Catella and LeaseGreen have signed a long-term agreement which will see five housing companies under the ownership of Catella Asset Management move over to geothermal heating. The low-emission geothermal heating will replace district heating in these properties. In addition, two properties will be fitted with a solar energy system and two will have their lighting solutions modernised. LeaseGreen predicts that the technology upgrade will cut the heating costs of the five properties by 69 per cent and the CO2 emissions by 63 per cent.
“Energy costs have risen sharply during the 2000s,” says Catella Asset Management’s Chief Financial Officer, Iiro Nurkkala.
“An energy overhaul is one of the few effective ways a property owner can make significant cost savings. It also helps us to reduce the energy price risk. Pressure to increase the price of district heating is still growing because the infrastructure is getting old and needs to be renewed.”
Another important motive is sustainability. According to Nurkala it is no longer a question of fancy celebratory speeches rather the hard maths of property investment value creation.
“Some investors are ready to pay a higher price, that is, lower their profit expectations in order to build a portfolio of low-emission and carbon neutral properties. Lower emissions are already reflected in both the price and liquidity of properties. There are numerous investors who will not invest at all in Catella property funds if the sustainability issues are not closely monitored and taken care of.”
There are a total of 308 dwellings with a combined area of 26 000 m2 in the five properties under Catella Asset Management. The properties are located in Helsinki, Espoo, Kerava and Tampere. The properties comprise four relatively new apartment building companies and one terraced house company. All the properties were completed in 2011. As part of the changeover to geothermal heating, the apartment building company located in Lauttasaari, Helsinki, will also be fitted with a cooling system in each apartment. The air cooling will be produced using the same heat pumps and the same geothermal well that is used to produce the heat.
According to Iiro Nurkkala, now is a good time to initiate energy investments. Capital markets that were shaken by the Corona crisis have returned to some sort of normality, but the fundamentals that preceded the Corona crisis have not changed. Energy investments still have good expected returns.
“Relatively new properties are moving over to geothermal heating because it is cost effective. Traditionally, the optimisation of lifecycle costs and minimising emissions was not a concern for construction companies during the building phase. Construction companies concentrated for the most part on delivering a building according to the contract and in line with buildings regulations with the lowest possible construction costs. Paying better attention to environmental perspectives is a marginal risk that is usually not taken.”
“Builders operate logically, but the perspective of a long-term and future-oriented owner is undergoing considerable change. Pressure to change comes particularly from capital markets, which are the most effective routes for legislators to implement desired changes.”
According to LeaseGreen, emissions in the five Catella properties will be reduced by almost 300 tonnes every year. The carbon footprint will be reduced by the same amount as 1500 return flights from Helsinki to Berlin.
LeaseGreen’s CEO, Thomas Luther, believes that in the future ever more leaseholders – be they residents or businesses – will consider the climate impact of the property when making their decisions.
“Smart property investors are anticipating a gradual increase in the taxation of high-emission heat sources during the 2020s,” Luther says.
“We want to help our customers to benefit from this turning point in energy use. We want to make sure that their own energy turning point is planned and carried out as smoothly as possible. For property investors, we first produce a portfolio analysis and profitable concepts. Then we take responsibility for the planning and implementation of the entire project, deliver the project at a fixed price and offer a service that fine tunes the technology to perfection after the handover.”
CFO Iiro Nurkkala
Catella Asset Management Ltd
+358 50 466 8879
CEO Thomas Luther
+358 40 534 4256