Sustainable property investment: valuing sustainable buildings through property performance assessment

Authors: Lützkendorf, Thomas; Lorenz, David

Source: Building Research and Information, Volume 33, Number 3, May/June 2005 , pp. 212-234(23)

Publisher: Routledge, part of the Taylor & Francis Group

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Abstract:

How can the property and construction industry meet the current and forthcoming challenges posed by sustainable development? The perception of property as a commodity is changing to emphasize building characteristics and performance as major determinants of a property's worth and market value, thereby requiring new ways of assessing worth and value. Commercial property valuation represents a major mechanism that could allow environmental and social considerations to be more closely aligned with economic return. In particular, the rationale and initial considerations are explored for the incorporation of environmental and social issues into valuation theory and practice. A system that allows for the description, measurement and assessment of various aspects of building performance is conceptualized. Possible sustainability key performance indicators are identified and the basic principles for assessing performance along the life cycle of buildings are explained. It is argued that the environmental and building research community has a central role in determining a standardization of terminology and improving the exchange of ideas between financial and environmental research disciplines. Then, the simultaneous consideration of economic, environmental and social issues can provide a more profound knowledge about property characteristics and associated performance. This will create a more robust assessment approach and lead to greater reliability of assessment results. Finally, the opportunities afforded by the synergies between sustainable design and risk management are identified and implications for property risk assessment for lending and insurance purposes are highlighted.

Keywords: environmental performance; key performance indicators; life cycle analysis; life cycle costing; post-occupancy evaluation; property valuation; risk assessment; sustainable buildings; sustainable development; trends

Document Type: Research article

DOI: http://dx.doi.org/10.1080/09613210500070359

Affiliations: 1: Department of Economics and Business Engineering, Sustainable Management of Housing and Real Estate, Kaiserstrasse 12, University of Karlsruhe (TH), Karlsruhe, D-76128, Germany

Publication date: 2005-05-01

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Sustainable property investment: valuing sustainable buildings through property performance assessment

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