Sustainable real estate: transformation requires the right mindset

Real estate valuations, financial viability and regulatory compliance can only be secured if the sustainability transformation is implemented consistently. The most important success factor: mindset.

The real estate industry is undergoing a period of profound change. Energy efficiency, digitalisation and decarbonisation have long been shaping market values, financial viability and regulatory compliance. Their influence will continue to grow.

Energy consumption is now a decisive factor in transactions and property valuations by experts. This is confirmed by several studies and surveys, including the Berlin Hyp Trend Barometer and CBRE’s Strengthening Value Through ESG.

More and more building users and tenants are demanding sustainability concepts and low operating costs. In this way, the energy performance of properties indirectly determines building value, as it influences the rentability of space.

Banks are also demanding comprehensive information on energy consumption. Sparkasse Berlin makes it clear: no financing without a sustainability concept. From 2026, the European Central Bank will tighten rules for climate-damaging investments. Energy-inefficient properties are considered high-risk. Investing in sustainability today therefore secures both regulatory and financial advantages.

Regulation is driving the transformation as well. The Building Energy Act requires digitised energy processes and energy management. In the future, EU directives will be transposed into national law: building intelligence, air quality, efficiency – everything will be measurable. Those who act now will avoid costly retrofitting later and remain compliant.

Standstill or front runners?

For real estate companies, one thing is clear: the sustainability transformation must be implemented – and some are already in the midst of it. Others, however, are still hesitating.

It is often assumed that the transformation will be blocked by hurdles such as lack of expertise, personnel or organisational barriers. And yes, these are important factors.

But a more fundamental question is decisive: does a company truly want to transform, securing long-term competitive advantages and joining the frontrunners? Or does it prefer to remain in the status quo, doing little or only what is strictly required?

Some companies have already chosen to lead, drawing up transformation plans and developing roll-out strategies for efficiency, transparency and decarbonisation solutions. There are many questions and challenges still to resolve – such an extensive transformation is, after all, new territory for the industry.

The biggest hurdle: mindset and culture

Yet with the right intent, all challenges can be overcome – especially since there are already many relevant use cases, experiences, specialist service providers and partners available.

In my view, the conclusion is clear: attitude is now the factor that determines the start and successful implementation of the transformation – and therefore the future viability of real estate. The competition is well under way – but some players do not (yet) want to take part. As a result, the gap between future-proof, competitive portfolios and those facing stranding or devaluation risks is widening.

The digitalisation study Transform to Succeed by Drees & Sommer and the Technical University of Aschaffenburg recently asked specialists and managers about the greatest obstacles to transformation. The most frequent answers were mindset and culture, along with resistance to change. Technical, financial, procedural and resource issues followed further down the list.

Five suggestions for a future-oriented mindset

How can companies adopt an attitude that is transformation-friendly and future-proof? A few suggestions:

Anchor the goals of the transformation at board level. This gives the strategic issues of efficiency, digitalisation and decarbonisation the weight they need to be implemented consistently.

Define the goals of funds, portfolios and holdings: where should each product be positioned, when and how? How can these goals be achieved efficiently? Two approaches can be taken here: property-specific and portfolio-wide. Depending on the solution and method, significant economies of scale can be realised.

Define responsibilities. Transformation requires clear responsibilities and decision-making processes. Who has authority to approve budgets and prioritise measures? Without clearly defined roles, friction and delays arise; with them, speed and commitment follow.

Plan and allocate budgets. This also means accepting capex expenditure and, if necessary, lower returns in the short term – in the long run, the investments will be rewarded with better valuations, higher rental income and stronger financing conditions.

Work with the right partners who bring specialist expertise and implementation skills. They can help create transparency, reduce energy consumption and emissions, and ensure compliance with regulations.

Conclusion

Today, transformation determines the value, financeability and long-term viability of real estate. Studies show it is not a lack of technology or budgets that slows progress the most, but rather mindset and culture. That is why attitude is the decisive lever – it separates the winners from the losers.

Those who embrace transformation with clarity, commitment and determination will secure better ratings, stable financing and advantages in the rental market. Those who hesitate risk devaluation and stranding. Transformation is not a nice-to-have, but a strategic necessity. And it does not begin with technology, but with mindset.

About the author

Carsten Kreutze is CEO of Recogizer. He has extensive experience in establishing companies, product development and strategic marketing. He sees enormous potential for energy saving in utilizing artificial intelligence and a cost-efficient contribution to the sustainability of real estate and climate protection.

Carsten Kreutze | Managing Director