What would you pay for a sustainable home?

In an east London backstreet, on an old light industrial site, a new terrace of homes promises “planet-positive” living. The Arbour’s 10 properties, priced £950,000-£1.5mn, are designed to be carbon negative, energy positive and zero waste.

By being carbon negative, these homes go a step further than being carbon neutral or net zero. Built from recycled materials — including foundations formed of bricks and blocks from the old buildings that stood on the site, and shower enclosures made from recycled yoghurt pots — they should absorb more carbon from the atmosphere than they produce, both during construction and from day one of their life cycle. Even the carbon emissions of transporting materials have been included in the equation.

The energy-positive bit? Residents should have no energy bills for the first five years, thanks to the buildings generating more power, through renewable sources, than they need. And zero waste means no landfill during construction. Then it’s up to residents to keep it up, “using composting bins, borrowing items such as bikes or buggies from our Sharing Centre,” says Josh Gordon, co-founder of The Arbour’s developers GS8.

Buildings accounted for 37 per cent of global carbon emissions in 2021, according to the UN Environment Programme — with residential buildings responsible for 20 per cent of that, due to a combination of day-to-day running and the embodied carbon in their construction process. Solutions used by other industries, such as offsetting emissions by planting trees or sequestering carbon, are too slow to counter the impact of building new homes, says Gordon. “It will take decades to have an effect and we need to be creating carbon-negative buildings now.”

Even being net zero — which, as defined by the UN, means cutting greenhouse gas emissions to as close to zero as possible and reabsorbing the difference from the atmosphere — “is no longer enough to balance the growing amount of carbon the world’s growing population emits and to limit global warming to a maximum 2C rise,” says Kent Jackson, partner at the architectural studio SOM. His answer lies in Urban Sequoia, a blueprint for high-rise buildings that would behave like trees, absorbing carbon and purifying the air.

Among those who feel the need to go beyond net zero with new-builds is Jonathan Smales, a former managing director of Greenpeace UK who has co-founded the developer Human Nature. It is turning an old industrial riverside site in East Sussex into The Phoenix, with 700 renewably powered timber and hemp homes that will store carbon. Smales hopes the project will encourage behavioural change among its residents: “cycling and walking, composting, recycling and fostering a culture of sharing and partnering with local regenerative farms”.

Green terms are widely used in property marketing these days, and buyers would be forgiven for getting confused. Carbon-neutral and net zero are broadly interchangeable. (Passivhaus-certified homes aim to achieve next to zero energy consumption too.) Zero carbon is different, though; it’s where no carbon emissions are produced at all — by using wind or solar power, for example, though arguably no technology is entirely zero carbon because they still emit carbon during their installation.

As commendable as developers’ green initiatives may be, they have been “pretty mixed”, says Charlie McCurdy, economist at the Resolution Foundation, a think-tank. “Instead, big changes are driven by policy carrots or regulatory sticks. Even with the property industry’s best efforts, they’re highly unlikely to be able to meet the scale and pace of change needed without significant government investment and intervention.”

Ben Ridley, director at Architecture for London, says buyers needn’t get bogged down in the semantic nitty-gritty. “Whether a development is net zero or Passivhaus-certified is perhaps not relevant. There would be little to choose between them. Both these standards are very challenging and highly commendable, if it can be demonstrated they have been reached.”

But while environmental guilt and rising energy costs are fuelling interest among buyers for sustainable living, are they prepared to pay a premium for it?

Of high net worth individuals polled recently by Knight Frank, 82 per cent said that, for a future home purchase, energy efficiency would be a more important consideration than it had been a year before. Eighteen per cent of respondents said they were prepared to pay more for a “greener home”.

In the mid-market, buyers are willing to pay a higher price “where developers can demonstrate that the initial purchase price can reduce operation costs such as utility bills over time”, says Matt Barrington, the London director of global construction consultant MGAC.

For affluent homeowners, the image of sustainability matters. “Two-thirds of our buyers say it’s important that their next home is environmentally friendly,” says Keir Waddell, Strutt & Parker’s head of new home sales. “Sustainable features carry a certain cachet at the top end of the market.” For the super-rich, such features can come with a touch of bling, such as the Tesla Powerwall, a rechargeable battery that developer Octagon Bespoke has installed in a new £8mn house in north London.

