Timber in Real Estate: Understanding Investors Perception

This report, authored by Systemiq, investigates investor perceptions of timber as a low-carbon alternative to steel and cement in real estate projects. By conducting interviews with real estate investors and developers across the UK, Europe, and North America, the study identifies key drivers and challenges influencing timber adoption. Despite growing interest, adoption is limited by regulatory constraints, cost premiums, and insurance challenges.

Key Takeaways

Pipeline Limitations: There is a perception that timber is mainly suited for low-rise buildings, limiting its use across diverse asset types.
Business Case: While timber has a 0-5% cost premium compared to traditional materials, this is expected to decrease as supply chains mature.
Regulatory and Insurance Barriers: Limited embodied carbon regulation and high insurance premiums hinder investment in timber projects.

How It Can Help You

This report is valuable for investors, developers, and policymakers who are:

Seeking to understand the financial and regulatory landscape for mass timber projects.
Interested in strategies to mitigate risk and enhance timber’s market potential.

Key Learnings

Early Engagement Essential: Investors focused on reducing embodied carbon engage early with developers to influence design and material choice.
Insurance as a Barrier: Perceived high insurance costs and complex underwriting deter investment, but early insurer involvement can mitigate these risks.
Need for Regulation: Clear, consistent regulations on embodied carbon and updated building codes are critical for promoting timber use.