I attended the Sustain Worldwide 2011 Conference today at the Barbican, London. It was a very interesting day because it focussed on sustainability in terms of economic viability more than environmental improvements. The speakers covered a wide variety of topics and working practices from hotel development (Hotel in a Box) to residential development in the Algarve (Andre Jordan Group), and marketing sustainability (Brand Potential)as well as linking property values to sustainability benchmarking.
Speakers and guests from across the UK and Europe debated how to get projects moving in times of tight finance, and how to maintain good sustainability objectives in the face of tighter competition.
A particular problem shared across several sectors seemed to be that valuers do not understand sustainability. A building that has sustainable features is more valuable than one without, and is easier to let or sell, but so far valuers have so little information on this that they do not value these properties more than their less sustainable neighbours. Part of the problem is that there simply aren’t enough examples out there for them to base values on. This is because markets and property types are very specific and unless there is a similar building of a similar type in a similar neighbourhood, valuers find it difficult to make a judgement. This lack of comparable properties is holding up the assignment of a realistic value on sustainable buildings, and therefore the wider adoption of more sustainable buildings. Until investors see that sustainability sells for a premium they won’t invest, and unless someone invests there won’t be enough examples. Sounds like a classic Catch-22.
Surely the guidance that valuers use can be amended to illustrate that a sustainable building that has a PV array, for example, will have an additional income stream for the next twenty five years and that this should be included in the book value? That doesn’t sound too difficult. But it hasn’t happened yet.
Suggestions for making this happen in a tweet, please.