Future Cities
Electric vehicles are here to stay – with the right advice, everyone can profit from this
June 19, 2024 7 Minute Read
The opportunity
UK regulation will require 80% of new cars sold to be fully electric by 2030. That will increase to 100% by 2035. This transition towards electric vehicles (EVs) will create massive demand for new charging infrastructure. Public charging points will play a big role in fulfilling this demand, particularly in destination sites (supermarkets, retail parks, pubs, gyms, hospitals, and hotels), but offices and logistics warehouses will also need EV charging points to remain functional for occupiers.
EV charging presents an opportunity to generate additional income for real estate investors, owners, and occupiers. CBRE estimates that EV charging (not including indoor charging points) will generate £10-12bn of consumer spend and c.£1bn in rent across the UK in 2035, based on current trends.
How do charging points create value?
Over time, EV charging points will become a standard feature. Sites that do not provide them are likely to be less attractive to occupiers who need them to satisfy their customer and/or fleet demand. Such locations may even experience discounted values.
The provision of the correct type of EV charging points is a way to protect and enhance value, particularly as a source of regular income. There are two main models for generating income from EV charging points:
- The lease-out model: The landlord leases an area to a Charge Point Operator who owns and operates the EV charging points. There are various rent structures and choosing the right one to benefit from any future growth is important.
- The investment model: The landlord owns and operates the EV charging points and receives all the proceeds from the sales. However, there is a greater risk due to the upfront capital expenditure, maintenance, and repair costs.
Which model to follow will depend on the landlord’s strategy, ability to commit upfront capital, and appetite for risk. Figure 1 illustrates the significant difference in income between the lease-out and investment models, using a theoretical multiple-location scenario with high charging demand.
Figure 1: Potential rent and operating profit from an increasing number of outdoor EV charging points under the lease-out and investment models
Source: CBRE
Notes: This forecast is based on a theoretical scenario of a growing number of outdoor EV charging points installed across multiple high-demand locations. The scenario depicted is not directly comparable to figure 1. Year one shows no profit or rental income due to upfront installation costs. Our scenarios reflect outdoor charging points only. Indoor charging points can come with increased insurance and fire mitigation costs, which result in different income profiles.
Where has the greatest growth potential?
The demand for EV charging points will surge across the UK, but demand will not increase in the same way everywhere.
CBRE has forecast the potential consumer spend on EV charging across the UK based on the predicted evolution in demographics, vehicle ownership, and EV uptake. Our analysis has been carried out at local authority level rather than large cities, to give more granular insight into demand. The local authorities forecast to see the greatest consumer spending at EV charging points in 2035 are:
1. Stockport
2. Swindon
3. Leeds
4. Milton Keynes
5. Windsor and Maidenhead
6. Slough
7. South Gloucestershire
8. Wiltshire
9. Peterborough
10. Renfrewshire
These locations are all highly populated, with significant GDP contributions and uptake of EVs. As a result, they have the ideal profile for good returns on investment in EV charging.
Stockport comes at the top of the list. It ranks in the 95th percentile of local authorities with the highest number of EVs. Stockport Borough Council and Be.EV signed a £15m deal for the expansion of EV charging infrastructure in 2023. Similarly, Swindon Borough Council has recently received a grant of £2.3m from the Government's Local Electric Infrastructure Fund to install 600 charging points in residential areas.
In all locations where EV charging is required, we expect to see a positive cycle whereby increasing charging infrastructure leads to increased EV use, which in turn prompts more investment in infrastructure, continuing the cycle.
Figure 2 maps the forecast consumer spend on EV charging in 2035. It shows that the growth of electric charging will create EV income opportunities across the country. Indeed, only three of the 10 local authority areas with the greatest predicted demand growth are in the South East.
Figure 2: Forecast consumer spend on EV charging in 2035 in Great Britain by local authority
Source: CBRE
Conclusions
We should start to view EV charging points as critical infrastructure comparable to any other utility; both businesses and the public expect convenient charging solutions at virtually every location from supermarkets to places of work. The correct EV charging provision also represents an opportunity to boost income and capital value for a range of investors, businesses, and public institutions.
To find out more and unlock these opportunities please reach out to our team.
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