Impact invest­ing in real estate has to clear two hur­dles at once: projects must be finan­cial­ly viable and deliv­er mea­sur­able social val­ue. Real estate projects unfold over long time­lines, involve diverse user groups and depend on com­plex local part­ner­ships. That makes rig­or­ous impact mea­sure­ment essen­tial to cred­i­bil­i­ty. With­out a clear struc­ture, it’s often impos­si­ble to tell whether a project is gen­uine­ly address­ing a social chal­lenge or sim­ply telling a good sto­ry.

Fiona Exn­er, Impact Invest­ing Man­ag­er at Next Gen­er­a­tion Invest

That’s where the IMM­PACT Guide comes in. Devel­oped by the Ber­tels­mann Stiftung togeth­er with SEND, the Ger­man Asso­ci­a­tion for Impact Invest­ing and PHI­NEO, it pro­vides a clear, shared point of ref­er­ence. Its struc­tured set of guid­ing ques­tions – from needs assess­ment and impact hypothe­ses to KPI design – makes impact eas­i­er to under­stand, com­pare and com­mu­ni­cate. For real estate in par­tic­u­lar, the frame­work pro­vides the method­olog­i­cal clar­i­ty the sec­tor often lacks. Even more impor­tant­ly, it makes get­ting start­ed sim­ple. All stake­hold­ers can move straight into action with­out first hav­ing to nav­i­gate com­plex the­o­ret­i­cal impact mod­els. The result is a much low­er bar­ri­er to enter­ing the impact mar­ket, a com­mon foun­da­tion for impact-dri­ven col­lab­o­ra­tion, and a strong basis for crit­i­cal­ly reassess­ing exist­ing busi­ness mod­els.

Advanc­ing the IMM­PACT Guide for real estate

To reflect the real­i­ties of the real estate sec­tor, we have refined the approach fur­ther with­in the Real Estate Work­ing Group of the Ger­man Asso­ci­a­tion for Impact Invest­ing and adapt­ed it to real trans­ac­tion process­es. The result is a prac­ti­cal guid­ance note with an invest­ment check­list. Build­ing on the IMM­PACT Guide, it gives prac­ti­tion­ers a clear, robust struc­ture they can apply right away. The need is clear: many project devel­op­ers have strong ideas or avail­able sites, but lack a proven method to plan, mea­sure and com­mu­ni­cate impact in a struc­tured way. Togeth­er, the IMM­PACT Guide and the prac­ti­cal guid­ance note offer a low-thresh­old entry into impact invest­ing. They help actors move faster and sup­port a rapid­ly grow­ing ecosys­tem of com­mit­ted impact play­ers.

At NEXT Gen­er­a­tion Invest, this log­ic is built into our Impact Man­age­ment and Mea­sure­ment approach. We start with needs assess­ments and a clear the­o­ry of change, define impact goals and trans­late them into action­able KPIs. Stan­dard­ized due-dili­gence tools, reg­u­lar impact per­for­mance reviews and clear col­lab­o­ra­tion process­es with part­ners ensure con­sis­ten­cy and account­abil­i­ty.

Case in point: Frank­furt Hausen

What this approach looks like in prac­tice is illus­trat­ed by the Frank­furt Hausen project. Orig­i­nal­ly designed as social­ly ori­ent­ed hous­ing, the prop­er­ty faced major chal­lenges before its acqui­si­tion by NEXT GI: high rents, lim­it­ed inter­ac­tion between res­i­dent groups and grow­ing resis­tance with­in the neigh­bor­hood. Using the IMM­PACT guid­ing ques­tions, the first step was a clear needs assess­ment at the site. The result: demand for afford­able hous­ing for stu­dents, peo­ple with spe­cial hous­ing needs and – inten­si­fied by the war in Ukraine – refugees. These needs were trans­lat­ed into a clear the­o­ry of change with three con­crete impact goals:

1. Increase afford­abil­i­ty, includ­ing an aver­age rent reduc­tion of around 20% for stu­dent apart­ments.
2. Strength­en social inte­gra­tion, through redesigned shared spaces and a rental mod­el that active­ly encour­ages vol­un­tary engage­ment.
3. Acti­vate local ecosys­tems, by involv­ing com­mu­ni­ty-ori­ent­ed orga­ni­za­tions and munic­i­pal insti­tu­tions.

Impact is tracked through clear­ly defined KPIs, includ­ing rent relief, qual­i­ty of social inter­ac­tion, occu­pan­cy struc­ture and reg­u­lar feed­back from key stake­hold­ers.

The Frank­furt Hausen exam­ple shows that impact doesn’t hap­pen by chance. It is the result of delib­er­ate, struc­tured impact strate­gies. The IMM­PACT Guide and the prac­ti­cal guid­ance built on it pro­vide exact­ly that ori­en­ta­tion – help­ing estab­lish a shared under­stand­ing of impact across the real estate sec­tor. Cred­i­ble impact mea­sure­ment requires both a clear method­olog­i­cal frame­work and a will­ing­ness to work in close part­ner­ship with local actors.