Reflecting sustainability in property valuation – a progress report

Peter Michl (Centre for Real Estate, Karlsruhe Institute of Technology, Karlsruhe, Germany)
David Lorenz (Centre for Real Estate, Karlsruhe Institute of Technology, Karlsruhe, Germany)
Thomas Lützkendorf (Centre for Real Estate, Karlsruhe Institute of Technology, Karlsruhe, Germany)
Sarah Sayce (Royal Agricultural University, Cirencester, UK)

Journal of Property Investment & Finance

ISSN: 1463-578X

Publication date: 5 September 2016



The purpose of this paper is to report on the findings of a survey conducted by the Royal Institution of Chartered Surveyors (RICS) to discuss the extent to which qualified valuers have adapted their valuation practices in the light of guidance published by RICS in respect of sustainability and commercial property. The findings are placed within a wider debate between assessment of market value and investment value (worth).


The paper is a theoretical discussion incorporating the results from an empirical survey of valuation practitioners.


The paper reveals that guidance published by RICS in 2011 has achieved limited, but variable, impact in terms of impacting on valuation practice due to a combination of factors including lack of knowledge of the guidance, non-requirement of clients to request sustainability reporting within valuations, paucity of data. It found that where worth (investment value) is required, sustainability factors are more likely to impact the calculation than where an estimate of market value is prepared. The paper identifies theoretical problems and practical barriers hindering an integration of sustainability aspects into valuation practice.

Research limitations/implications

The empirical work was conducted prior to the embedding of guidance within the mandatory provisions of the “Red Book”; the study therefore reports on a direction of travel rather than the current position. The implications for research are the requirement to enhance data capture and to seek ways to break down the barriers to more comprehensive integration of such data so that worth and market values may begin to converge.

Practical implications

The paper has practical implications for both the education of valuers which is proposed through the RenoValue project discussed in the paper and for the RICS in monitoring progress towards more specific integration within valuers’ calculations. Further, the paper identifies that clients and lenders have a key role to play through the instructions given to valuers.

Social implications

There is now widespread recognition that properties which are not resource efficient and which are not equipped to flex to changing occupier needs may not currently be “future proofed” in investment value terms and are likely to see value erosion over time. Further, buildings have a key role in terms of climate change policy. Whilst new buildings can be mandated to meet improved efficiency standards, the ways in which buildings owners can be encouraged to upgrade will be important moving forward. One way is through a value chain response.


The survey is the most comprehensive investigation of valuer’s practice in relation to sustainability and the assessment of market value and worth undertaken. This provides a unique insight into the effectiveness of professional guidance and enables an informed discussion as to appropriate ways to enhance guidance moving forward.



Michl, P., Lorenz, D., Lützkendorf, T. and Sayce, S. (2016), "Reflecting sustainability in property valuation – a progress report", Journal of Property Investment & Finance, Vol. 34 No. 6, pp. 552-577.

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