CBRE and IPD have jointly launched an industry-backed initiative aimed at supporting the measurement of sustainable property investment.
Alongside the usual considerations of “quality”, covenant strength, and lease length, the sustainability characteristics of properties may now be impacting on asset value and investment performance.
As investors have to properly understand and manage the risks their portfolios face, they require asset-level information and valuers must now seek to reflect the relevance of environmental characteristics of buildings in their valuations.
From now on, CBRE’s valuers will include the collection of data on a limited set of environmental variables relevant to asset value and investment performance in the work they do on their regular site visits.
Discussions are now ongoing to determine how this initiative might be implemented more widely across the valuation community to significantly grow the amounts of environmental data that can be collected.
Once gathered, IPD will be able to analyse these variables at asset and portfolio level to augment the services they already deliver on investment performance. The initiative will provide the industry with a new and improved index of sustainable properties (ISPI – IPD Sustainable Property Index version 2.0, sponsored by CBRE, K&L Gates and the IPF) and a benchmarking service, the Eco Portfolio Analysis Service (EcoPAS).
CBRE and IPD agreed the list of variables which will initially underpin EcoPAS alongside representatives from five of the UK’s largest property investing institutions AVIVA Investments, Henderson Global Investors, HERMES, L&G and PRUPIM.
Ian Cullen, Founding Director, IPD said: “At IPD we have been working to bring sustainability questions into the core framework of investment performance measurement, now for more than five years. It is most gratifying that all sides of the industry are at this crucial moment acting together to give this initiative a real chance of success.”
John Symes-Thompson, Senior Director, CBRE said: “As valuers we already appreciate the need to be fully aware of these sustainability factors, and we have been delighted both to sponsor IPD and work with them, our clients and the RICS on producing this upgraded data-collecting initiative which we hope will become an industry standard.”
Bill Hughes, Managing Director, Legal & General Property noted that “Current metrics systems are designed to look at all aspects of ‘sustainability’ rather than the different and more narrow issue of ‘the investment implications of sustainability’. As such, they cannot do this very necessary job for investors in the way that EcoPAS can. In time, this critical project will bring the impact of sustainability upon investment performance into the Boardroom.”
Richard Jones, Managing Director UK Real Estate, AVIVA said that “This is an investor and valuer-led initiative aimed at solving a common problem, namely, capturing investment relevant environmental data at asset level for every property in an investment portfolio in a meaningful but pragmatic way.”
Ben Elder, Global Director of Valuation, RICS said “The role of the valuer is to reflect market value and this is an opportunity to improve market information. The open and enthusiastic engagement of all parties in this project emphasises its importance and relevance.”
Paul McNamara, Head of Research, PRUPIM said that “The EcoPAS concept offers an exciting route to gaining much needed traction in the currently mired area of asset level, investment-related, environmental metrics. It is absolutely not ‘another sustainability metric’. Indeed, it is not a sustainability metric at all – it is an investor service built by investors and valuers for investors and valuers and should be seen in that way.”