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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.

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.

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.

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.

The aims of this paper are to: provide a systematic overview of various publications and international research efforts undertaken to integrate sustainability considerations into the property valuation process; summarize the key results of these publications and research efforts; highlight the role of key valuation‐input variables in considering sustainability issues when applying traditional methods of valuing income‐producing properties; briefly present and comment on a broader concept of property value and the resulting implications for property valuation practice; and provide recommendations for change in the everyday practice of individual valuation professionals and for the future operation of professional organisations and valuation‐standard‐setting bodies.

This paper builds on the authors' previous contributions to the discussion on sustainability and valuation, presents advances on these previous works and condenses the more theoretical issues debated earlier into concrete recommendations for future action. Starting from a literature review of the different strands of research relating to the new discipline of sustainable property investment, 31 publications and ten research projects that investigate in detail the topic of sustainability and property valuation are identified and the current stage of discussion is briefly commented on. On this basis, a systematisation of existing approaches for the integration of sustainability issues into the valuation process is presented, followed by further explanations of practical valuation issues such as identifying the key “adjustment screws” or valuation input parameters of traditional valuation methods. Finally, the underlying concept of property value is discussed and a “value map” is presented which conceptualises the relationships between different components of value as well as other value‐influencing forces.

Changes are required in the processes of gathering, processing and presenting property‐related information, as well as in the methods for determining individual valuation‐input parameters and for explicitly stating formerly implicit assumptions and qualitative judgement. This includes but is not limited to the extension of the scope and informational content of standard valuation reports to include sensitivity analyses, risk documentation and a separate section on sustainability. The required changes should be supported by actions that could be undertaken by the professional and valuation‐standard‐setting bodies and organisations within the valuation world. These actions include: embracing and improved marketing of the qualitative nature of the valuation service; the development of educational material and formal guidelines; the provision of dedicated market research to assist valuation practitioners operating in different market segments, geographic regions and local sub‐markets; and adjusting and further developing existing valuation standards to enable and support individual practitioners in offering a two‐tier valuation service to clients.

This paper proposes that valuation professionals and their professional bodies are confronted with a new reality of changing value perceptions and systems among market participants, and offers practical recommendations on how to cope with this situation.

The purpose of this paper is to explain the rationale for integrating sustainability issues into property valuation theory and practice and to provide initial suggestions for valuers on how to account for sustainability issues within valuation reports.

The authors emphasise the key role of valuation professionals and of the valuation process itself in achieving a broader market penetration of sustainable construction. It is explained that, on the one hand, property valuation represents the major mechanism to align economic return with environmental and social performance of property assets, and thus to express and communicate the advantages and benefits of sustainable buildings. On the other hand, it is explained that gradual changes in market participants' perceptions in favour of sustainable buildings must be reflected within the property valuation and associated risk assessment process (otherwise valuers would produce misleading price estimates). The authors identify both the financial benefits and risk reduction potential of sustainable design as well as valuation input parameters that would allow these benefits to be reflected in property price estimates.

The authors show that the main reasons for immediately and rigorously integrating sustainability issues into property valuation are as follows: more sustainable patterns of behaviour are urgently necessary to sustain the viability of the Earth's ecosystems; a huge untapped market potential exists for sustainable property investment products and consulting services; sustainable buildings clearly outperform their conventional competitors in all relevant areas (i.e. environmentally, socially and financially); neglecting the benefits of sustainable design leads to distorted price estimates; and reflecting sustainability issues in property price estimates is already possible and the validity of this decision depends solely on the valuer's capability and sophistication to explain and justify his/her assumptions within the valuation report. However, it is also shown that efforts need to be undertaken to improve the description of property assets in transaction databases in order to provide the informational databases necessary to empirically underpin a valuer's decision to assign a “valuation bonus” to a sustainable building or a “valuation reduction” to an unsustainable/conventional one.

The paper postulates that valuation reports should be extended to include the following additional elements: a clear description of the availability of certain sustainability‐related property characteristics and attributes; a statement of the valuer's opinion about the benefits of these characteristics and attributes; and a statement of the valuer's opinion about the impact of these benefits and/or risks on property value.

The basic purpose of this paper is to explore the relationship between the sustainability of construction on the one hand and market value, worth and property investment performance on the other hand. This paper aims to analyse price movements and price differences caused by different property characteristics.

Based on the estimated log‐linear hedonic regression model, a hedonic price index is calculated. Price movements subject to different property characteristics are examined by constructing various conditional hedonic price indexes.

The results reveal that, high‐quality flats or flats within preferred locations clearly outperform their competitors in terms of price stability during an overall market downturn. However, it is also shown that contemporary building descriptions or specifications of transactions within property databases are not yet sufficient and need to be widened to meet forthcoming challenges. Therefore, an “integrated building performance approach” is introduced and a proposal for the step‐wise improvement of building descriptions is made.

The paper shows that efforts need to be undertaken by the property profession in combining and transferring financial performance data along with information that is indicative of a building's contribution to sustainable development.

The paper offers insights into the relationship between the sustainability of construction and market value.

The purpose of this paper is to propose and discuss practical approaches on how to address risk and uncertainty within valuation reports, particularly when there is only insufficient comparable transaction evidence available.

A four stage approach to property valuation is proposed that can be particularly useful if there is insufficient comparable transaction evidence available: Identifying, measuring and expressing risk by making use of property rating approaches. Transforming risk into risk premia for calculating the yield on a risk free basis by partially making use of models of risk and return usually applied in finance. Simulating risk premia (since there is great deal of uncertainty involved in determining these premia) by making use of a statistical method commonly referred to as Monte Carlo Simulation. Using the derived yield's probability distribution in combination with further probability distributions for other valuation input variables (e.g. market rent) to calculate a range of possible outcomes of Market Value as well as a number of statistical measures that can be indicative of the valuer's perceived uncertainty regarding the valuation assignment.

