Proptech and Sustainability: Why Green Real Estate is the Future

In the 2024 ESG in Real Estate report, Deloitte stated that 42% of global emissions come from buildings, with 64% of them due to building operations and 36% coming from building materials. This highlights the need to improve how real estate works and find more sustainable ways to build and manage properties. Besides, green properties have a higher value on the market and are more likely to be top sellers. So, in real estate, it pays to go green.

Proptech is known for solutions that automate real estate processes and can help businesses meet the rising demand for eco-friendly real estate innovations. How? That’s what we’ll explore here today.

As a leading product development company, we know every “why” and “how” of proptech, so we’d like to share our experience and expertise with you.

Sustainability in Real Estate, or What Does Green Real Estate Mean?

We’d like to start by defining green real estate and the key principles it follows. So, “green real estate” refers to the practice of building properties that are resource-efficient and leave a minimum environmental footprint. In general, it balances human comfort with environmental responsibility.

Sustainability in real estate includes a few aspects, and each of them contributes to the overall idea and aim of green properties.

Indoor Environmental Quality

Poor indoor air quality increases the risk of respiratory diseases, while low natural lighting is more likely to lead to depression. There are also rare cases where people enjoy living in noisy houses with uncontrollably uncomfortable temperatures and humidity. That’s why ensuring high indoor environmental quality—essentially the comfort and well-being of tenants—is crucial for green buildings.

Furthermore, when the amount of daylight in a building increases from 3% to 6%, CO2 emissions can decrease by 3% throughout the year.

Energy Efficiency

Commercial real estate can significantly impact the energy crisis. For example, about 40% of all the energy used in the EU is consumed by buildings. Green real estate, in turn, focuses on reducing energy use through energy-efficient systems, appliances, and technologies, such as solar panels, LED lighting, and smart homes.

Water Conservation

Did you know that a faucet that leaks at the rate of one drip per second can lead to 21.6 liters of water waste per day? If we assume that every second house has a leaking faucet, we can see just how much water we waste unnecessarily, not to mention how much consumers may be out of pocket.

Green properties address this problem by incorporating high-quality, water-efficient fixtures designed to minimize leaks and prevent water waste. They also often collect rainwater to water plants and gardens and reuse water from sinks and showers (called greywater) for tasks like flushing toilets.

Eco-Friendly Materials

This principle focuses on using sustainable building materials—those that are renewable, recyclable, or have a low carbon footprint. Examples include reclaimed wood, recycled steel, bamboo, cork, and locally sourced materials, which help reduce transportation-related emissions.

By considering and following these principles, you can make your real estate business “green.” And fortunately, with sustainable proptech innovations, it's much easier to be eco-friendly. Next, we’ll show you which technologies can guide you into a sustainable real estate future.

Six Eco-Friendly Real Estate Innovations and How They Drive the Green Revolution

Modern technologies have a lot to offer to green real estate. The proptech and sustainability solutions we’ll discuss next can help properties drastically reduce energy use, minimize construction waste, improve recycling, and enable more efficient use of water and other natural resources. How? Let’s take a look.

Smart Building Systems

Smart building solutions use sensors, the Internet of Things (IoT), and artificial intelligence (AI) to monitor the lighting, heating, cooling, and security of the building and then automatically adjust utilities to minimize waste. And in fact, with smart building systems, residential and commercial buildings can reduce emissions by 36.5% and 21.2%, respectively.

Energy Management Platforms

These platforms focus specifically on the property’s energy consumption. With the help of big data analytics, machine learning (ML), and AI, they analyze patterns in energy usage, detect inefficiencies, and suggest ways to optimize the amount of energy used.

Energy management platforms can also help integrate renewable energy sources (like solar or wind) and provide insights on how to balance traditional energy with green energy.

Green Building Materials and Modular Construction

A typical construction site generates waste equal to 30% of the building's total weight over its lifetime. At the same time, cement production alone accounts for 8% of global CO2 emissions.

With technologies like 3D printing, prefabrication practices, and modular methods of construction, companies can create building components and entire buildings off-site, reducing construction waste and on-site energy use.

If you’d like to learn more about this topic, check out our article on the top technologies in the construction industry to watch.

Sustainable Property Management Platforms

While these platforms share some functionality with smart building systems, their main purpose is to help property managers oversee the building's sustainability rather than provide comfort to tenants. They use cloud computing, IoT sensors, and data analytics to monitor and report on resource usage.

With sustainable property management platforms, property owners and managers can achieve sustainability goals, reduce waste, and ensure compliance with green certifications.

Smart Water Management Systems

Smart water management systems detect leaks and monitor water usage in real time using IoT sensors and smart meters. With the help of ML, they can also analyze patterns in the property's water consumption, predict possible issues, and suggest more efficient ways to use water.

