Sustainability - Ability to Exist Constantly
Efe Rizvanoglu is Managing Director at 928 Group. In this article, he talks about sustainability in business as well as in construction and development.
Sustainability is a very popular word in this era, and we come across it quite often nowadays. This article is about two types of sustainability that I would like to go over. Firstly, sustainability in business, especially in property investment: a brief discussion on how the business is sustainable from a financial continuation aspect. Secondly, sustainability in construction and development that we should all be aware of if we desire to live better and environmentally aware by decreasing CO2 emissions and pass the legacy to next generations like we inherited.
Sustainability in Property Investment as a Business
Change comes too soon too quick. Some of the great companies in history, even industry dominators, were wiped out because they couldn’t take the necessary steps. Industry leaders like Kodak, Nokia etc. failed to innovate in order to sustain their business.
For some reason, most business encounters I have been envisioning must have a sustainability angle, and therefore needs to provide stable income/cash flow. I have always feared (but admired sometimes) the “debt up to neck” type of one’s position where the entrepreneur/business owner is on a make-or-break line. Who can refuse the capital in the age of capitalism? I’ve always believed what comes quickly, goes quickly. Therefore, sustainable growth in business is achieved through know-how, effort, strategy and well-thought structuring.
In my opinion, real estate is one of the few business sectors that are sustainable. We, as a family, operate in various sectors and I can confidently state that property investment is the most stable and sustainable out of all. As part of our property investment model, we are currently operating both emerging and developed markets, of which the UK is the most promising one. Diversification in types of investment is the key to our success, slowly, but surely. We hold residential and commercial properties which from time to time one performs more than the other so that taking advantage from both is inevitable.
According to PropertyData, average house prices in London have doubled in the last 10 years. In addition, rental yield provides healthy cash flow in some areas. Commercial investments are also lucrative. Prices are usually calculated by multiple factors which current lease(s) have serious weight. Purchasing a commercial property with its current lease(s) expiring soon and re-letting to a national tenant with a long lease is extremely profitable. Along with property investment, I diversified into planning gain, value-add and renovation/development as well. Taking advantage from cyclical movements in property requires tools to play with. Therefore, diversifying is essential.
Sustainability in Construction & Development
As I pointed out in my previous Q. Magazine article in February 2021, housing shortage in the UK is around 300,000 dwellings per year for the next decade or so. As the world’s population grows, we see a lot of activity in construction industry, and it became one of the major sectors that drive the economy. We built homes senselessly; as a result, the activity in the construction industry has been growing exponentially.
According to Chatham House, cement is the source of about 8% of the world's carbon dioxide (CO2) emissions, and if the cement industry were a country, it would be the third largest emitter in the world. In addition, European Commission states that construction industry in EU has significant environmental impact with a third of all waste generated, 40% of energy consumed and a third of fresh water used. Figures tell us that this is not sustainable going forward, and the construction industry faces substantial challenges in reducing its environmental footprint.
We can agonize over the issue day and night, but as we see usually in politics, only problems are being discussed. Solutions to the problems and starting to act are the only key if we want to move forward. Therefore, we as a nation/world need to increase the awareness and work on simple but effective solutions. As technology is far advancing, sustainability in construction industry can be increased more effectively by materials, construction methods and operation of completed buildings:
1) Sustainability in construction materials
There are respective factories/companies that produce sustainable materials. Cellulose-based insulation is one of the most eco-friendly construction materials. In addition, precast concrete slabs’ sustainability factor is higher than many traditional concrete options because it takes considerably less energy to produce.
2) Sustainability by alternative construction methods
Timber frame construction method is far more environmental than steel frame. In addition, SIP (structurally insulated panel) as well as prefabricated method has far less impact on the environment, with SIP being a breakthrough in solving housing production need in UK.
3) Smart buildings with BAS (building automation systems)
Utilizing building automation systems, especially with IoT (Internet of Things), is much more energy efficient; therefore energy consumption is less than traditional buildings. According to the European Commission, the latest sustainable technologies in construction processes could potentially deliver a remarkable €410bn a year in savings on global energy spending.
In conclusion, sustainability in various angles of our life brings the ability to exist constantly if that’s a concern at all. We should all reckon that we inherited the world from our ancestors, and we will pass the legacy to our children and to their children. Therefore, the world we inherited should be lived ethically, and rightful legacy should be passed to our children. Adopting and practising sustainability into various angles of our life is the proper way going forward. Good luck in your business encounters and keep safe.
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