The empirical part shows that due to data limitations determining idiosyncratic risk premia for property assets is not yet possible. This significantly hampers the development of robust yield pricing models and reinforces the need to create databases including information on both individual property returns and associated building characteristics.

The paper postulates that there are few (if any) rational reasons for valuers not to use rating and simulation approaches as an indispensable element of the valuation process.

A valuation approach that allows simultaneously addressing risk and uncertainty as well as sustainability issues within commercial property valuation practice is proposed.

The UK government’s support for sustainable construction involves an explicit attempt to introduce a new institutional logic into the construction sector, while the use of Building Research Environmental Assessment Method (BREEAM) as a preferred policy mechanism exemplifies neoliberal use of voluntary self-regulation to promote policy goals. This paper uses the case of BREEAM to examine the role of science and scientific expertise in the exercise of neoliberal governance. More specifically, it combines a neo-institutional analysis of change with Foucault’s theory of governmentality to explore the effect of BREEAM on eight construction projects. The concepts of visibility, knowledge, techniques, and identity provide an analytic grid to explore the effect of BREEAM on understandings and practices of “green building.” Appeals to science and scientific authority are found to be most important in those instances where institutional logics clash and the legitimacy of BREEAM as a carrier of sustainable construction is challenged. From a theoretical perspective, the case studies highlight the role of instruments in the micro-dynamics of institutionalization. Empirically, it underlines the limited, but nonetheless significant, effect of weakly institutionalized neoliberal policy mechanisms.

The purpose of this paper is to examine the New Labour governments’ approach to amending the regime for the protection of heritage assets in England.

The paper critically reviews New Labour policy documents alongside contemporary research‐based literature.

The terms heritage, conservation and sustainability are increasingly regarded as synonyms. While providing initiatives for the built heritage, New Labour urban policy was set in the context of domestic economic and political restructuring and increased international environmental awareness. This has made managing the heritage environment at both national and local levels more challenging, an aspect that has been exacerbated by the New Labour government's introduction of performance targets and new operational languages.

The paper offers an applied consideration of three specific aspects of recent heritage protection direction.

Adaptive re‐use enables a building to suit new conditions. It is a process that reaps the benefit of the embodied energy and quality of the original building in a sustainable manner. Initiatives to improve the sustainability of buildings have tended to focus on new construction projects rather than existing ones. One reason is the tendency to regard old buildings as products with a limited useful life that have to be eventually discarded and demolished. Much of the existing building stock will still be in use for another 100 years. Thus, there is a need to develop policy and strategies that encourage adaptive re‐use and the ongoing sustainability of building stock. The purpose of this paper is to provide a comprehensive review of the factors influencing the decision to adopt an adaptive re‐use strategy.

Adaptive re‐use is beginning to receive attention, yet there is a lack of consensus as to whether it is an appropriate strategy for meeting the changing needs and demands of developers, occupiers and owners for existing building stock. Considering the limited published research on adaptive re‐use in buildings, particularly in the context of sustainability, a comprehensive review of the normative literature is undertaken to determine the factors influencing the decision‐making process for its use.

It is revealed that the major drivers for adaptive focus on lifecycle issues, changing perceptions of buildings, and governmental incentives. The barriers to re‐use, on the other hand, include a perception of increased maintenance costs, building regulations, inertia of development criteria and the inherent risk and uncertainty associated with older building stock. The identification of drivers and barriers has enabled a balanced view of the adaptive re‐use debate to be presented.

The paper concludes that more empirical research is required to examine the role of adaptive re‐use in the context of its contribution to sustainability if it is to become an effective strategy that drives the formulation of public policy for addressing the issues associated with existing building stock.

The research identifies key adaptive re‐use issues that need to be addressed by policy makers, developers and owners during the formative stages of the design process so that efforts toward sustainability can be ameliorated. Addressing a building's adaptive re‐use will significantly reduce whole life costs, waste and lead to the improved building functionality.

This paper provides policy makers and key decision makers with the underlying factors that need to be considered when implementing an adaptive re‐use policy as part of their sustainability strategy.

The purpose of this paper is to understand both the facts and the values associated with the breadth of issues, and the principles related to sustainable real estate for institutional investors. Sustainable real estate is a growing sector within the commercial real estate industry, and yet, the decision-making practices of institutional investors related to sustainability are still not well understood. In an effort to fill that gap, this research investigates the post-global financial crisis (GFC) motivations driving the implementation of sustainability initiatives, the implementation strategies used, and the predominant eco-indicators and measures used by institutional investors.

This paper presents the results of a three-round modified Delphi study conducted in the USA in 2011-2012 investigating the nature of performance measurements and reporting requirements in sustainable commercial real estate and their impact on the real estate decision-making process used by institutional investors. Two rounds of in-depth interviews were conducted with 14 expert panelists. An e-questionnaire was used in the third round to verify qualitative findings.

The key industry drivers and performance indicators influencing institutional investor decision making were associated with risk management of assets and whether initiatives can improve competitive market advantage. Industry leaders advocate for simple key performance indicators, which is in contrast to the literature which argues for the need to adopt common criteria and metrics. Key barriers to the adoption of sustainability initiatives are discussed and a decision framework is presented.

This research aims to help industry partners understand the drivers motivating institutional investors to uptake sustainability initiatives with the aim of improving decision making, assessment, and management of sustainable commercial office buildings.

Building on the four generations of the sustainability framework presented by Simons et al. (2001), this research argues that the US real estate market has yet again adjusted its relationship with sustainability and revises their framework to include a new, post-GFC generation for decision making, assessment, and management of sustainable real estate.