Waste Management Solutions

You can install IoT sensors in waste bins to monitor their fill levels and determine when to empty them. With data analytics capabilities, property managers will also gain insights into waste generation, types of waste, and recycling rates, which can help them develop more effective waste reduction strategies.

Some proptech solutions feature automated sorting systems that use robotic technologies and ML to separate recyclables from non-recyclables.

So, proptech and sustainability have created a strong bond, and using green proptech solutions can definitely help you achieve your real estate sustainability goals and even more.

Why Invest in Green Proptech Solutions?

Apart from the invaluable service that sustainable proptech strategies provide to the Earth, they interest real estate stakeholders for other reasons as well. For example, 45% of real estate consumers are interested in sustainability, and at least 14% of realtors indicated that over 25% of their clients considered climate and environmental risk in their purchase decisions, according to REALTORS®.

So, what other motivation to join the proptech sustainability trend do real estate companies have beyond contributing to a greener future and gaining client approval?

Long-Term Cost Efficiency

Even though the upfront costs of installing smart housing technologies may be high, they can save property owners and managers significant resources in the long run. For example, smart energy management systems optimize heating, cooling, and electricity usage based on occupancy or weather conditions, ensuring energy is not wasted when it's not needed.

According to Minna Song, Co-Founder and CEO of EliseAI, an AI assistant for property management, the primary focus in proptech today is on cost efficiency and sustainable scalability:

Regulatory Pressure and ESG

The introduction of the EU's Corporate Sustainability Reporting Directive (CSRD) has brought both opportunities and challenges to the real estate sector. Now, businesses need to report on how their properties affect the environment and what green efforts they plan to implement. And large public interest entities in the EU are already set to start reporting in 2025 for the 2024 financial year.

However, compliance with such regulations builds trust with stakeholders and customers and can help attract more investments.

Increased Property Value

Leadership in Energy and Environmental Design (LEED) is the most widely used green building rating system, and statistics say that LEED-certified buildings usually earn higher rents than non-LEED buildings, with an average rent that is 11.1% higher.

Moreover, green properties equipped with smart proptech attract more investors and homeowners due to automated energy monitoring, which simplifies maintenance and reduces costs.

As we can see, the reasons to invest in proptech and sustainability in real estate are clear. However, while making properties greener with technology is beneficial, it can also present some challenges.

The Challenges of Proptech and Sustainable Solutions Development

We understand that facing challenges when adopting new technology is something a business needs to be prepared for. And while we can’t predict the exact challenges you might encounter when implementing smart proptech for sustainability, we can share the ones we have successfully managed for our clients.

Costs

A survey conducted by the Institute of Real Estate Management (IREM) found that the two major challenges companies face when considering and implementing proptech solutions are cost-related: determining cost benefits (23.2% of respondents) and the overall cost of implementation (22.6%).

However, while the initial expenses can be quite high, businesses can reduce these through government incentives and grants, sustainability-linked loans with lower interest rates, or by calculating their potential ROI based on resource savings.

Technical Expertise and Maintenance

When adopting proptech, some real estate companies may lack the technical expertise or sufficient resources for an in-house proptech development team. In this case, partnering with technology experts like Exoft can provide the necessary development, support, training, and system maintenance for your proptech solution.

Interoperability of Systems

Integrating different proptech systems and ensuring they work seamlessly can be a significant hurdle. Landon Cooley, Co-Founder and CEO of Pest Share, shared his thoughts on the matter, stating:

Businesses can address this by opting for or developing a unified proptech solution that manages multiple systems from different vendors through APIs or custom integration.

Regulatory and Compliance Complexities

Proptech systems collect a significant amount of sensitive data on energy usage, occupancy, and tenant behavior, which creates potential vulnerabilities for data breaches or unauthorized access. To address this, businesses can implement strong encryption protocols, regularly update their software, and ensure compliance with data protection regulations like GDPR.

Additionally, since there are regulations governing environmental impact assessments, emissions, waste management, and resource usage, green proptech solutions must also carefully navigate these.

These are the most common challenges our partners and clients have encountered. Of course, as we mentioned, you might face other ones while implementing sustainable proptech strategies, and we’d like to remind you that Exoft is here to assist you with any issues or questions you may have about proptech.

Last Thoughts: Why the Real Estate Sector Should Embrace the Green Revolution

So, despite the challenges of pursuing sustainability in real estate, it’s definitely worth it. Embracing the green revolution will not only make your properties more attractive to investors and tenants but also save on maintenance and energy costs while helping you navigate governmental regulations. Moreover, it contributes to preserving our planet’s resources and improving our quality of life.

Regarding proptech solutions, we want to remind you that Exoft is here to help, whether you already have an idea or need assistance in understanding the proptech possibilities for your business. Contact us, and we’ll assist you with any questions or issues you may have.