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Building Value: A pathway to circular construction finance

Building Value: A pathway to circular construction finance

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Type:

Author: 
Aglaia Fischer (Circle Economy / Sustainable Finance Lab)
Publication Date: 
January, 2019
Country: 
Netherlands

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Scope:

The transition to a Circular Economy requires innovative business models that stimulate optimised use of repairable products, reusable components and recycling of materials. A Community of Practice (CoP) has been established in which experts from different fields have collaborated to improve the financeability of circular construction. CoP members have engaged in a case of social housing corporation Eigen Haard. This report retraces the 'learning-by-doing' trajectory of this Community of Practice. It provides tools to unlock the potential of circular construction business models.

Five main lessons have been drawn from this exercise:

  1. Circular construction depends on the development of a market for used elements, products and materials.
  2. Unlocking the potential of circular construction requires new valuation methods, distinguishing between land and buildings.
  3. Circular construction can successfully be financed when risks and future potential are balanced. This can be supported by detailed financial modelling and leveraging key strengths of circular buildings as securities.
  4. Social housing corporations are ideally suited to implement circular economy business models since both favour long-term inclusive value above mere financial profits. 
  5. Collaboration and transparency support the creation of synergies between different fields of expertise (business, technical, legal, financial) to tackle the challenges of circular construction business models.