Australia Local Response_Green Finance Report 2022

Commercial real estate operation and construction account for 11% of global energy usage. 1.5oc scenario requires 28% cut in property emissions by 2030. Real estate finance can play a key role in signalling “green investment”.

We estimate just 3%/$10bn of Australian commercial real estate debt is green loans. The biggest opportunity is in re-financing existing real estate debt on energy efficient assets, we see scope for $10bn-$15bn pa of green re-finance. There is smaller (but arguably more climate relevant) opportunity to fund new green investments in real estate, which we value at $500m-$600m pa.

Why do it? 

a) get recognised for green credentials;

b) take advantage of tighter spreads. In H2 2021, 50% of green bonds priced on or inside their yield curve; and

c) tap into $200bn of green finance commitments from Australia’s Big 4 lending institutions.