An overwhelming number of investors are looking at sustainable issues when assessing potential acquisitions according to the latest research by a leading property company.
With commercial property capital values down 20 per cent in little more than a year, investors are becoming increasingly aware an environmental approach to stock selection and asset management opportunities are becoming paramount to enhancing portfolio performance, according to GVA Grimley.
Its latest research into sustainable investment attitudes highlights that sustainability has a vital part to play and reveals that 82 per cent of investors are taking sustainability into account.
Green to Gold – GVA Grimley’s second survey of leading UK investors attitudes towards sustainable commercial property investment, shows 21 per cent, almost twice as many compared with last year, have measured the sustainability of their stock, although there is little evidence of investment appraisal calculations factoring in sustainability issues with only 25 per cent taking this into account in their investment appraisals.
With occupiers keen to secure favourable CSR credentials, investors are finally recognising the importance occupiers place on sustainability with 14 per cent claiming the issue to be ‘very important’ in 2007, lower than the 23 per cent in the current survey. Overall, a significant majority of 81 per cent of investors thought that sustainability issues would increase in importance to occupiers over the next twelve months.
Energy Performance Certificates, a new factor in the marketplace, do not appear to be a key driver of change for investors, with the results showing 13 per cent of respondents thought that EPCs would have a ‘major impact’, compared with 18 per cent in our 2007 survey. Those believing that there would be ‘no impact’ increased to 21 per cent in 2008, compared with just eight per cent in 2007. However, 80 per cent still responded with either ‘major impact’ or ‘some impact’ in the 2008 survey.
Miles Keeping, head of sustainability and director at GVA Grimley, said: “It is clear from the survey results that significant progress is being made and in the new investment environment, sustainability has moved up the agenda. Some may be surprised at this, but investors are clearly indicating that sustainability has a key role to play in enhancing portfolio performance, a view which we wholeheartedly endorse.
“Whilst there is little statistical evidence available to compare performance based on sustainability criteria and the effects of sustainability issues on property investment performance and values remain far from clear, the survey does however suggest that investors are most worried about the effect on obsolescence, with tenant retention the second biggest worry.”
Ian Stringer, regional senior director at GVA Grimley Birmingham, based in Brindleyplace, said: “In last year’s survey we were looking at thoughts and intentions. This year’s survey shows that investors have a broad view of what constitutes a ‘sustainable building’ and some of the intentions have translated into actions. Consequently we are slowly beginning to understand how sustainability can translate into value and how an environmental approach to stock selection and asset management can enhance portfolio performance.
“However there is still a lack of understanding in this area and more research is required so that investors can see that investing in the long-term quality of their property portfolio in a sustainable manner will generate an increase in value.”