by jbs091409 c3 — September 16, 2009—As a step towards embedding sustainability as a core consideration in the appraisal process, the U.K.’s Royal Institution of Chartered Surveyors (RICS) is issuing an Information Paper on Sustainability and Commercial Property Valuation. The paper aims to heighten awareness and therefore appraisers’ working knowledge of sustainability in order to further advance awareness of its potential to impact on the valuation process.
Currently available only to RICS members, the Valuation Information Paper will act as a stepping stone to more formal guidance that will be included in the RICS Red Book when it is next reprinted in January 2010. The paper outlines ways in which sustainability can be defined, how a building’s green credentials may be assessed, and how such characteristics might be reflected within a valuation—whether that be quantitatively or qualitatively.
Sustainable characteristics that are highlighted in the paper include the build quality and life cycle, the type of building materials used, the health and human performance of a building, and building services such as air-conditioning, energy efficiency, and waste management, as well as location and accessibility considerations and the impact of regulation, tax, and financial incentives.
In terms of reflecting these aspects of a property in the valuation, the paper encourages appraisers to analyze comparable rental evidence in the light of sustainability. Issues identified for particular consideration include requiring the appraiser to reflect upon the potential impact of sustainability on rental growth prospects, how sustainability factors will accelerate or temper obsolescence rates, and the risks of weak credentials on tenant retention rates and the speed of re-letting.
