Available now | Redevco’s research paper on Funding Europe’s Green Transition
Around €100 billion of European office assets sit in EPC D/E categories requiring reinvestment by 2030
Upgrading to EPC B could require approximately €10 billion, or €2.5 billion annually through 2030
Retrofit spending represents an estimated 10–20% of annual office lending volumes
In Funding Europe’s Green Transition – Reframing the challenge, Redevco argues that the shift from brown to green buildings is not a one-off balance sheet event, but an ongoing capital flow requirement that will influence investment strategy, lending markets, and asset management decisions well into the next decade.
Drawing on data from MSCI, Savills, Cushman & Wakefield, Bayes Business School, Eurostat and the OECD, the paper assesses retrofit needs across the office and residential sectors, highlighting both risks and opportunities for capital providers.
The paper at a glance
€100 billion of office assets at a turning point
Across the main European markets analysed, around 40–50% of office floorspace falls within EPC D/E categories. In capital value terms, this represents approximately €100 billion of invested office stock whose long-term viability depends on meaningful reinvestment by 2030.
Upgrading these assets from EPC D/E to EPC B is estimated to require roughly €10 billion in total. Viewed in isolation, that figure appears significant. However, when aligned with regulatory compliance deadlines between 2026 and 2030, the annualised requirement falls to approximately €2.5 billion per year across Europe.
The required annual spend represents around 2–3% of capital value, compared with less than 1% historically allocated to improvements. Sustainability upgrades are therefore becoming embedded within standard underwriting assumptions rather than treated as exceptional outlays.
“Describing the transition as a looming cost burden oversimplifies the issue,” said Simon Marx, Head of Research at Redevco. “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.”
France and the UK account for nearly half of the estimated upgrade requirement, rising to around two-thirds when Germany is included.
A debt-enabled transition
When benchmarked against annual office development and refurbishment lending volumes, the retrofit requirement represents approximately 10–20% of typical lending activity. While material, the funding need appears manageable within broader capital markets.
Redevco’s analysis suggests that debt markets will play a central role in enabling the transition, particularly in an environment of value corrections and tighter equity conditions. Well-structured retrofit financing can allow owners to spread costs over time, align funding with stabilised post-upgrade income, and reduce the risk of stranded assets.
Residential markets are also facing mounting pressure, particularly where retrofit backlogs intersect with affordability concerns. Italy and Spain show elevated indicators of inefficiency, while Germany and France stand out for the scale of rented multifamily exposure.
“Residential de-carbonisation is influenced as much by tenure and affordability as by building quality,” added Richard Caddock, Head of Real Estate Debt at Redevco. “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.”
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