Valuers Go Green!
"Beautiful British Columbia's" City of Vancouver provided an apt environmental setting and venue for an international Valuation Summit on "Sustainability" on 2nd March 2007.
The summit was attended by more than 200 top property valuers from across the world including representatives from the Royal Institution of Chartered Surveyors (RICS) and the Appraisal Institutes of Canada and USA. The Polish Federation of Valuers' Associations (PFVA) and The European Group of Valuers' Associations (Tegova) were represented by Chris Grzesik, International Representative, PFVA and Managing Director, Polish Properties.
The conference served as a wake up call to valuers worldwide to educate themselves on the value benefits of sustainable development and green buildings. Failure to do so would put them at risk of loosing the competitive edge in the property advisory sector.
Distinguished speakers included the Premier of British Columbia, the Hon Gordon Campbell, Dr Charles McNeil of the United Nations Development Program, Stephen Williams, Past President RICS, Professor Sarah Sayce of Kingston University and Paul McNamara, Director of Prudential Property Investment Managers. All emphasised the inevitable march towards sutainability in property development and the role valuers have to play in the process. Thus businesses and communities around the world are more likely to invest in sustainability if that investment is financially viable. The primary vehicle for determining financial viability or security is the business case which valuation provides.
The summit organiser, Chris Corps summed up the position today as follows: "if an investor has the choice of buying a "green building" or a conventional one, all other things being equal he will buy the green one".
Dr McNeill made the case for sustainable development by a series of stark statistics. He observed for example that if the global population were to attain the standard of living of the average American, 5 planet earths would be needed to accommodate it.
Sustainability has been defined by the UNs Bruntland Commission's report (1987) as development that meets the needs of the present without compromising the ability of future generations to meet their own needs. By way of further explanation the UN has observed that the "interdependent and mutually reinforcing pillars of sustainable development are economic development, social development and environmental protection".
The summit coincided with a recent RICS publication titled "Green Value" (www.rics.org/greenvalue). This was a joint collaborative study by several major bodies in British Columbia. The study reviewed over 300 technical papers, books, articles, news releases and other media items with indexed links to sustainability and value and undertook case studies of various buildings in Canada, USA and the UK.
The report which defines Green Buildings "as those that use resources efficiently, reduce waste and provide superior indoor air and other qualities" claims a clear link beginning to emerge between the market value of a building and its green features. As the report states "Not only are green buildings good for the environment, provide healthier places to live and more productive places to work, they can command higher rents and prices, attract tenants more quickly, reduce tenant turnover and cost less to operate and maintain".
The study found that the green building industry and others may be failing to get the message across that the main beneficiaries are occupants.
For example because they are easy to measure, a lot of attention has been focused on energy savings. However these are usually less than 1% of business operating costs. By comparison, total annual real estate expenses are usually 10% of such costs whilst staff costs can be as high as 85%. This means that the biggest return on investment should arise when green buildings improve business productivity. Instances were found of green features improving productivity, but neither owners, developers, appraisers nor the green building sector, fully value or communicate this advantage.
The high point of the summit was the signing of a "Vancouver Valuation Accord" by valuation bodies and other organizations. The Accord is an agreement to work on the interrelationship of sustainability and value. It is a commitment to review sustainability and valuation, including education, standards and practice with the aim of improving understanding of their relationship.
The Accord is expected to report back in 2010.