Sustainable Real Estate Valuation and Economics

From Principles to Practices: Realising the value of circular economy in real estate - a report by Arup

Devni Acharya, Richard Boyd, Olivia Finch

Published 2020

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From Principles to Practices is a two-phase collaborative project led by Arup and the Ellen MacArthur Foundation that aims to translate the principles of a circular economy into everyday built environment practices. Phase 1 of the project established our vision for a circular built environment and identified the key barriers, opportunities and enablers of implementing circular economy practices. It also informed proposals for who needs to lead the change and what their first steps might be. The key outputs from Phase 1 were published in a report titled, First Steps Towards a Circular Built Environment, released in July 2018. The second phase of the project, described in this report, aims to demonstrate the value and process of implementing circular economy principles in the built environment to real estate investors and construction clients. We have focused on these two stakeholder groups because our Phase 1 work highlighted they are best placed to lead the transition to a circular built environment, since they have the greatest capacity to influence decision-making, set direction and catalyse action throughout the value chain. Policy makers were also identified as possible first movers, yet in our interviews in Phase 1, policy makers made it clear they needed an evidence base of the benefits of a circular economy to be developed by investors and construction clients. Our research also revealed that value and the way in which it is created from real estate assets is set by investors and construction clients through investment requirements, tenure models and design briefs (developed within the confines of the policy environment in which they operate). Despite this, the business case for implementing circular economy principles has not yet been explicitly articulated to investors or construction clients to incentivise a change in this direction. The aim of this project is, therefore, to signpost the business case.

Abstract

From Principles to Practices is a two-phase collaborative project led by Arup and the Ellen MacArthur Foundation that aims to translate the principles of a circular economy into everyday built environment practices. Phase 1 of the project established our vision for a circular built environment and identified the key barriers, opportunities and enablers of implementing circular economy practices. It also informed proposals for who needs to lead the change and what their first steps might be. The key outputs from Phase 1 were published in a report titled, First Steps Towards a Circular Built Environment, released in July 2018. The second phase of the project, described in this report, aims to demonstrate the value and process of implementing circular economy principles in the built environment to real estate investors and construction clients. We have focused on these two stakeholder groups because our Phase 1 work highlighted they are best placed to lead the transition to a circular built environment, since they have the greatest capacity to influence decision-making, set direction and catalyse action throughout the value chain. Policy makers were also identified as possible first movers, yet in our interviews in Phase 1, policy makers made it clear they needed an evidence base of the benefits of a circular economy to be developed by investors and construction clients. Our research also revealed that value and the way in which it is created from real estate assets is set by investors and construction clients through investment requirements, tenure models and design briefs (developed within the confines of the policy environment in which they operate). Despite this, the business case for implementing circular economy principles has not yet been explicitly articulated to investors or construction clients to incentivise a change in this direction. The aim of this project is, therefore, to signpost the business case.

Topics

AI in asset managementAI material selectionAI-Powered Real Estate ValuationML for sustainable real estateReview PaperSustainable Buildingsbig data in buildingscircular economyreal estate analyticssustainable materials

Cite this paper

@misc{8a6b9de6,
author = {Devni Acharya and Richard Boyd and Olivia Finch},
title = {From Principles to Practices: Realising the value of circular economy in real estate - a report by Arup},
url={https://circulareconomy.europa.eu/platform/en/knowledge/principles-practices-realising-value-circular-economy-real-estate-report-arup},
abstractNote={European Circular Economy Stakeholder Platform - A joint initiative by the European Commission and the European Economic and Social Committee}, year={2021}, month={nov}, language={en} }