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Property valuation, Linking energy efficiency of buildings and property valuation pratice (IMMOVALUE)

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Energy performance certificates (EPC) are available in all European countries and provide comparable information on the energy performance of properties. As one of the largest single operating expenses, energy costs are usually an important factor concerning the overall property value. Energy costs therefore deserve great attention from banks, valuers and property owners. Additionally, constantly rising energy prices amplify the need to focus on energy efficiency and a life-cycle perspective of the property in the future. This background given, the project aimed at integrating energy efficiency and partly other sustainability aspects into property valuation standards. In a first step, the project team developed a solid “modified” valuation approaches. In a second step, the approaches have been checked through a comprehensive expert reviewing process with direct involvement of the relevant association for property valuation, the Royal Institute of Chartered Surveyors (RICS) or The European Group of Valuers Association (TEGoVA). In the third step, the newly developed standards for property valuation have been disseminated to the market.

Results

  • IMMOVALUE has developed well working modified valuation approaches that ensure the integration of energy efficiency, life cycle cost assessment (LCCA) and partly also other sustainability issues into standard property valuation approaches. These modified valuations approaches have been tested in 15 pilot projects taken from the real market and have been reviewed by well known experts.
  • The project's results and methods have interested the European Group of Valuers' Association (TeGoVA) which is the publisher of the European Valuation Standards (EVS). The project has then contributed to the preparation of a Guidance note for the integration of energy performance and LCC into EVS which should be published in autumn 2010.
  • The project was able to gain high awareness among experts as well as among real estate market players such as valuers, developers and customers. This is the result of a successful dissemination campaign including among others the participation at important conferences, estate fairs and platforms, face to face meetings, publication in national specialised literature, press releases and newsletters in real estate media.
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Lessons learned

  • Professional real estate stakeholders are increasingly interested in the (possible) impact of energy performance of buildings and life-cycle costs on property values. The tests performed within IMMOVALUE have shown that the value impact of energy efficiency is in general currently limited. Only for very energy efficient properties a value premium of 5 to 10% could be detected.
  • This project has shown that the broad application of these new valuation approaches is hindered by the lack of data on energy efficiency and LCCA. Valuers are missing indeed reliable data bases on reference/comparable buildings as well as data on energy efficiency and operational costs and basic knowledge on energy efficiency.
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Partners and coordinator

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Contact

KPMG Financial Advisory Services GmbH
Austria
Contact point: 
Name: 
Sven Bienert
Tel: 
+43 (512) 599 96-5321

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In brief

Duration:
01/09/2008 to 30/04/2010
Contract number: 
IEE/07/553/SI2.499204

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