What is sustainable development in real estate? And how can it be achieved?

In this article, we clarify the standards of sustainable development in the real estate sector and present a set of proposals to achieve sustainable development in the Turkish real estate market through Imtilak Real Estate. Follow along with us.

General Definition of Sustainable Development

"Sustainable development" is a developmental model capable of meeting the needs of today's generations without compromising the ability of future generations to meet their own needs. It entered the global agenda at the end of the twentieth century and became a global implementation plan with the international agreements signed in 1990.

The concept of sustainable development defines the common denominator in the economic and social development goals of countries. Implementing a development strategy that does not clearly define the relationship between the environment, social, and economic development may meet current needs, but it could jeopardize the ability to meet people's basic needs in the future. This is because it is unclear to what extent growth may lead to environmental disasters, and environmental degradation is often irreversible.

Therefore, evaluating the interaction between the economic and social structure and the environment in a holistic manner and ensuring that current and future generations benefit fairly from the opportunities provided by development constitutes the basic philosophy of sustainable development.

Sustainable development aims to meet people's needs while taking into account the needs of future generations. This practice aims to achieve balance in the economic, social, and environmental aspects.

Sustainability requires achieving a balance between economic growth, social justice, and environmental protection. This concept may include studies in areas such as the use of environmentally friendly energy sources, waste management, water management, and air quality.

At the same time, cooperation between governments, the business sector, and private organizations is important to achieve sustainable development, as sustainable development aims to balance the economic, social, and environmental aspects. The following three dimensions should be considered regarding the strong relationship that binds them together:

• Economic dimension: Ensuring economic growth and providing job opportunities to achieve sustainable development. This may include activities such as increasing investment, expanding job opportunities, and improving economic prosperity.
• Social dimension: Achieving social justice and meeting people's needs for sustainable development. This may include healthcare, education, housing, and social security.
• Environmental dimension: The environmental dimension is ensuring environmental protection and the sustainable use of natural resources to achieve sustainable development. This may include activities such as reducing environmental pollution, increasing energy efficiency, improving waste management, and protecting natural resources.

The Concept of Sustainable Development in Real Estate

Real estate engineers link the concept of sustainable development in real estate to the strategic plans set by decision-makers in construction companies, which contribute to the development of the real estate market and the improvement of the level of services provided in the real estate sector.

The participation of government institutions with construction companies in real estate development and providing all necessary support and facilities for them is a key element in the concept of sustainable development in real estate. Large financial assets and massive cash flows from businesspeople and public and private companies play an influential and powerful role in sustainable development in real estate.  

Many different interpretations can be made regarding measuring the rate of sustainable development in the real estate market, as sustainable development indicators serve as a type of performance evaluation tool in light of environmental, social, and economic factors. However, when choosing indicators, it is necessary to pay attention to the problems that may arise when evaluating results.

Many organizations and international institutions continue to work on creating and developing their own sets of sustainable development indicators. Examples include the United Nations Commission on Sustainable Development indicators, common European indicators, and the sustainability index.

When talking about indicators in the construction and housing sector, we encounter general indicators for the real estate sector, such as new housing construction permits, construction expenditures, current real estate sales, and new housing sales instead of housing prices.

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The Importance of Sustainable Development in the Real Estate Market

After the concept of sustainable development entered various sectors of practical life, it was natural for the real estate sector to compete with other sectors in applying the concept of sustainable development to the real estate market, which includes investment projects, residential complexes, commercial offices, shops, land, and other types of real estate.

Some local analysts in the real estate market have argued that the concept of sustainable development in the Turkish real estate market has become an urgent need and a necessity for work in the real estate sector, indicating the need for real estate developers to rely on renewable energy and the latest construction methods in building commercial and residential investment projects.

In a related context, renewable energy is an important element that cannot be dispensed with in achieving sustainable development in the real estate market. It has become necessary for the real estate sector to rely on renewable energy in construction work, with the need to expand the use of this energy in a way that ensures the achievement of sustainable development in all currently completed real estate projects, while taking into account the needs of real estate developers in the future.  

In general, it can be said that there are three principles the real estate sector must implement to achieve sustainable development: The first is protecting environmental values and the environment, especially since the construction sector is trying to develop all its technologies based on renewable energy. The reason for this is that buildings capable of producing their own energy and causing minimal harm to the environment during construction and use are in demand.

The second factor that strengthens this demand is the development and improvement of social life. The third is economic developments. In our era, as the global market gradually shrinks and even minor fluctuations can change the course of markets, the real estate market is also evolving in light of economic developments and under the influence of internal dynamics.

According to the results of the "First Quarter Report of the Real Estate Sector in Turkey and the World for 2022" prepared by the Association of Real Estate Investors (GYODER), which is considered the leading organization in the real estate sector in Turkey, in order to create a comprehensive database for the real estate sector, the Turkish economy grew by 11 percent in the first quarter, and the construction sector was the second fastest-growing sector at a rate of 14.8 percent.

GYODER announced that growth in the construction sector was largely driven by the boom in commercial real estate, while the stagnation in the housing sector continued. The reason for the stagnation in the housing sector was interpreted as the increasing trend in loan interest rates.

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Proposals to Achieve Sustainable Development in the Turkish Real Estate Market

1. Transparency and Credibility in Presenting Data and Information

One of the most prominent proposals for achieving sustainable development in the Turkish real estate market is to rely on transparency and credibility in presenting data and information in the real estate sector. Real estate reports should be analyzed accurately, and their results highlighted with complete objectivity and the highest possible degree of transparency.

In this regard, the conditions of the real estate market should be studied using the most advanced statistical tools to provide a comprehensive study of the figures and data issued by this field study of the real estate market. To reach sound results, cooperation between the public and private sectors is necessary in issuing these real estate reports.

2. Issuing the Necessary Legislation to Strengthen the Real Estate Market

A large part of this aspect falls on the shoulders of governments and official institutions operating in the real estate sector. They must provide all facilities to encourage investors to establish investment projects, and this can only be applied by issuing the necessary legislation and laws that enhance the participation of foreign construction and investment companies in the real estate market.  

3. Continuation of Tax Exemptions

One of the most important facilities that should be provided to investors in the real estate market is tax exemption. Tax exemptions are among the strongest proposals on the discussion table aimed at achieving sustainable development in the Turkish real estate market.

Ensuring the continuation of tax exemption provides broad participation from foreign businesspeople in real estate investment and the establishment of large real estate projects, and encourages the inflow of foreign capital into many vital sectors within the country.

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4. Considering Sales to Foreigners as Part of Exports

The proposals for achieving sustainable development in the Turkish real estate market include considering real estate sales to foreigners throughout the Turkish provinces as part of exports. The figures recorded by statistics related to real estate sales to foreign investors seeking property ownership constitute a significant value in increasing Turkish exports if classified as exports.

5. Creating Special Funds to Meet the Needs of Low-Income Groups

Creating investment portfolios aimed at meeting all the needs of low- and middle-income individuals on the one hand, and forming investment portfolios that contribute to the development of the real estate sector's infrastructure on the other, are among the most important proposals for achieving sustainable development in the Turkish real estate market.

Other factors contributing to achieving sustainable development in the Turkish real estate market include:

• Setting a specific timetable to increase investment returns and the tax value of real estate in Turkey.
• Developing reconstruction plans that include all conditions related to population density, infrastructure, earthquakes, natural disasters, and urbanization plans.
• Providing the necessary raw materials for construction operations at acceptable prices.
• Offering more government facilities to help all low-, middle-, and high-income earners acquire real estate.

Edited by: Imtilak Real Estate©