Valuers’ Perception of Sustainability in the UK Commercial Real Estate Market

The observed increase in market awareness of climate change and other sustainability issues has translated into increased demand for so-called ‘sustainable’ buildings in the real estate sector in the UK. This contention is supported by the results of a wide range of academic studies, which have reported a positive pricing impact for superior sustainable credentials in buildings. However, these large-scale studies are not without criticism in terms of data, methodology and approach and consequently, their usefulness to valuation professionals. Less is currently known about the extent to which impacts of sustainable building attributes on prices and values are visible to property valuers and how this is recorded by them. Valuers rely on analysis of comparable transactional evidence in ways that allow them to isolate the impact of specific features from other value drivers and their experience, judgement and heuristics play a major role in this process. There is currently less understanding of how valuers are applying existing methodologies to incorporate sustainability attributes into calculating market and investment values and how current methodologies for valuation facilitate or constrain the consideration of such attributes. This research will review the existing sustainability and valuation literature along with guidelines issued by the RICS to identify how existing processes consider sustainability attributes. It will then investigate the extent to which valuers make connections to such attributes and which adjustments, if any, they make to account for their presence. To investigate and answer the above research problems, three issues will be addressed. Firstly, how property valuers in the UK understand commonly understood sustainability attributes and their relation to values; secondly, how valuers collect data related to sustainability attributes and report this; and, thirdly, barriers they face while considering sustainability in existing valuation processes. This research will collect data from valuers in the form of primary data by using an online survey and interviews. The results of this survey will provide a further insight into the extent to which sustainable building features are currently considered in valuation processes.