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Conference - European Real Estate Society (ERES)
Panel - Climate change and property’s green agenda: fiddling while the planet burns?
This year’s ERES property research conference, which was attended by over 400 delegates, was held at Cass Business School in the City of London from the 27th to 30th June. The conference featured a panel session on real estate sustainability organised by the Oxford Institute of Sustainable Development, Oxford Brookes University and sponsored by King Sturge. The Panel had a controversial focus on whether property academics, practitioners and other stakeholders were ‘fiddling while the planet burns’.
Dr Paul McNamara, Head of Property Research at PruPIM, opened the session by asserting that over the last five years property investment professionals have progressed from a state of complete denial to the recognition that sustainability issues will have an impact on values and performance. McNamara believes that talented property researchers can now make a vital contribution by assessing what that impact will be.
Dr Tim Dixon (see presentation slides PDF), Professor of Real Estate and Co-Director of the Oxford Institute for Sustainable Development and Construction Management at, Oxford Brookes University, emphasised that although research on sustainability for buildings and property has come a long way, there remain some crucial issues which are holding the business backpreventing step-changes in knowledge and understanding. In particular there is a need for better data at a building level and clearer definitions on what sustainability means for us all, even in a purely environmental sense. Do we want to be a low carbon, zero carbon, or carbon-neutral society? The implications of sustainability for property valuations have not yet been clearly identified, for all the good work recently done by the IPF, and the whole debate on the relative merits of retro-fitting versus new-build has been little exploredrelatively under-researched, especially in relation to developed and developing countries. However, research was only part of the answer: others in society (government, individuals and business) had to share responsibility and change behaviour to reduce man-made climatic impacts.
Dr Richard Reed, Senior Lecturer in Property, University of Melbourne, described how sustainability is gaining importance for Australian property professionals, in part because of the dramatic climatic effects now emerging in the country. The lack of rainfall in many populated areas has led to a premium on water efficient homes. Even here, however, it is doubtful that an appropriate impact on property values has yet reached the market.
Miles Keeping (see presentation slides PDF), Research Partner, King Sturge also sees sustainability issues starting to have a real impact for UK property investors and occupiers, with the Meadowhall shopping centre near Sheffield likely to have lost £4m of retail sales each day during its recent closure due to flooding. The implications of this kind of event will have to be taken on by investors, perhaps through an ‘IPD for Good’ in parallel with the current FTSE for Good, since all property investors want to beat IPD benchmarks.
But like Dixon, Keeping believes that there are crucial research issues that first need to be tackled. For investment it is essential to know what constitutes a sustainable building, and the relative merits of environmental and social sustainability. How do sustainability concerns weigh against the fiduciary duties of fund managers to maximise profits? What is the real demand for sustainable buildings from occupiers rather than the lip-service they pay to sustainability in surveys? Perhaps most importantly, there is now a need to concentrate on the way buildings are used rather than the way they have been built.
Finally, Philip Parnell, Valuation Partner at Drivers Jonas, emphasised the positive work being done by valuers around the globe to account for sustainability issues within the valuation process, particularly through the Vancouver Valuation Accord. But ultimately the demand for sustainable buildings can only come from users and the valuation profession can only reflect that as and when it happens.
For further information contact:
Oxford Brookes University
Oxford Institute for Sustainable Development: www.brookes.ac.uk/schools/be/oisd/!
Details of speakers