Environmental, social and governance (ESG) considerations have shifted from a marketing buzzword to a central driver of real estate value. This article highlights how sustainability shapes investment decisions in 2025 and why assets with strong ESG credentials command premium pricing and financing advantages.
The Emerging Trends in Real Estate 2024/25 report by PwC observes that inflation and interest rates continue to cast a long shadow over real estate, yet climate change and ESG remain at the forefront of investor concerns. Although there is political backlash against ESG regulations in the U.S., industry leaders increasingly focus on the financial upside of energy efficiency and environmental stewardship. The report emphasises that diversification across regions and sectors is crucial, and assets with operational components, such as logistics, data centres and new-energy infrastructure, are attracting significant capital. Residential subsectors like senior and student housing remain popular due to demographic drivers.
Buildings with high energy efficiency ratings benefit from lower operating costs, reduced regulatory risk and access to green financing. In Europe, the ECB is considering sustainability criteria in collateral frameworks, which may further enhance the financing advantages of green buildings. Conversely, assets that ignore ESG considerations risk becoming stranded, incurring higher capital expenditures for retrofitting and facing discount rates that undermine valuation. This is particularly relevant for U.S. investors dealing with older office stock and for emerging-market investors where building codes are tightening.
Pagani Capital incorporates ESG analysis into due diligence, favouring projects that use renewable energy, support community development and comply with forthcoming EU taxonomy requirements. By prioritising sustainability, Pagani Capital attracts institutional capital and meets the expectations of wealth managers, family offices and immigration advisors. Investors should evaluate certifications (LEED, BREEAM) and explore opportunities in sectors at the “intersection of real estate and infrastructure,” such as logistics and data centres.
Sustainability manifests differently across the USA, Brazil and Turkey. In the United States, the Inflation Reduction Act and state-level incentives encourage developers to adopt solar panels, battery storage and high-efficiency HVAC systems. Green building certifications such as LEED and WELL are widely recognised by tenants and investors, creating a competitive advantage for certified properties. Brazil’s push to protect the Amazon has spurred interest in timber-certified construction and carbon-credit markets, while its abundant renewable resources enable clean energy integration in developments. Turkey, a seismically active country, has prioritised earthquake-resilient and energy-efficient buildings. New projects often incorporate smart-city features like distributed solar, water recycling and green spaces that enhance residents’ quality of life. For global investors, understanding these nuances is essential for assessing risk and opportunity.
ESG is not solely about reducing carbon footprints. The social dimension includes considerations such as labour conditions in construction, community engagement and access to affordable housing. Governance involves transparency in project financing, shareholder rights and anti-corruption measures. Pagani Capital engages third-party consultants to audit supply chains, evaluate community impact and ensure compliance with anti-money laundering regulations. For investors from the USA, Brazil and Turkey, these governance measures provide assurance that investments adhere to international standards and avoid reputational pitfalls. By integrating social and governance factors alongside environmental metrics, Pagani Capital delivers holistic ESG strategies that resonate with institutional and private investors alike.
Readers interested in this topic can explore Multi-Asset Portfolios for insights on green bond allocations and Housing Affordability for the social dimension of ESG.
