Measuring the financial performance of green buildings in the UK commercial property market

Abstract

Purpose -Given the centrality of data and information to the evaluation and operation of policies to reduce carbon emissions, the purpose of this paper is to investigate potential sources of data within in the UK on the commercial building stock in terms of its physical characteristics, financial performance, energy consumption and environmental performance. The research aimed to increase understanding of the potential sources of data on property attributes, financial performance and energy use or environmental performance, with a particular emphasis on evaluating their strengths and weaknesses in terms of scope, quality, availability and practicability. Design/methodology/approach -This is an explorative, qualitative study that uses semi-structured interviews conducted with 11 different data holding organisations. Findings -Whilst public sector organisations have the potential to provide the data required for large samples, there are major barriers to obtaining and linking the different databases. Data on the three key data elements (prices, attributes and environmental performance) tend to be split between different governmental agencies. There are likely to be substantial problems (and costs) of linking the databases due, in particular, to definitional differences. There is a conflict between government's public good objective of increasing knowledge of the environmental performance of buildings and its objective of maximising revenues from the commercial exploitation of data. Since the private sector organisations that hold data are commercially motivated, the samples that they have gathered are largely client driven and, consequently, tend to be partial, particular, proprietary, private and product-related. Originality/value -Since pricing studies are central to evaluating the effectiveness of eco-labelling in property markets, this paper improves one's understanding of the role of information and data barriers to improving the allocative efficiency of commercial property markets.

Is energy performance too taxing?

“…In Europe, the Energy Performance in Buildings Directive has moved mandatory energy performance disclosure to the forefront of the energy and climate change policy agenda (Berry et al, 2008), requiring all buildings at construction, sale or rent to have certificates providing information about their energy performance, through a rating based ultimately on an assessment of CO 2 emissions. The Energy Performance Certificates (EPCs) which are the result of this policy are intended to inform potential buyers or occupiers about the intrinsic energy performance of a building (Fuerst et al, 2011). The principle underlying the Directive is to provide accurate and standardised information relating to inherent building energy efficiency to the market place, in order to change consumer behaviour and permit prospective owners, occupiers and tenants to recognize and integrate energy efficiency characteristics in determining value (Davis et al, 2015).…”

Rental price and sustainability ratings: which sustainability criteria are really paying back?

“…Higher rated buildings may have been located in higher value locations within urban areas and/or have superior construction and/or specification. For instance, the only quality variable included in one of the models is condition and it is notable that, when it is included in the model, the estimated premiums drop substantially (Fuerst et al, 2011, Fuerst and McAllister, 2011a, Kok and Jennen, 2011.…”

Risk Perception and Vulnerability of Value: A Study in the Context of Commercial Property Sector

“…The feasibility and quality of empirical research into the effect of environmental input on the output of economics of real estate value depends heavily upon access to comprehensive and disaggregated data. as Byrne (2005) andfuerst et al (2011) indicated, despite several agencies holding data for aggregated market trend and index purposes, this data is not available or sufficient for the analysis of individual locations, especially for detailed and specific environmental studies in the context of commercial properties. research also suggests that even when data is available the impact of flooding on market value is difficult to assess from the current market due to causes such as imperfect information, risk perception and differences in availability of insurance (Lamond et al 2010).…”