This study aims to review empirical research concerning the impact of green certificates on property cash flows and values, particularly from professional property investors’ perspective. The study uses discounted cash flows (DCF), a widely used property valuation method in income-generating properties, as a methodological framework. In this study, over 70 peer-reviewed studies were identified, categorized, and analyzed in the DCF framework. The reviewed studies indicated that certificates might increase the rental income and decrease the operating expenses, vacancy, and risks of a property. Together with the brand value of certificates, these enhancements should lead to an increase in property value. The number of studies has grown rapidly during the 2010s. Lately, studies have developed from asset-level to portfolio-level examinations. Although the reviewed studies found certification to be beneficial, the range of reported benefits was wide, and over half of the studies concentrated on U.S. commercial real estate markets, with a strong focus on LEED and ENERGY STAR certificates. From a property valuation perspective, applying these results to other markets and certificates might be challenging. Property values that fully reflect the environmental performance of properties would be a key to motivate mainstream investors to adopt sustainable property features.

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Purpose Contrary to the traditional technology project perspective, real estate investors see building-specific renewable energy (on-site energy) investments as part of the property and as something affecting the property’s ability to produce a (net) cash flow. This paper aims to show the value-influencing mechanism of on-site energy production from a professional property investors’ perspective. Design/methodology/approach The value-influencing mechanism is presented with a case study of a prime logistics property located in the Helsinki metropolitan area, Finland. The case study results are compared with the results of a survey answered by over 70 property valuation professionals in the Finnish real estate market. Findings Current valuation practice supports the presented value-creation mechanism based on the capitalisation of the savings generated by a building’s own energy production. Valuation professionals see benefits beyond decreased operating expenses such as enhanced image and better saleability. However, valuers acted more conservatively than expected when transferring these additional benefits to the cash flows of the case property. Practical implications Because the savings in operating expenses can be capitalised into the property value, property investors should consider on-site energy production when the return of on-site energy exceeds the return of the property. This enhances the profitability of on-site energy, especially in urban areas with low initial yields. Originality/value This is the first research paper to open the value-influencing mechanism of on-site energy production from a professional property investors’ perspective in commercial properties and to confirm it from a market study.

The increased smartness of the built environment is expected to contribute positively to climate change mitigation through energy conservation, efficient renewable energy utilization, and greenhouse gas emission reduction. Accordingly, significant investments are required in smart technologies, which enable the distributed supply of renewables and increased demand-side energy flexibility. The present study set out to understand the cash flows and economic viability of a real-life smart system investment in a building. The data collection process was threefold: First, a case building’s level of (energy) smartness was estimated. Second, the semi-structured interviews were held to understand the building owner’s motives for a smart investment. Third, the investment’s profitability was analyzed. The study found that the progressive smartness investment was technically feasible, and surprisingly also economically profitable. The original EUR 6 million investment provided over 10% return-on-investment and, thus, increased the property value by more than EUR 10 million. Moreover, the commercial partners also emphasized the strategic value gained by renewable energy and environmental performance. The high level of smartness with a good return on investment was accomplished mainly through new income generated from the reserve power markets. However, the results implied that financial profitability alone was not enough to justify the economic viability of a smart building system investment.