UK commercial real estate valuation practice: does it now build in sustainability considerations?
Journal of Property Investment & Finance
ISSN: 1463-578X
Article publication date: 19 May 2023
Issue publication date: 13 June 2023
Abstract
Purpose
This paper investigates the extent to which commercial property valuers in the UK refer to Royal Institution of Chartered Surveyors (RICS) professional standards and guidance on the inclusion of sustainability in valuation reports. Data collection, analysis and reporting related to sustainability attributes is examined, as well as the perceived importance of these attributes to clients and any value impacts that are associated with them.
Design/methodology/approach
An online survey of UK commercial property valuers was conducted from July to September 2019. The survey included both structured and open-ended questions.
Findings
Reference to RICS standards and guidance on sustainability has improved since earlier research. However, progress on data collection is still limited. At the time of the survey, UK valuers indicated that sustainability attributes were of more importance to owner-occupiers than investors and lenders. UK valuers also indicated that, out of a range of sustainability attributes, only certification was influencing market value (MV) and investment value (IV) to any great extent.
Research limitations/implications
The online survey had 53 responses and this limited the ability to draw definitive conclusions. Hence, whilst the results may be indicative of the perceptions of some valuers of the significance of sustainability-related matters in the UK, the sample is not large enough to be considered representative of the opinions of property valuers per se in the UK.
Practical implications
Explicit reflection of sustainability in market or investment values is still limited in the UK valuation practice, but there are challenges faced by valuers that need further investigation, including difficulties in pricing sustainability attributes.
Originality/value
This is the first empirical investigation of the perception of sustainability by valuers in the UK commercial property market since the 2012 survey reported by Michl et al. (2016).
Keywords
Acknowledgements
The corresponding author would like to thank the contribution of the Reading Real Estate Foundation (RREF) for her Ph.D. studentship. She would also like to acknowledge the funding from the Funds for Women Graduates (FfWG) during her Ph.D.
Citation
Hossain, S.M., van de Wetering, J., Devaney, S. and Sayce, S. (2023), "UK commercial real estate valuation practice: does it now build in sustainability considerations?", Journal of Property Investment & Finance, Vol. 41 No. 4, pp. 406-428. https://doi.org/10.1108/JPIF-11-2022-0083
Publisher
:Emerald Publishing Limited
Copyright © 2023, Emerald Publishing Limited