SUSTAINABLE VALUE
WHAT ARE THE CONSIDERATIONS THAT VALUERS NEED TO TAKE INTO ACCOUNT FOR COMMERCIAL REAL ESTATE ASSETS IN THE CONTEXT OF SUSTAINABILITY?
T
he role of the valuer is to consider all factors relevant to value.
The aim of this article is to set out some guidelines to support valuation surveyors in the inspection, valuation and assessment of assets in the context of environmental and
sustainability considerations. It references a document,
‘Valuation Considerations for the Valuation of Commercial Assets in the Context of Sustainability’, which was launched by the SCSI in June 2021. The aim of this document was to support valuers in developing their awareness around these matters and making a more informed opinion on the valuation of a real estate asset. By way of context, the Royal Institution of Chartered Surveyors (RICS)
has recommended the inclusion of sustainability considerations as part of the valuation process since 2009. The most recent RICS Valuation – Global Standards (‘Red Book Global Standards’ 2022) now references sustainability within the mandatory professional standards, and an update of the RICS guidance note on sustainability and valuation has been in effect since January 31, 2022. Table 1 sets out a list of some considerations when valuing in the context of sustainability. While not exhaustive, from a reporting perspective it can be used in conjunction with existing valuation considerations such as contamination and flood risk.
Approach to valuing sustainably Step 1 Break down the inspection of the asset into zones of interest within the
Step 3
context of sustainability – external and internal, tenancy and landlord
Consider developing an asset register of building typologies /ages/profiles
issues, data and management plan, etc. Create a checklist (or template)
that facilitates the valuer to categorise the assets and compare against
to reflect the items that need to be examined. The aim is to capture the
other assets of a similar age and construction.
aspects of the property asset that are significant in the context of assessment of value.
Step 4 Review the asset in the context of highlighted areas of strength and
Step 2
vulnerability. The updated Guidance Note gives a good account of this and
Align these examined areas with a focus on where the asset sits in the
an example may be the investor requirement/building envelope/thermal
context of best in class. If necessary, a good idea might be to create a
qualities/lack of amenities for bikes/poor energy performance/fit-out. This
scale of best to worst and score the subject asset under various
may be further categorised by easy upgrades/more onerous and costly
categories.
items. This approach has the potential to bring valuers and clients on a journey that develops more knowledge, awareness and understanding of
FEATURE
crucial issues.
Emer Byrne Lecturer, Real Estate and Valuations, TU Dublin
Step 5
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SURVEYORS JOURNAL Volume 12, Issue 1, Spring 2022
Using this same approach and adopting the above list of considerations, the valuer can begin to analyse comparable evidence necessary to
