Design Economics for the Built Environment: Impact of Sustainability on Project Evaluation

Chapter 17Sustainable Design Economics and Property Valuation: An Industry Perspective

Barry Gilbertson, Ann Heywood, Ian Selby and John Symes-Thompson

17.1 Introduction

This chapter will explore the relationship between sustainable design and key factors influencing property values from a UK practitioner’s perspective. Such factors include users, buyer or tenant preferences, rental income, yield, taxation, operational costs, uncertainty and risks, sustainability drivers and whether in future there will be a premium for the ‘most sustainable’ design which reduces the ‘environmental cost’. There will be some reflection on the impact of these factors and how property value is affected. After introducing the topic of sustainable design economics and the relationship with property valuation, the potential creation of a two-tier market for sustainable buildings is discussed, followed by a consideration of the difficulties of data collection, the impact of Government intervention (and relevant legislation and regulation) and finally the way that the valuation process is changing to reflect values of assets incorporating sustainable design economics is examined.

17.2 Sustainable design economics and property valuation

Sustainability has become a mainstream property investment and valuation topic in the UK largely as a result of higher energy costs but also because increasing government legislation on carbon reduction, minimum building standards and energy efficiency have created ...