Energy efficiency investments in the commercial real estate business : A study of decision drivers on the Swedish market

Abstract: The International Energy Agency has stated that it is more sustainable to improve the energy efficiency of already existing buildings than increasing the national energy production to provide inefficient buildings with even more energy, which would result in that an increased amount of resources required to power the existing energy inefficient building stock. Taken into consideration that buildings in Sweden consume about 40% of Sweden’s final energy consumption and count for about 36% of the total greenhouse gas emissions it becomes evident that in order to decrease Sweden’s carbon foot print, it is important to understand real estate investors decision-making process. The aspiration is to provide stakeholders both on a micro and macro level with a better understanding of the real estate investors decision making process. This will enable companies (micro level) in the field to better customize their value propositions and there by enable companies to contribute to decreasing the primary energy consumption of buildings in Sweden. The macro level, referring to governmental institutions, will be provided with a better understanding of what kind of measures can be taken, to increase investments into buildings energy efficiency. It could be found from the literature reviewed for the study that there is a gap in research what comes to the Swedish market. Majority of the existing literature covers bigger markets e.g. the USA and UK but very little or if at all the Swedish market. During the literature study an existing framework on decision drivers for real estate investors was developed. The study uses mixed method consisting of qualitative and quantitative methods to answer the research questions. The study showed that the most prominent drivers on the Swedish market were the customers strategic decisions, environmental and energy certificates, reporting protocols, investment horizon, rental agreements, internal investment policies decreased property costs and building specific characteristics. It was found that the Swedish real estate investors experience very little pressure from the government to increase the energy efficiency of their buildings. It was also found that governmental subsidies are more considered a gamble than an encouragement to invest in energy efficiency due to long processing times and heavy bureaucracy.