The ESG (Environmental, Social, and Governance) has become a central theme in the real estate sector in Europe. For Kazakhstan this is not just a trend but an opportunity to modernize the sector and adapt to global challenges. Leveraging European experience can help to address current issues while increasing competitiveness on the international stage.
European experience shows that ESG is essential for securing long-term financing. Nearly 90% of survey respondents believe the costs of transitioning to carbon neutrality will shape project funding over the next five years. ESG encompasses not only environmental but also social and governance aspects. For Kazakhstan, where climate change and a lack of affordable housing are pressing challenges, this approach could form the foundation for sustainable development.
Risks in Real Estate:
1. Climate Risks
Extreme weather events are becoming more frequent in Europe. More than half of respondents highlight that properties without a carbon-neutral plan will struggle to secure insurance, and costs will rise. Kazakhstan faces similar risks, including droughts, floods, and extreme temperatures. The lack of adaptation for older buildings exacerbates the issue.
2. Financial Barriers
European banks are turning away from financing “dirty” assets, reducing liquidity for older properties. High capital costs for transitioning to carbon-neutral practices deter investors. Kazakhstan, with its energy-intensive construction sector, faces similar challenges.
3. Regulatory Requirements
The EU has introduced new environmental laws, including minimum energy efficiency standards and carbon taxes. These increase costs for developers. Kazakhstan has not yet implemented such requirements, but their eventual adoption will bring significant changes to the industry.
4. Asset Valuation Challenges
European investors point out that current property valuations fail to account for climate and social risks. In Kazakhstan, the lack of transparent valuation mechanisms further deters foreign investment.
Opportunities for Kazakhstan:
1. Attracting Green Financing
In Europe the demand for sustainable real estate is growing. Green bonds are becoming a popular tool. Kazakhstan can offer ESG-compliant projects to international investors, enhancing the country’s investment appeal.
2. Modernizing the Construction Sector
European construction companies actively use eco-friendly materials and energy-efficient technologies. Kazakhstan can adapt these solutions to reduce long-term costs and improve competitiveness.
3. Enhancing Social Infrastructure
European cities invest heavily in affordable housing and improved urban environments. Kazakhstan can apply these practices to address housing shortages, particularly in fast-growing cities.
4. Increasing Competitiveness
Companies that adapt their assets to ESG standards gain access to cheaper loans and long-term contracts. This is especially crucial for Kazakhstan to attract major international players.
How ESG Impacts Business:
Example: Insurance for Properties
65% of European survey participants expect rising insurance costs due to climate risks. Kazakhstan must consider this when designing new properties and retrofitting older ones.
Example: Financing Green Projects
There are 70% of respondents emphasizing ESG’s importance in attracting capital in Europe. Kazakhstan can develop green financial instruments such as bonds or subsidies for sustainable projects.
Example: Social Adaptation
60% of European participants highlight the growing importance of tenant well-being for developers. Kazakhstan can implement programs to enhance social infrastructure and improve quality of life.
Recommendations for Kazakhstan:
1. Develop a National ESG Strategy
This should include stricter energy efficiency requirements and mechanisms to support sustainable projects.
2. Introduce Tax Incentives and Subsidies
These measures would stimulate affordable housing construction and the adoption of green technologies.
3. Attract International Capital
Creating favorable conditions for foreign investors through ESG-compliant projects is key.
4. Modernize Asset Valuation
Transparent standards that account for climate and social factors must be established.
European ESG practices demonstrate that sustainable development is not just a trend but a necessity. For Kazakhstan, ESG can be a tool to innovate the sector, improve living standards, and attract investments. It is an opportunity to build a sustainable future that meets the demands of the time.
Source: Emerging Trends in Real Estate Europe 2025.
Prepared by: Sultan Valikhanov, expert of the Economy KZ portal
