Research by re:sustain has highlighted the challenges faced by European insurance asset managers surrounding their investments in buildings with poor energy efficiency.
The science-based technology platform surveyed 80 European real estate asset managers in the UK, Germany, France, the Netherlands, Spain and Italy, with €117bn in assets under management.
It found that 52% said between 10% and 30% of their commercial real estate portfolio has poor energy consumption, which is materially above expected energy benchmarks for asset type and location.
A further 34% said between 30% and 50% are performing above these benchmarks, and 14% said that over half the assets are poor performers.
As a result, all respondents have “stranded assets” in their portfolio, which are properties experiencing reduced capital value, leasing or future liquidity due to energy performance.
Over two in five (42%) respondents have seen stranded assets decrease in value by between 20% and 30% over the past three years, and a further 31% have seen values decline by between 30% and 40%.
Furthermore, over the next five years, 30% expect their number of stranded assets to increase by between 5% and 10%, while 35% predict an increase of between 10% and 25%.
However, 96% of those surveyed have plans in place to improve the energy efficiency of their real estate portfolio.
When asked how they plan to tackle energy efficiency in their portfolios, 75% cited using technology to optimise a building’s systems to reduce energy usage remotely, adding that this will have the greatest impact, ahead of investment in new building management systems (61%) and new light and HVAC systems (50%).
Chief business officer at re:sustain, Katie Whipp, stated: "Our research highlights that the extent of real estate assets affected by poor energy performance is no longer a future risk — it is already being priced into asset values.
"The findings make clear that a material share of portfolios are underperforming on energy, and that this is translating directly into value erosion and increasing liquidity risk. For insurance asset managers in particular, this creates a clear tension between protecting long-term income and managing near-term execution risk.
"The challenge is not a lack of intent or capital — it is the complexity of delivering change in live, multi-tenant environments without disrupting income. As a result, we are seeing a shift toward solutions that can improve performance quickly, with minimal operational impact. The ability to optimise assets in use — without major intervention — is becoming critical to protecting value and maintaining portfolio resilience."
