ULI Global Sustainability Outlook 2025: Five Key Issues Reshaping Real Estate

As the world enters a critical phase in the fight against climate change, the Urban Land Institute (ULI) has released its Global Sustainability Outlook for 2025, highlighting five pivotal issues set to shape real estate decision-making in the year ahead. Derived from expert discussions held in late 2024 by ULI’s Randall Lewis Center for Sustainability in Real Estate, the outlook reflects insights from leaders across the Americas, Europe, and Asia Pacific.

At a time when 2024 is likely to be recorded as the hottest year globally, the urgency for climate action is greater than ever. Despite geopolitical uncertainties and economic headwinds, ULI members emphasize the need for the real estate sector to lead with purpose, streamline strategies, and invest in sustainable transformation. Below are the five critical themes emerging for 2025:

1. Simplifying Goals and Prioritizing Decarbonization

Industry leaders agree: action must become more straightforward and execution more effective. Decarbonization remains the central goal, but with mounting regulations and limited resources, a simplified, measurable approach is needed.

Daniel Chang, head of Europe ESG at Hines, stresses “actionability and practical solutions,” advocating for more direct, asset-level sustainability efforts. In South Korea, Koramco board member Chungha Cha urges the use of straightforward metrics like Energy Use Intensity (EUI) to benchmark and reduce energy consumption. Koramco’s own EUI-based approach saved the company $2 million in 2023 boosting both operating income and asset valuation.

Benchmarking also matters for attracting capital. Hong Kong’s Hang Lung Properties uses internal EUI data to demonstrate asset performance to investors. Yet, data collection remains a hurdle for many firms globally.

2. Emphasizing the Impact of Building Materials

Building materials are under the microscope as developers face pressure to reduce embodied carbon. Material costs have surged, complicating decarbonization goals.

Stefano Corbella of Coima, an Italian investment and development firm, highlighted the financial reality: “The cost increases mean the return on investment is not attractive to certain investors.” Coima, like many others, is seeking alternative materials and methods to reduce costs without compromising sustainability.

This issue is not just financial, it’s fundamental. Choosing low-carbon, recycled, and locally sourced materials can significantly impact a building’s total environmental footprint.

3. Focusing on Occupiers: Demand, Health, and Well-Being

Tenant expectations are evolving. Beyond energy efficiency, occupiers now value health, comfort, and well-being. Forward-looking developers are incorporating natural ventilation, biophilic design, and wellness certifications to meet growing demands from both residents and commercial tenants.

Post-pandemic expectations around indoor air quality, noise levels, and access to nature are becoming non-negotiable. These features also translate into higher occupancy rates and tenant retention, driving long-term asset value.

4. Sourcing and Storing Green Power

As buildings electrify and operational carbon takes center stage, access to green energy becomes essential. The conversation is shifting from just sourcing clean power to storing it effectively.

Battery storage, microgrids, and power-purchase agreements (PPAs) are becoming more relevant, especially in regions with unreliable grids or high renewable penetration. Real estate firms are exploring onsite solar and storage solutions as long-term safeguards against rising energy prices and supply disruptions.

5. Investing in Resilience

Climate resilience is no longer optional; it’s fundamental to future-proofing assets. Extreme weather events, rising sea levels, and urban heat are now affecting asset valuations and insurability.

ULI participants noted growing interest in integrating resilience into investment models. Developers are assessing flood risks, retrofitting infrastructure, and designing for flexibility to adapt to shifting environmental conditions. Cities, too, are becoming more involved pushing public-private partnerships to co-develop solutions.

Looking Ahead: Streamlining for Impact

While economic pressures and policy uncertainty remain, ULI’s 2025 outlook reinforces a clear directive for the global real estate industry: simplify, prioritize, and act. The path forward lies in focusing on measurable decarbonization, smarter material use, enhanced tenant well-being, integrated renewable energy, and long-term resilience.

As ULI members made clear, the stakes have never been higher but so has the potential for transformation.