Decarbonising affordable housing creates value. Almost none of it returns to the investor.
The EU and UK hold around 19 million affordable rental homes. Rents are capped and exit values are constrained, so money spent on decarbonisation has no reliable route back to whoever invests it. The benefits are real: lower energy bills, better health, less pressure on public services. But they land with residents, health systems and local authorities.
ULI Europe's foundation research identified 12 places to intervene. ULI asked us to take on one of its three priorities: redefining the business case.
We repositioned the problem.
A business case sits on top of a business model. If the model can't return value to the investor, no case will hold, however well it's argued. So we stopped polishing the case and followed the value instead.
We mapped who creates it, who captures it and who loses it, inside real estate and well beyond it. The answer changed the brief. The sector isn't short of value. It's short of routes for that value to reach the people paying for the work.
We used a speculative future to free the sector from today's constraints.
We wrote Varenhal, a fictional city that by 2050 has made its housing affordable and zero carbon, and put 40 people from inside and outside real estate to work on getting there. Their ideas became raw material for our advice.
We tested five pathways for fit, evidence and leverage. ULI chose to start with avoided costs: what health systems and public budgets gain from decarbonised homes, translated into terms investors can price. ULI has commissioned us to build it. Carbon pricing turned a hidden cost into an investment signal. This does the same for a hidden benefit, and every other pathway depends on it.
“Exactly the kind of cross-sector conversations needed to tackle complex challenges.”
Lara Newman, Founder and CEO · Common Ground
people in London, a deliberate mix of Tier 1 and Tier 2
pathways tested for fit, evidence, feasibility and leverage
primary pathway, the evidence base the others need
phases, as one question became a programme
The programme now targets the business model underneath the case, not the case alone.
Voices from infrastructure, policy and public services shaped the solutions alongside investors.
ULI's Steering Committee chose the primary pathway and commissioned us to build it.
A three-phase path: from evidence, to investor tools, to a model places can use to unlock their own capital.