A call to action from the World Green Building Council demands that all new buildings, infrastructure and renovations should have at least 40 per cent less embodied carbon by 2030 than they do today. This is a monumental challenge for the industry, needless to say.  

Embodied carbon in the built environment, as the Savills Global Living (Part 2) report notes, contributes 11 per cent of all global carbon emissions annually. Thus, to achieve anywhere near what needs to be achieved, developers must adopt a drastically different way of working.  

Increasingly, developers and investors are opting to keep the building that is there to avoid further exacerbating embodied carbon levels. But another part of the solution may be the use of Modern Methods of Construction (MMC). 

MMC is an alternative approach to building assets, and particularly large operational projects such as build-to-rent, student housing and co-living schemes. Broadly, the term MMC covers a range of alternatives to traditional construction that incorporates offsite manufacturing, onsite techniques and the use of natural materials.  

Not only do these techniques rapidly reduce the carbon impact of construction, they also produce buildings more quickly than conventional methods (least of all because they are not subject to delays caused by bad weather). 

MMC is being utilised by a growing band of visionary companies and at Savills we have been working with one such investor – Ailon Group, which is undertaking several MMC schemes, including senior living, student, and office schemes in the Nordics and the UK. 

In September, Ailon scooped an International Project of the Year from The Offsite Award for Project Jylland – a 345 student accommodation scheme in Kista, Stockholm that was produced offsite. Ailon is now developing a carbon net zero office in London’s Whitechapel using cross-laminated timber constructions. 

So much of conventional construction is unsustainable. The waste of materials onsite means, for instance, that up to 30 per cent of it ends up as landfill. But with MMC, where the majority of a building is assembled using controlled inventory and conditions, wastage is minimal, at around 1 per cent of the total materials used.   

In Europe a significant amount of capital has surfaced to hunt for partnerships and developments that use MMC techniques, a shift being driven by investors’ ambitions to significantly reduce their portfolios’ carbon footprints. The growing opportunity to team up on the journey towards a more sustainable future is clearly a win-win for all and due to this, such partnerships will be ever-more common in the foreseeable future.  

This, alongside the proliferation of specific ESG funds, will set the industry in good stead as it aims to achieve the World Green Building Council’s goals. But not only that: as valuers are known to be already applying a yield premium for future-proofed assets, tackling the climate challenge will also be financially rewarding. 

Further information

Contact Aurelio Di Napoli

Spotlight: Global Living (Part 1) – 2021