Property buyers ready to pay up to €32,000 extra for green improvements – study

Prospective home buyers are ready to pay up to €32,000 more for a property that includes serious green credentials like insulation and solar panels, €7,000 more than those who have already bought a property – indicating a shift towards greater importance being placed on sustainability.

Sharing findings from KPMG’s annual report on Malta real estate sector, conducted in conjunction with the Property Malta Foundation, the firm’s associate director of ESG Rachel Decelis admitted that sustainability remains towards the bottom of the list of priorities for property buyers. Location, predictably, remained in first place.

However, practically all those intending to buy a property within the next three years (99 per cent) selected at least one green measure as at least “moderately important”.

The most important element was the availability of a natural open space within or close to the property.

“This desire for green open spaces really took off after the experience of the COVID-19 pandemic, when everyone was stuck inside or limited to their vicinity,” said Ms Decelis.

The second most important element was energy efficiency – “possibly a reaction to international developments in energy prices,” which are only kept in check locally through a large public outlay on subsidies.

A dedicated space to separate waste was the third most important factor selected – a perhaps surprising inclusion given a tendency in previous years to place relatively little value on such space.

Ms Decelis hypothesised that the rapid revaluation of the importance of having a space dedicated to waste separation may be the result of the introduction of national regulations that mandate the practice, together with significant efforts to enforce it.

Turning then to the question of cost, the KPMG study found that a full half of those who already bought or intend to buy property are ready to pay more for a property that includes certain green improvements.

Respondents who bought a property in the last few years said they would be willing to pay up to €25,000 for a package of green improvements that includes PV panels and insulation.

This figure rises to €32,000 for those intending to buy over the next three years – sending an important signal to developers.

Despite their willingness to shell out more money for a more sustainable property, prospective buyers were largely unaware of the existence of favourable bank finance for green improvements.

This indicates that banks need to do much more to promote their offerings in this space, especially given that these offerings were listed as the third most important decision when it comes to selecting which bank to go with for a mortgage, behind, unsurprisingly, the size of the loan and the interest rate offered.