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Socially Responsible Property Investment: Quantifying the Relationship between Sustainability and Investment Property Worth

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  • Louise Ellison
  • Sarah Sayce
  • Judy Smith

Abstract

This paper explores the potential link between the sustainability of a property asset and its investment worth. The research is based on the premise that sustainability represents an additional and changing set of risks for property investors and as such needs to be examined systematically for those risks to be properly understood and mitigated. It seeks to make the bundle of issues referred to as ‘sustainability’ explicit within the appraisal process in order that their impact on property worth can be more effectively examined and assessed from a property investment perspective. A series of relationships between sustainability and the functional performance of a property are theorized. A set of parameters quantifying the impact of that functional performance on rental growth and depreciation are then developed. The main findings are that sustainability is pertinent to property investment and can be analysed in relation to potential impact on standard investment appraisal variables. The paper presents a model for doing this as a foundation from which further work can be developed. Two example appraisals are presented to demonstrate the approach developed.

Suggested Citation

  • Louise Ellison & Sarah Sayce & Judy Smith, 2007. "Socially Responsible Property Investment: Quantifying the Relationship between Sustainability and Investment Property Worth," Journal of Property Research, Taylor & Francis Journals, vol. 24(3), pages 191-219, September.
    • Handle: RePEc:taf:jpropr:v:24:y:2007:i:3:p:191-219
    DOI: 10.1080/09599910701599266
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    Citations

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    Cited by:

    1. Franz Fuerst & Patrick McAllister, 2008. "Green Noise or Green Value? Measuring the Price Effects of Environmental Certification in Commercial Buildings," Real Estate & Planning Working Papers rep-wp2008-09, Henley Business School, University of Reading.
    2. Nappi-Choulet, Ingrid & Décamps, Aurélien, 2011. "Is Sustainability Attractive for Corporate Real Estate Decisions ?," ESSEC Working Papers WP1106, ESSEC Research Center, ESSEC Business School.
    3. Ingrid Nappi-Choulet & Aurélien Decamps, 2012. "The impact of energy efficiency and green performance on the value of corporate real estate portfolios," ERES eres2012_145, European Real Estate Society (ERES).
    4. Tom Kauko, 2014. "Innovation in real estate and evolutionary agendas," ERES eres2014_15, European Real Estate Society (ERES).
    5. Tom Kauko, 2013. "A Demonstration of Sustainability Arguments Using House Price Data," ERES eres2013_146, European Real Estate Society (ERES).
    6. Pernille Christensen, 2011. "Assessing Assessment: Toward a More Holistic Rating System for Sustainability Performance," ERES eres2011_336, European Real Estate Society (ERES).
    7. Tessa Hebb & Ashley Hamilton & Heather Hachigian, 2010. "Responsible Property Investing in Canada: Factoring Both Environmental and Social Impacts in the Canadian Real Estate Market," Journal of Business Ethics, Springer, vol. 92(1), pages 99-115, April.
    8. Ayşegül Durukan & Şebnem Ertaş Beşir & Selver Koç Altuntaş & Mikail Açıkel, 2021. "Evaluation of Sustainability Principles in Adaptable Re-Functioning: Traditional Residences in Demirel Complex," Sustainability, MDPI, vol. 13(5), pages 1-23, February.
    9. Deniz Ikiz Kaya & Nadia Pintossi & Gamze Dane, 2021. "An Empirical Analysis of Driving Factors and Policy Enablers of Heritage Adaptive Reuse within the Circular Economy Framework," Sustainability, MDPI, vol. 13(5), pages 1-24, February.
    10. Graeme Newell & Zaharah Manaf, 2008. "The Significance of Sustainability Practices by the Malaysian Property Sector," Local Economy, London South Bank University, vol. 23(3), pages 152-167, August.

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