Pricing energy risk: how ESG is reshaping real estate transactions in Poland

From a transactional perspective, energy-related considerations have become an integral part of real estate deals in Poland. Issues that were previously treated as operational and addressed at the asset management stage are now analysed at the initial stage of a transaction and expressly incorporated into pricing assumptions and contractual frameworks. In practice, investors are no longer questioning whether energy aspects matter, but are instead focusing on how the associated risks should be allocated between the parties.

Following a period of relative macroeconomic stabilisation, investment activity has begun to recover, supported by improving economic sentiment and more stable financing conditions. At the same time, operating costs – particularly those linked to energy consumption – remain higher than before 2021. The impact is visible in valuation. Higher energy costs translate into increased operating expenses and place pressure on net operating income, especially in older office and retail assets. At the same time, occupiers continue to favour modern, energy-efficient buildings. This is contributing to a clear divergence between newer and older assets, with the latter being more exposed to vacancy risk and leasing pressure.

In practice, investors distinguish more clearly between assets that maintain performance under current conditions and those requiring significant upgrades. This is reflected in pricing. Buildings with weaker energy performance or limited upgrade potential are increasingly subject to pricing discounts, while assets with stronger technical parameters tend to maintain their position.

The broader energy context remains relevant. Poland’s renewable energy share is growing, but the transition is gradual and the energy mix continues to rely partially on conventional sources. This contributes to ongoing exposure to energy price volatility. Therefore, energy efficiency remains an important factor in managing operating costs for real estate assets.

Energy and ESG considerations are now a standard element of the transaction process. During due diligence, buyers expect access to detailed information on technical specifications, including energy consumption, as well as compliance with regulatory requirements resulting from both Polish and EU legislation. This information is used to assess not only current performance but also future capital expenditure needs. Where risks are identified, they are reflected in transaction documentation through various mechanisms, such as for example a price adjustment linked to anticipated upgrade costs, as well as escrow or retention structures intended to secure funding for post-closing works. The cost of upgrading existing assets to the current ESG standards can be substantial and now directly influences negotiations.

Sellers seek to limit their exposure, particularly where technical issues have already been identified during the due diligence process and have accordingly been factored into the pricing structure. As a result, representations and warranties relating to technical and ESG matters are often subject to negotiation and tend to be more limited in scope.

Transaction structures are also evolving. Although financing conditions have improved compared to previous years, lenders remain selective and place greater emphasis on asset quality, including energy performance. Assets with weaker characteristics may face more limited access to financing or additional conditions, such as the requirement to implement improvement measures within a defined timeframe. In certain transactions, a portion of the purchase price is deferred or linked to the completion of modernisation works.

The effects of rising energy costs are also visible after closing, particularly in landlord–tenant relations. Increasing operating costs are influencing service charges, while tenants – especially in the office sector – show a clear preference for buildings that offer both cost efficiency and compliance with their internal ESG policies.

Green lease provisions are increasingly appearing in the Polish market, particularly in new developments and high-quality assets. At the same time, comprehensive green lease structures are not yet as popular as we would expect. More often, individual provisions are introduced into contracts on a case-by-case basis. These may include obligations relating to energy data sharing or certain technical standards for fit-out works.

Many buildings are subject to long-term contracts concluded in a different cost environment, with limited flexibility to introduce new mechanisms or pass on energy‑related upgrade costs to tenants.   Renegotiation is possible, but often difficult, particularly where tenants are already facing higher occupancy costs. In practice, this means that some of the investment burden may remain with the landlord or be spread over a longer period.

Even in new leases, the allocation of costs and benefits remains a point of negotiation. Tenants may accept certain ESG-related obligations, but are generally reluctant to take on additional costs without a clear benefit. This affects how investment assumptions are made and how transactions are priced.

As part of this assessment, a sustainable building certification is also becoming increasingly important, having emerged as one of the key elements of ESG analysis. Sustainability certifications act as independent verification of a building’s energy efficiency, safety and overall technical quality, and because they are issued by independent bodies, they serve as a reliable tool in the due diligence process. They cover environmental, economic and social issues simultaneously, enabling a more comprehensive and multidimensional risk assessment.

Buildings with such certifications become more attractive to investors and stand out from the competition. Although there are many assessment systems available, the Polish market is dominated by a few of them. BREEAM is the most popular certification which focuses on the environmental aspects of the design, construction and operation of buildings. Factors assessed include user comfort, a building’s location and access to public transport. LEED is the second key sustainability standard, which covers a wide range of criteria: from a building’s location and site development, through the use of materials, energy and water, to indoor air quality, user health, design innovation and the environmental impact of solutions employed. WELL is also gaining popularity; it focuses primarily on the well-being of users, assessing factors such as acoustics, thermal comfort and social aspects. Poland is the leader in building certification in the CEE region, which also confirms Poland’s established role as one of the key markets in Central Europe.

Regulatory developments at both national and EU level, along with rising investor expectations, mean that the relevance of the ESG factors will only increase and continue to shape real estate transactions in Poland. Identifying and addressing potential issues associated with energy aspects of real estate assets is now a standard element of transaction practice and asset management. For market participants, it means not only complying with regulatory requirements but also seizing strategic opportunities to strengthen competitiveness and enhance the long‑term resilience of their assets. In this context, the capacity to evaluate, manage, and improve energy performance has become a fundamental skill for making effective investment decisions and developing solid asset management strategies for the future.