RICS to 'Value' Sustainability

Online, September 9, 2009 (Newswire.com) - RICS Americas, a division of the Royal Institution of Chartered Surveyors, the world's leading membership organization for professionals in property, land, construction and related environmental issues, announced today that RICS globally is issuing an Information Paper on Sustainability and Commercial Property Valuation. Effective from Tuesday, September 15, 2009 the paper aims to heighten awareness and therefore valuers' working knowledge of sustainability in order to further advance awareness of its potential to impact on the valuation process.

This is an important step toward embedding sustainability as a core consideration in the valuation process.

The paper outlines ways in which sustainability can be defined; how a building's green credentials may be assessed and how such characteristics might be reflected within a valuation - whether that be quantitatively or qualitatively.

Sustainable characteristics that are highlighted in the paper include the build quality and life cycle, the type of building materials used, the health and human performance of a building, building services such as air-conditioning, energy efficiency, and waste management, as well as location and accessibility considerations and the impact of regulation, tax and financial incentives.

In terms of reflecting these aspects of a property in the valuation the paper encourages valuers to analyze comparable rental evidence in the light of sustainability. Issues identified for particular consideration include requiring the valuer to reflect upon the potential impact of sustainability on rental growth prospects, how sustainability factors will accelerate or temper obsolescence rates, and the risks of weak credentials on tenant retention rates and the speed of re-letting.

Commenting on the paper, RICS spokesperson Philip Parnell, Chairman Valuation Sustainability Working Group, said:

"The valuer has a clear responsibility to ensure that a valuation reflects all material factors that may influence value. Sustainability is one of the factors that is rapidly gaining in importance. Markets appear to be moving towards a requirement for greater recognition of sustainability issues, with the evidence suggesting that buildings that fall short of the prevailing market expectations will be increasingly at risk of accelerated obsolescence.

"Accordingly, it is becoming more and more important that the valuer is conversant with the issues and can reflect them in the advice given. Hence the need for clear guidance from RICS."

To put sustainability firmly on the agenda, the Valuation Information Paper will act as a stepping stone to more formal guidance which will be included in the Red Book when it is next reprinted in January 2010. The issuing of this Valuation Information Paper is part of RICS' wider commitment to pursuing the objectives of the Vancouver Valuation Accord, signed in 2007.

Notes for editors:
Valuation Information Papers are issued periodically by the RICS Valuation Group Board. They are designed to address important areas of valuation practice and respond to issues where clarification or expansion of best practice is required. They do not form part of the RICS Valuation Standards. After publication of a Valuation Information Alert, any changes to guidance which are necessary will be published in the subsequent annual Red Book edition.