Sustainability emerges as a critical factor in property valuation
ESG factors are increasingly recognised as essential indicators of the long-term performance and risks of real estate investments. Roy van der Veld reports.
In the rapidly evolving landscape of real estate, sustainability has emerged as a critical factor in property valuation. This shift reflects a growing emphasis on environmental consciousness and energy efficiency.
Accurate valuation in sustainability provides insight into the value of real estate aligned with sustainability standards, enabling stakeholders to make strategic decisions that are both financially and ecologically sound.
Sociëteit Vastgoed, in collaboration with INNAX and ING Real Estate Finance, recently organised an event to explore the integration of sustainability and environmental, social and governance (ESG) factors in real estate valuations. The session included discussions and presentations emphasising the role of regulations and their impact on the market.
Integrating sustainability and ESG criteria into real estate valuations is a multi-faceted process that requires a holistic approach. After all, sustainability not only includes energy efficiency and environmental sustainability, but also social impact and governance practices.
Quantifying sustainability
ESG factors are increasingly recognised as essential indicators of the long-term performance and risks of real estate investments. Quantifying and qualifying sustainability and ESG criteria are critical to gaining a full picture of the value of assets.
Regulations around sustainability in the real estate sector are evolving rapidly, both nationally and internationally.
Standards such as ‘Paris Proof’ force real estate owners and investors to adapt their portfolios to stricter environmental and energy requirements. Regulations promote sustainable investments and greatly impact real estate values.
Investors and financial institutions are aware of the value of sustainable real estate and the risks associated with non-sustainable assets. This has led to a shift in investment priorities and increased demand for green buildings.
Assessing sustainability performance and ESG risks have become essential for maintaining market compliance and making strategic decisions regarding real estate investments.
Not starting on time means you are at the back of the line, due to a lack of capacity among installers and contractors.
ESG is no longer optional
Sustainability and ESG integration are no longer optional in valuations. DuPa 2.0, (which stands for duurzaamheidsparagraaf) was developed in cooperation with the NVB, the Dutch banking association. It is a standardised approach used to assess the sustainability of a building as part of any valuation. DuPa 2.0 has become an important source of information for banks, accountants and other stakeholders. Banks apply strict sustainability requirements to 2030 and 2050 from the European Banking Authority and via the EU Taxonomy.
Data-driven roadmaps are essential for implementing the right measures, considering factors like network congestion and labour shortages.
Accurate valuation of sustainability values provides insight into the true value of real estate assets and enables stakeholders to make informed decisions that are both financially and ecologically sustainable.
The transition to a more sustainable real estate market requires collaboration among stakeholders, transparency in reporting, and a proactive approach to regulation.
Roy van der Veld is strategic marketeer at INNAX
