savings in a process that takes just four to six weeks to implement.
Leave a Reply