Environmental consultancy Envos has launched a new service to help landlords and tenants assess the sustainability of their buildings, claiming that a property’s environmental impact will have direct and significant implications for its value within the next two years.
Envos believes that changes due to be made to the RICS (Royal Institution of Chartered Surveyors) Red Book in April, linking property values to the
sustainability of
buildings, are likely to create a two-tier property market.
Its new service –
Sustainable Property Assessment (SPA) – aims to boost the sustainability of a a property by looking at its
energy usage,
energy efficiency, effectiveness of insulation and any
investment needed in its fabric and fixtures.
A roundtable discussion arranged by Envos showed there is an expectation amongst landlords and tenants that property prices for unsustainable buildings will fall as a result of the Red Book changes.
Participants also agreed that initiatives such as the
Carbon Reduction Commitment Energy Efficiency scheme (CRC) would start to feed through to property rental values and valuations by quantifying the cost of carbon.
“The likely net effect of sustainability on a building's value will vary widely depending upon its type, location and individual circumstances,” said Jim Green, Technical director for
Envos.
He added: “Attitudes and valuations are hardening – the gulf between sustainable and unsustainable properties is likely to widen and variations of plus or minus five to 10 per cent can be expected."
It is Envos’s contention that landlords and tenants need to act now to start boosting the sustainability of their properties.
Its new service is designed to do this by surveying a property. It will then measure its findings against the requirements of current and forthcoming environmental legislation to produce a report that can either be used by buyers as a negotiating tool, or by investors to assess their existing portfolio.
Wade Barker, managing director of Envos commented: “The breadth of environmental legislation now being introduced and the impact this has on properties and property owners is significant and will only get more intense [...]
“Ensuring a property is compliant and cost and energy efficient is therefore a key element in any investment decision.”
Environmental Real Estate IndexThe new service is launched just a week after three major institutional investors announced the first global environmental benchmark for the property sector and revealed that a “strikingly low” number of property companies are able to report actual numbers on things like energy consumption (19 per cent of respondents), water consumption (16 per cent), or carbon emissions (14 per cent).
The research for Dutch pension management firms APG and PGGM and the Universities Superannuation Scheme (USS) in the UK, covered 700 listed property companies and fund managers worldwide. It concluded that: “Despite the fact that energy-saving investments can create value for property investors, the majority of survey participants are not yet actively managing environmental issues in their portfolios.”
The research has resulted in a new environmental benchmark – the global Environmental Real Estate Index, which includes scores on environmental management practices and the implementation of these practices – only a few investors from Australia, Sweden and the United Kingdom come close to attaining the top score.
The pension funds hope the benchmark will encourage other property companies and investment managers to make environmental considerations a priority.
Roger Gray, chief investment officer at the (USS), said: "As long-term investors, the environmental performance of our assets is a major consideration, even in the aftermath of the financial crisis.
“Management of environmental issues is an essential component of good management and financial performance of our property investments, and we believe that the drivers in this area will only get stronger."
Insufficient data on sustainable propertyA report by RICS, also published last week –
'Sustainable Property: Is Sustainability Reflected In Commercial Property Prices: A Review Of Existing Evidence?' – concluded that there is not sufficient data in the UK to conclude that sustainable buildings currently command a premium price.
Head of research Stephen Brown, explained that the research was not aimed at finding out whether there is a price differential in the market place for individual buildings but on finding out what detailed published research had been carried out into this topic.
“The conclusion was that there are a few reports from the USA that support this contention but that the data is not yet available for this type of analysis to be carried out in the UK,” he said.
“This does not mean that green buildings do not command a price premium, but simply that the data required to do the type of research to isolate the effect does not exist.”
Related Links:
Green And Sustainable Building NewsCarbon Reduction Commitment Energy Efficiency scheme (CRC)Energy Efficiency NewsRelated Sites:
www.rics.orgwww.envos.co.uk