Green factors gain in importance despite slow economic growth – GVA
Investors have continued to put increasing importance on sustainability factors when making decisions about property, as shown by the latest GVA ‘Green to Gold’ survey. The firm expects investors’ greater appreciation of the risks from regulation, occupier and investor demands to drive improvements in performance and to lead to “a more transparent and discerning market”.
During the acquisition process, almost half of the investors and fund managers surveyed put sustainability at the same level of importance as other deciding factors. This compares with 25% in 2010. GVA notes that the proportion of respondents who assign no importance to sustainability in their decision-making has fallen to 3% from 16% two years ago. When it comes to disposals, the trend is similar: 39% of those surveyed assign equal importance to sustainability and other factors, while the proportion giving it no importance has dropped to 11% from 19%. The firm points out that only a quarter of investors with a short-term horizon (less than three years) put sustainability at the same level of importance as other key factors, during acquisitions and disposals.
Despite the growing importance of sustainability in decision-making, almost half of respondents have only assessed around 25% of their properties against sustainability criteria. But a quarter of them have assessed more than 75% of their assets “and, as the investment horizon increases, so too does the proportion of properties assessed,” the firm notes. More than half of those surveyed said they always undertook pre-acquisition sustainability due diligence, which is up from 40% in 2010. Again, the proportion rises consistently with investment length, up to 75% for those with a long-term horizon (more than 15 years).
GVA believes that the integrity of the assessments carried out has improved during the past two years, in line with investors’ perceptions of the risks and opportunities. “We would expect to see the proportion of properties that have been assessed to increase significantly in the short-term as it is becoming part of the normal acquisition process,” it adds.
The sustainability factors that are considered most frequently by investors are high energy efficiency and a ‘badge’ such as a BREEAM or EPC rating. This is the case for all investment lengths. Those with longer-term horizons also give importance to brownfield sites, water efficiency and pollution levels.
GVA notes that green leases appear to have gained little traction since the firm’s 2008 report. “There is still a lack of understanding as to the benefits of such clauses to both occupier and landlord and more work is required with these parties as well as with the legal profession in order to make the most appropriate clauses the norm for the benefit of all,” it adds.
Only 10% of respondents said sustainability issues were ‘very important’ to their occupiers, down from 20% in 2010. GVA thinks this reflects the continuing poor economic outlook, and points out that 69% of those surveyed said their occupiers felt these issues were of ‘some importance’, a similar level to 2010 (67%). It notes, too, that the 2012 Occupier Satisfaction Survey indicates that 65% of occupiers view environmental and sustainability issues as important to their business. “Certainly for corporate occupiers and institutional investors we have seen sustainability issues move up the agenda since our last report,” the firm adds.
