Decarbonizing existing buildings: Challenges and progress in the real estate industry

6 March 2025

The real estate industry faces increasing pressure to make existing buildings emission-free by 2050, requiring annual renovations of up to 1.2 million properties. Currently, only about 280,000 buildings are renovated each year, raising concerns about meeting climate targets.

At an online press conference organized by Rueckerconsult, industry experts discussed the challenges of aligning ambitious decarbonization goals with economic realities. A survey by aedifion and Rueckerconsult, involving project developers, portfolio holders, and financiers, provided insight into current industry trends. More than half of respondents do not have a decarbonization strategy for their real estate portfolios, and 60 percent lack a budget for such initiatives. Among those with a strategy, a quarter are unaware of their properties’ carbon emissions.

Despite these challenges, regulatory pressure and market shifts are prompting companies to act. According to the survey, 73 percent of respondents worry that failing to implement decarbonization measures could reduce property values. Concerns also include the risk of stranded assets (29 percent) and lower rental income (17 percent), while 23 percent believe inaction will have no impact.

Alexander Roth, ESG & Operations Director at Savills Investment Management, noted that buildings with high carbon footprints are becoming harder to sell. Some companies set decarbonization targets aligned with the Paris climate agreement, but economic conditions complicate large-scale investments.

One key challenge in improving energy efficiency is understanding consumption data. Experts agree that measuring energy use is the first step in assessing necessary improvements. Iris Hagdorn, Head of Sustainability at HIH Invest, emphasized the need for long-term sustainability strategies rather than short-term ESG initiatives. She stressed that detailed energy data collection is essential for identifying areas where improvements are possible.

Energy sources and building systems play a more significant role in reducing carbon emissions than insulation upgrades. While better insulation can offer some efficiency gains, Roth explained that measures such as switching energy sources or optimizing heating and cooling systems have a greater impact.

Among the most common measures implemented or planned for reducing CO2 emissions are heating system upgrades, operational efficiency improvements, and switching to green electricity. Heat pumps, although less frequently mentioned, are gaining attention as a transitional technology. Johannes Fütterer, Managing Director of aedifion, highlighted their potential to integrate with flexible energy pricing, allowing buildings to optimize energy costs by adjusting consumption patterns.

Artificial intelligence (AI) is another emerging tool, though its application in real estate remains limited. Survey results show that 47 percent of respondents are open to using AI for decarbonization, while a third remain skeptical. Fütterer explained that AI can help analyze building operation data to optimize energy use. However, industry-wide adoption is slow due to the lack of interconnected systems capable of exchanging data.

Roth pointed out that digitalization is crucial for AI implementation. Many buildings lack smart control systems that allow for room-specific heating and cooling, requiring retrofits before AI-driven solutions can be effective.

The discussion concluded that while the real estate industry recognizes the importance of decarbonization, economic challenges and technical limitations slow progress. Improving data collection, optimizing energy sources, and integrating smart technologies will be key to meeting long-term climate goals.

Photos: Iris Hagdorn-HIH Invest, Dr.-Ing. Johannes Fütterer, Alexander Roth-Savills IM and Prof. Dr. Henric Hahr-Real Blue

If you would like your ad here, please  contact us.
LATEST NEWS