Decarbonising European offices: €10b reinvestment needed

Around €100 bn worth of European office buildings currently fall into inefficient EPC D/E categories and will require significant reinvestment by 2030 to remain viable.

Real estate - Redevco

In its analysis, Redevco emphasize that upgrading existing properties will be an ongoing investment, impacting investment strategies, lending, and asset management for the next decade.
To upgrade these offices to EPC B, an estimated €10 bn is needed in total. When spread annually until 2030, this amounts to roughly €2.5 bn per year across Europe.
This annual spend represents about 2-3% of a property's capital value, a notable increase from historical improvement budgets (less than 1%). This means sustainability upgrades are now a regular part of financial planning rather than an unexpected expense.
France and the UK make up almost half of the required upgrade investment, growing to about two-thirds when Germany is included.
The retrofit investment needed is about 10-20% of typical annual office lending volumes, suggesting that the broader capital markets can handle it.
Redevco believes that debt financing will be essential for this transition, especially with current market conditions. Properly structured loans can help owners manage costs, align funding with future income from upgraded properties, and avoid having "stranded assets" (buildings that lose value due to poor energy performance).
Residential properties face similar pressures, particularly in areas where upgrade needs clash with affordability issues. Italy and Spain show high inefficiency, while Germany and France have large rental apartment sectors that will be impacted.
Simon Marx, head of Research at Redevco, said: “Describing the transition as a looming cost burden oversimplifies the issue. When assessed against regulatory timelines, it becomes a predictable capital allocation programme. The focus shifts from the scale of the number to how efficiently capital is deployed.”
Richard Caddock, head of Real Estate Debt at Redevco, added: “Residential de-carbonisation is influenced as much by tenure and affordability as by building quality. Across sectors, the green transition will be financed through both equity and debt. The capital requirement is meaningful, but manageable. Structured correctly, financing allows owners to spread costs, safeguard income and avoid stranded assets, while lenders play a key role in enabling long-term resilience.”