A Case for Urgent Change: Dissecting the Complex and Confusing Choices Confronting Developers and Investors
2024 MIT World Real Estate Forum showcases profit and ESG are not mutually exclusive
Celebrating the MIT Center for Real Estate’s 40th Anniversary, the 2024 MIT World Real Estate Forum (June 17+18) brought together 300 industry leaders, policymakers, researchers, and academics to explore the future of real estate — offering inspiration and practical strategies for navigating an uncertain future.
Kicking off the event, MIT Sloan Professor Roberto Rigobon, gave a compelling presentation concerning the complex choices developers and investors face when balancing environmental, social, and governance (ESG) considerations with economic realities.
“I am completely and absolutely obsessed with measurement,” Rigobon shared. His presentation featured his “Interactive Game”, which asked attendees to submit their investment preferences through their phone to his proprietary data gathering app, simulating how personal values and preferences affect building tradeoffs and how they are ultimately designed. His reveal of the data would take place in a later “debrief”, following a Response Panel to the Interactive Game.
How can we improve the way we measure our impact on the world, and in turn, make better, more informed decisions?”
Professor Roberto Rigobon (Keynote Speaker)
Response Panel participants were asked to share their expertise regarding how Rigobon’s simulation might translate to the real world where human values intersect with the marketplace and produce diverse outcomes. Companies report that clients are struggling to balance ESG priorities in the current economic climate, and while many acknowledge that fulfilling ESG values is the way forward, they also feel the reality that it’s still very challenging to build sustainably and make a profit.
MIT/CRE alumnus and Taurus Investment Holdings CEO, Peter Merrigan, shared his insights, saying, “When you start applying reality to some of these [simulation] games, not everything will work right now, which is why we’re seeing so many projects stall… The focus really becomes incentives, mandates, policies, energy costs, and the state of the grid.” Merrigan emphasized the challenge of balancing creativity, investor returns, and occupancy amid rising interest rates and low-valued carbon credits, which increase the effort needed for success. Divulging his interest on the outcome of Rigobon’s game, he noted, “I would like to know, are people actually willing to pay more? The concept of the green premium is widely discussed, but nobody has really been able to quantify it.”
Promising Results from a Varied Audience
Following the Response Panel, Rigobon retook the stage to deliver the results of the Interactive Game’s data collection to attendees. In answer to Merrigan’s question of quantifying the green premium, Rigobon enthusiastically shared, “You understand this is a [simulation], but you actually paid, without knowing, about $200 per person, per metric ton of CO2…In that process you only reduced the profits by 1.48%, you reduced CO2 emissions by about 9%, and you increased well-being by about 13%.” Rigobon highlighted the frequently impressive profitability of sustainable investments, challenging the notion that profitability and social responsibility are mutually exclusive. “How can we improve the way we measure our impact on the world, and in turn, make better, more informed decisions?” Rigobon asked, pushing the audience to think critically about the role of data in driving sustainable change.
A Roadmap & Call to Action for the Real Estate Industry
The future of real estate lies in our ability to adapt, innovate, and act with purpose, and those who hesitate to do so risk being left behind in a rapidly changing world. As the real estate industry stands on the brink of profound change, the 2024 MIT World Real Estate Forum set the stage for a new era. From expert guidance on rethinking traditional approaches, to presentations of new real estate innovations, technologies and strategies, the conference delivered an overwhelming amount of new knowledge, connections, and a sentiment of urgency to its attendees. “Collaboration and innovation are so important to solve these merging crises,” says Siqi Zheng, Faculty Director of CRE, “I encourage participants to stay engaged with MIT/CRE’s ongoing research, initiatives, partnership opportunities and students as we embark on new frontiers in real estate.”
For full details on the MIT World Real Estate Forum speakers and sessions, visit: https://www.mitworldreforum.com and WATCH on YouTube.
