The construction sector is a major contributor to the Maltese economy, contributing a Gross Value Added (GVA) of €588m in 2021, representing 4.5 per cent of total GVA (News Release, National Statistics Office 2022. Available from: News2022_037.indd). Nevertheless, globally, building operation and construction is responsible for 38 per cent of all energy-related CO2 emissions (Building sector emissions hit record high, but low-carbon pandemic recovery can help transform sector, UN Environment Programme 2020), which is substantial in the context of the global climate crisis that is already under way. The sector also carries out processes that contribute towards air and noise pollution, generation of waste, and resource depletion.
Last October, KPMG and the Malta Property Foundation held a national conference entitled The Future of the Property Market in Malta. During the conference, KPMG in Malta’s ESG lead Rachel Decelis shared the findings of a nationwide study conducted by the firm which sought to gather data on general sustainability awareness and preferences amongst Maltese consumers, and on the extent to which residents in the Maltese islands prioritise and value sustainability factors when purchasing or renting property. The full report has now been published and is available from the KPMG website.
Does a market for sustainable products exist locally?
The study evaluated the importance that respondents give to sustainability in their daily life as well as how well-informed they are on sustainability. The data indicates that respondents are considerably environmentally conscious, and given the choice, the majority prefer to purchase sustainable products when available.
In addition, 90 per cent say they are willing to pay more for sustainable products. Such findings point towards a potential market for sustainable products, with most customers willing to pay a premium for sustainable products if needed.
How important is sustainability when purchasing or renting property?
Unsurprisingly, the survey revealed that location is the most important factor when deciding which property to rent or buy. Other factors, such as size of property, quality of build, layout, and proximity to green space or the sea, followed location in priority and surpassed sustainability, which came in at sixth place. This pattern indicates that when forced to choose between sustainability and other factors, respondents prioritise other factors, and points to the need for sustainability to become embedded within the real estate sector so that customers do not feel they need to make a trade-off between sustainability and other factors when buying or renting property.
However, both purchasers and renters identified sustainability features such as low energy consumption, green spaces, space for waste recycling and greywater treatment systems to be moderately or very important. This suggests that when purchasers or renters are comparing two otherwise equivalent properties, they prefer to choose the sustainable property.
Are residents willing to pay more for sustainable property?
Although sustainability does not necessarily translate into higher costs (particularly if embedded in the design and build phase, versus an afterthought or retrofit) and may indeed result in savings during the operation of the building, it is useful to understand whether purchasers and renters are willing to pay more for sustainable buildings.
The data from KPMG’s study reveals that most (58 per cent) of the purchasers and half of the renters surveyed are willing to pay more for sustainable property. The results point towards a potential market for sustainable properties. Additionally, purchasers and renters may be willing to pay more for a sustainable home, matters of note for the sector’s stakeholders.
Who should lead the transformation?
The public feels that more must be done. While some developers are already taking initiatives towards sustainability, such as by incorporating energy-efficient measures in buildings, preserving heritage features and trees, and opting for sustainability certification, the construction sector still has a poor reputation. When asked whether the sector is taking initiatives towards sustainability, respondents gave the construction industry an average score of 2.5 on a scale from 0 to 10.
This finding suggests that the construction sector requires urgent and significant transformation, and respondents suggest that Government or regulators should take the lead in this regard. Our view is that all stakeholders – including the construction sector, buyers, and renters – play an important role in this transformation.