Across the world, new urban neighbourhoods are experimenting with ways of meeting this shifting demand. Milan’s Porto Nuova district has become home to 36 LEED-certified buildings (Leadership in Energy and Environmental Design, a global benchmark for sustainability) since the completion of Bosco Verticale, two residential towers wrapped in vegetation.

They have inspired similar projects from Sydney to Taipei, and green shoots are emerging in Milan too, with Pirelli 39. It will involve transforming a 1950s tower to incorporate 1,700 sq m of green walls that will absorb an estimated 14 tonnes of carbon dioxide and produce up to nine tonnes of oxygen a year.

“Before, buying decisions were driven by location, lifestyle offer and design. Now many of these factors are underlined by environmental considerations,” says Chitra Stern, the chief executive and founder of Martinhal Resorts and Residences in Portugal. On Lisbon’s riverside Expo 98 site, the Parque das Nações, her company’s new Martinhal Residences use greenery to improve the building’s thermal performance, shield it from heat, reduce energy consumption and lower CO₂ emissions and noise pollution. Apartments cost from €2.1mn.

In the US, buyers and developers are juggling environmental concerns with the higher costs of sustainable luxury. In New York, “Rental buildings are seeing more green initiatives than in the sales market because the developer is the owner, so they have a vested interest in keeping the running costs down,” says John Gomes, the New York-based co-founder of estate agent Eklund Gomes. In the sales market, developers are less convinced, he says. “Time is money, and it’s a long process to get New York City’s Green Property Certification.”

Only 24 buildings out of 46,486 in Manhattan have this certification. One is The Emerson in West Chelsea, built in 2020 and considered one of the borough’s most sustainable buildings. The average sale price of its eight apartments was $6.3mn, according to Streeteasy.com, an average of $2,214 per sq ft, compared with the West Chelsea average of $2,269 per sq ft. “The properties didn’t sell at a premium, and there’s the conundrum for developers,” says Gomes. “There may be tremendous savings for owners in the end, but developers don’t care about that.”

That tension between cost and conscience is at play on the west coast too. “Los Angeles isn’t perceived as a green city — the smog, the traffic — and buyers won’t throw money at a property just because it’s green, so developers haven’t felt it pays off to spend money on sustainable features,” says Fredrik Eklund, the LA-based co-founder of Eklund Gomes. But, he adds, there is a slow change “as people feel such immense guilt about global warming and extreme weather”.

Some buyers are looking to future-proof their homes. Branden Williams, a former Hollywood actor turned residential developer, says his clients are asking for reverse osmosis water systems, “so in case of an emergency, they can remove the chlorine and drink the pool water”.

Back in London, developments targeting eco-minded buyers include The Zero SW20, whose 35 apartments (from £500,000) have zero-carbon status and A-rated energy efficiency, and Related Argent’s Brent Cross Town — a new 180-acre neighbourhood that aims to be net zero by 2030.

Part of the company that spent 20 years turning the 67-acre King’s Cross site into a carbon-neutral district (with a combination of renewable energy, energy-efficient buildings and offsetting carbon emissions), Related Argent’s plans for Brent Cross feature an on-site district heating network that provides homes with low-carbon heat and hot water from air source heat pumps.

Rentals are seeing more green initiatives than in the sales market because developers have an interest in keeping running costs down

It’s not just cities trying to find green solutions. As an island, Crete faces “challenging supply chain complexity”, says Stephan Clambaneva, a sustainability consultant for the Elounda Hills resort and residences. The resort’s developer, the Mirum Group, is assessing Crete’s renewable energy mix across solar, wind and wave power to find solutions that can be copied by other Greek islands. “Carbon neutral should be par for the course,” he says, along with “saving water, avoiding plastics and planting trees”.

None of this needs to be wishful thinking. The technology and materials needed for greener homes already exist, says Kent Jackson of SOM. “The challenge is to find more innovative ways to build, pushing the limits of carbon-sequestering materials such as timber and hempcrete, and developing systems such as direct air capture.” But he adds, “The easier answer would be to build less — to densify existing cities and re-use existing buildings.”

In an era of rising construction costs, that may well be the solution that’s most palatable to developers and buyers.

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