One of my colleagues, Craig Straw, spoke at an Investment Property Forum conference at Nottingham Trent University a couple of weeks ago. The theme was whether sustainable buildings are gaining a competitive advantage in the current marketplace. I have blogged about the relative value tests on sustainable / non-sustainable buildings here.
My view was – and still is – that there is no visible or tangible price differential at the moment. If there is it is marginal. The latest IPD study published last week suggests that environmentally sustainable properties have underperformed their less “green” counterparts by 4% since the first quarter of 2008. The IPD UK Sustainability Property Index (ISPI) reveals that for the properties examined in the 11 quarters to Q3 2010, “less” sustainable properties delivered a cumulative total return of -10.8%, compared with -14.9% for more sustainable properties.
But the conference suggested a slightly different ‘take’ – that sustainable buildings have a competitive advantage over other properties. It seems that there may be some evidence that sustainable buildings might be emerging as more attractive. It is fair to say that they will have more protection against future obsolescence. Provided they differentiate green bling and truly sustainable features.
My personal view is that if this is a trend then this will start to feed through to values. But valuers do look back (we don’t ‘make’ a market – we just report on what is has done) and this will take some time to drip feed through.
My guess – as I pointed out at the HS2 conference a few weeks ago, is that it is the next generation (our kids and theirs) will start to drive this green agenda.
And perhaps the next generation are now getting into management / ownership positions where they can influence buying decisions.
What is also clear though is that building owners are having to find ways of making their property more attractive in a difficult market. Having green credentials is one of those factors which may well be able to help…