Creating green values together

ARE/UBM: In connection with ARE/UBM projects, EU taxonomy compliance is being pursued for all developments. To achieve this, external auditors are commissioned to monitor the projects in terms of EU taxonomy compliance. With more than one investor or project developer, the question arises as to whether the companies are subject to EU taxonomy or want to implement these requirements on a voluntary basis, as this involves verifying the six environmental objectives, which can lead to additional costs, e.g., in this specific case, the issue of energy supply or the recyclability of the buildings constructed. 

Opportunities include more favorable credit terms for sustainable projects, higher fair value in building valuation, and better market opportunities, as large investors are increasingly focusing on certified sustainable buildings. 

ARE/UBM: VILLAGE IM DRITTEN is the largest urban development area in Vienna's city center and comprises 22 construction sites on a total area of 11 hectares with a gross floor area of around 250,000 m². As a large-scale project, it sets new standards in terms of sustainability – both at the neighborhood level and at the building level: almost all buildings are ÖGNI/DGNB or klimaaktiv certified, with standards ranging from “silver” to “platinum.” The neighborhood itself has an ÖGNI pre-certificate in gold, and individual buildings are certified according to EU taxonomy. 

Some highlights in terms of ESG criteria: 

• As part of a quality assurance process, the neighborhood development is monitored and optimized across all construction sites in terms of open space, mobility, special uses, and climate resilience. A quality assurance committee was convened for this purpose, consisting of representatives from the municipality, the property developer, and experts.  
• Already during the urban planning competition (master plan), the projects were subjected to a microclimatic preliminary assessment as part of a “greenpass City Pre-Assessment” and evaluated. In the course of the demolition project, an ecologically oriented demolition concept was developed and implemented to ensure the sustainable reuse of recyclable materials before the start of mechanical demolition.  
• The largest geothermal probe field (500 geothermal probes) and the largest energy network in Austria will supply approximately 2,000 residential and commercial units from 2027. As much energy as possible will be produced and consumed directly on site through the optimal use of various energy sources, such as geothermal probes, building waste heat, and photovoltaic systems (maximum output around 1 megawatt), which also includes a renewable energy community. 
• Social sustainability: Apartments will be created for different user groups and needs (subsidized/affordable/privately financed; rental and ownership), and from the start of the neighborhood development, there will be a wide range of opportunities for residents to network and interact through the activities of a local area support service.  
• Mobility: The interior of the area is completely car-free, the number of underground parking spaces has been reduced to a reasonable minimum, and sharing options are also provided, as is high-quality bicycle infrastructure for residents. 

ARE/UBM: RBI was involved after the building permit had been obtained and the tendering process for the general contractor services had been completed, during the evaluation of the financing institution and before the implementation or construction phase. 

Arnold Czabaun (RBI): As is usual with construction projects, we were brought in about four to five months before the start of construction. At a time when key project decisions had already been made or were imminent, as mentioned earlier. However, it was also at a time when we could still influence certain parameters through our offer. Thanks to our green financing (construction in accordance with EU taxonomy guidelines) and the resulting more favorable margin, we were probably able to provide the final incentive to actually implement the project, which was already planned in accordance with EU taxonomy guidelines, in that way. 

ARE/UBM:

Financial goals: 

A key financial goal for this project is to ensure economically stable, high-quality, and sustainable implementation. We place great importance on a solid cost structure, market-driven pricing, and attractive returns for all parties involved. At the same time, it is important to us that the project is not only economically viable but also convincing in terms of sustainability and long-term value. 

Sustainability goals of the quarter/plot: 

Our sustainability goals are primarily to construct an energy-efficient, resource-saving, and future-proof building. We pay particular attention to reducing energy consumption, complying with high environmental standards, and ensuring long-term value for residents and investors. In addition, we value aspects such as good transport links, social diversity, and a high quality of life for users. 

ARE/UBM: In particular, RBI offers more favorable interest rates for EU taxonomy-compliant projects than for non-certified projects. This contributes to both economic and environmental sustainability. 

Klaus Michal (RBI): At RBI, we are pursuing the goal of making our portfolio more sustainable and “greener.” Through the financial incentives already mentioned, above all with the reduction of the margin for green and/or EU taxonomy-compliant projects, we can offer significant added value for our customers and thus also achieve our goal. A win-win situation, so to speak.

ARE/UBM: The financing model is based on classic BTVG (German Real Estate Development Act) financing but has been supplemented with milestones and reporting requirements relating to taxonomy certification.

Arnold Czabaun (RBI): At RBI, we essentially distinguish between sustainability-linked loans and use-of-proceeds financing. In the first case, the financing is linked to sustainability criteria (e.g., reduction of CO2 consumption). In the second case, it is about financing a sustainable building that meets certain standards. The Park Flats (plot 05) of the Village im Dritten are being built in accordance with EU taxonomy standards and therefore fall under use-of-proceeds financing, and we were able to adjust the loan terms accordingly.

ARE/UBM: As with all projects, the contract was assigned based on the best bidder principle, and RBI was able to prevail with the most favorable terms, as there is the possibility of a bonus for EU taxonomy-compliant projects, the advantage of which was passed on to the borrower.

To what extent were these challenges unique, given that the project is not “only” certified according to the ÖGNI Gold standards, but also meets all the requirements of the EU Taxonomy Regulation? How did the partnership overcome these challenges? 

ARE/UBM: A final statement on the challenges will only be possible at the end of the project. By striving for ÖGNI certification and complying with the relevant requirements, a suitable foundation has already been laid for compliance with the technical assessment criteria of the EU taxonomy, e.g., by calculating the life cycle assessment (LCA) and avoiding pollutants in the selection of construction products. 

Several requirements have been added under the banner of taxonomy compliance, specifically compliance with flow rates for sanitary fittings, recycling quotas for non-hazardous waste, the re-examination of energy indicators due to increased requirements (primary energy demand, heating demand), and the preparation of a climate risk analysis (construction site screening).

Klaus Michal (RBI): Only after a building is completed is it possible to carry out the necessary tests to determine whether it really complies with the EU taxonomy guidelines. The challenge with a building under construction is therefore precisely that, by definition, the EU taxonomy does not yet apply during the construction phase. ARE/UBM has committed to constructing a taxonomy-compliant building and meeting the corresponding requirements.

ARE/UBM: Our advice is to place great emphasis on realistic project calculations, early involvement of all relevant partners, and a clear sustainability strategy right from the start. Especially in the current market environment, it is crucial to be able to react flexibly to changes, while at the same time not losing sight of long-term quality and value retention.

Arnold Czabaun (RBI): We can only agree with this and recommend incorporating green and EU taxonomy-compliant aspects into the planning at an early stage. We at RBI are available with our experts from the Real Estate Finance and Sustainable Finance departments and are happy to help identify the key issues that should be taken into account. 

ARE/UBM: Yes, especially because of the financing tailored to this project and the extremely professional and pleasant cooperation with RBI's real estate financiers.