ESG factors affect every aspect of the real estate industry

Savills’ Global Prime Office Report Q3/2023 shows that average prime office rents globally continue to rise, with net rents in recorded markets increasing by 0.8%. This increase is largely driven by higher fit-out costs and other costs.

According to experts, ESG factors continue to spread and affect every aspect of the real estate industry.

Health, safety and quality are the most important factors for all tenants, and offices that do not meet clean air or comfort standards risk losing out to new buildings.

Especially when more and more businesses consider reducing carbon emissions and ensuring environmental sustainability as one of the essential policies. In line with the world trend, according to Savills' real estate market report for the third quarter of 2023, currently more than 85% of the fastest growing companies in Vietnam have and are participating in ESG commitments. This helps to boost the soaring demand for offices that meet green standards.

Commenting on the general trend of ESG in the Vietnamese real estate market, Mr. Paul Tostevin, Director of Savills World Research said: “Vietnam has the opportunity to become one of the leading countries in the region in the field of sustainable development. Global investors are paying more attention to ESG. Therefore, in order to continue to attract investors, Vietnam needs to propose a comprehensive development plan that includes sustainable environmental measures.

Along with that are sustainable social standards, ensuring the project development process has safety measures, policies to protect workers, the migration process, site clearance...

According to Mr. Paul Tostevin, this will be a global requirement for investors, when they move to a new market to buy assets or develop projects, that place needs to meet clear criteria. When it comes to ESG, if that place does not meet the basic requirements in the business development policy, they cannot invest.

“Therefore, ESG factors will continue to spread and affect every aspect of the real estate industry. Countries need to build policies and legal foundations to create transparency for foreign investors,” Mr. Paul Tostevin emphasized.

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