Valuing the changes - Will investment in sustainable features be recognised in market value

Abstract

Sustainability has rapidly evolved as a key issue within the development and
use of the urban, built environment. Due to its emergence over such a short
period of time, most efforts have been directed at exploring and offering
suggestions on physical issues such as energy usage, design and
operational solutions. The suppliers of new product into the market –
developers, architects, builders, building product suppliers, etc can be
justifiably proud of the achievements to date.

However, more research and development is needed within all areas of
production that will refine the products further and we need better ways to
refurbish existing stocks. Nevertheless, the built environment sector has
demonstrably achieved more in addressing the issues of sustainability
compared to manufacturing, mining, primary production or the services sector
in general. Sustainability is now a mainstream “pressure point‿ for all of those
sectors, none more so than the built environment given that, for example, they
are responsible for 40% of all energy consumption and 40% of all atmospheric
emissions (AGO 1999).

Without denigrating past achievements, it is reasonable to observe that our
efforts and focus has been largely “supply‿ oriented. We are experiencing a
dramatic situation that is emerging with global change in its various forms and
we continue to translate that into adaptable, flexible and sustainable products
particularly in long term, high value products such as redeveloped property.
But we know – and if we don’t our banks will tell us – that a supply side
approach particularly in such complex economic environments, is
fundamentally flawed and incomplete. Unless the market identifies the values
and demands of a particular product (or generic principle such as
sustainability) we will never achieve the level of certainty and predictability
that stable markets require.

On that premise, this paper makes some observations on these demand
parameters and how they may change and develop into the future. They are
observations of not simply about the individuals in the market place but more
importantly the approach taken by financiers (and their professional advisors
such as valuers) who provide the financial underpinning for that demand.