Valuing sustainability part 1: a review of sustainability consideration in valuation practice
| DOI | https://doi.org/10.1108/JPIF-02-2022-0013 |
| Published date | 04 March 2022 |
| Date | 04 March 2022 |
| Pages | 398-410 |
| Subject Matter | Property management & built environment,Real estate & property,Property valuation & finance |
| Author | Georgia Warren-Myers |
Valuing sustainability part 1:
a review of sustainability
consideration in valuation practice
Georgia Warren-Myers
Faculty of Architecture, Building and Planning, The University of Melbourne,
Melbourne, Australia
Abstract
Purpose –The research investigates valuers’understanding of the value of sustainability in property and its
consideration in valuation practice. The paper explores the extant research that has examined valuers’
perceptions of the relationships between sustainability and market values, sustainability measurement, value
relationships and the standards and guidelines released industry bodies.
Design/methodology/approach –This paper, part 1 of 2, reports the current state of play of valuation
research in the consideration of sustainability in valuation practice and the role of industry bodies in the
guidanceregarding sustainabilityconsideration in valuation. The second paper provides the next rendition of a
longitudinal study examining valuation practice in Australia.
Findings –The paper provides an overview of the evolution of the considerationof sustainability in property
over the past two decades. Providing insights of how the property sector, its markets and valuation
professionals have responded to answering the questions of: what is the value of sustainability? Whilst earlier
publications both industry and academic publications alike focussed on the normative aspects of how
sustainability should affect value, more recent research starts to ascertain the implications of sustainability on
property values. Despite industry bodies providing information, education, guidelines and standards, it would
seem that valuers in their practice are still grappling with the challengesof understanding the rapidly evolving
area of sustainability, environmental, social and governance and climate risks in valuations.
Research limitations/implications –The paper does not present as an authority on all research that has
been conducted to date, it provides an overview of the evolving nature of both academic research and industry
consideration of sustainability, particularly in a valuation context. This provides the background for Part 2.
Practical implications –The broader agenda of net zero, climate change, mitigation and carbon
requirements, whether driven by market forces or government legislation, are generating substantial changes
in property markets, as investors reconsider their positions and model the implications of carbon emissions on
their bottom lines. Government policies appear to have a considerableinfluence over market behaviours, which
filters through to stakeholder decision-making. However, despite government policies, clear market signalling
and industry body guidance on valuing sustainability, the content and depth of sustainability consideration in
valuation are still limited.
Originality/value –The paper provides an overview of the last decade of research into the value of
sustainability and the evolving nature of information and guidance for valuers to identify, evaluate and
consider sustainability in valuation.
Keywords Sustainability, Valuation, Market value, Valuation standards
Paper type Literature review
1. Introduction
The sustainability agenda in the built environment continues to gain traction due to
increased awareness of the implications of climate change and the need to consider
substantial mitigation approaches to minimise global warming to avoid the most severe
consequences. The IPCC (2021) has stated in their recent report that, regardless of current
attempts for mitigation, global surface temperatures will continue to rise till 2050; and unless
substantial reductions in emissions are achieved, global warming will exceed þ28C within
the century. The urgency of emissions mitigation required as noted by the IPCC has seen
JPIF
40,4
398
The author would like to acknowledge the assistance of the Australian Property Institute for assistance
in the distribution of a link to the survey instrument in their member newsletter.
Received 10 February 2022
Revised 15 February 2022
Accepted 15 February 2022
Journal of Property Investment &
Finance
Vol. 40 No. 4, 2022
pp. 398-410
© Emerald Publishing Limited
1463-578X
DOI 10.1108/JPIF-02-2022-0013
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