REVALUE Recognising Energy Efficiency Value in Residential Buildings Roundtable in Brussels Rolf Bastiaanssen and Maarja Meitern (Bax & Company), Juan Francisco Palacios Temprano (Maastricht University), Corne Koppelaar (Savills) 22.06.2018 REVALUE ׀ www.revalue-project.eu
• To share with you key findings of the empirical research • To discuss with you – as experts in the field – the inferences of the work: does it chime with your ‘view of the world’? What findings are most likely to be useful to the stakeholders and policy makers? • To discuss your views on some specific questions: • What does the REVALUE project tell us in terms of the motivations of investment owners and their business case for retrofits? Purpose of the Pu • Is there a need to better understand the residential sector as a series of different markets (owner-occupied; social rented; private Workshop Wo rented)? • Is the business case sufficiently strong to drive improvements at the speed required to meet climate change goals? • If not, what else can/should be done to facilitate faster change in the rented sector? • what do the REVALUE findings tell us about what works: coercion or grant?
Who is in the Team Co-funded by the Intelligent Energy Europe Programme of the European Union
ASSET OWNERS Affordable and social housing providers in 4 European countries in ~200.000 dwellings Who are the REVALUE LENDERS Banks and other institutional participants? investors involved in specific case study projects and/or finance sector representatives VALUERS Valuation professional bodies who advise on the value of assets for various purposes including, investment, financial reporting and secured lending
ASSET OWNERS Calculation of investment strategies and Regression Analysis on links between EE and Value~120,000 dwellings REVALUE LENDERS Methodology Individual interviews and involvement in the individual investor case study on sustainability VALUERS Expert discussion groups and individual interviews with valuers in 4 different countries
A. Review of academic literature on the links between value and energy efficiency B. Quantitative study on the observed links between the energy efficiency of dwellings and their reported values REVALUE C. Examination of Building Typologies to establish cost/value effective renovation strategies Wo Work Streams D. Interviews and Round Table discussion groups with Registered Housing Providers, valuers, financial institutions to better understand how EE in buildings is impacting investment/lending decisions and market values E. Case studies with selected housing providers on sustainability planning
REVALUE Roundtable in Brussels Energy Performance and Valuation of Social housing in Europe: a quantitative analysis Juan Francisco Palacios Temprano (Maastricht University) REVALUE ׀ www.revalue-project.eu
Is energy efficiency incorporated in expert opinions of value?
Our approa oach: Re Regression covering 4 countries, 10 pr provide iders, ~120.000 unit units, mo mostly ly af affordable housing RI RICS ‘asset’ valuations, controlled fo for typical hedonic characteristics (a (and mod odernisation on)
Energy Efficiency is not a dominant factor of value % Explained of final valuation 99% 98% 88% 88% 79% 78% 77% 77% 76% 73% 73% 72% 70% 67% Re Reported values of dwellings remain 64% do domina minated d by tradit aditio ional nal value alue factors. fa 34% Location Location and Size Location, size, and Location, size, hedonics hedonic and energy efficiency NL Portfolio 2015 UK Portfolio <2013 North West England Portfolio 2015 London Portfolio 2016
The good is getting better the bad is getting worse… Evidence from Amsterdam area 8% Average Value Differentials in Dutch Market * 6% * 4% In some In e locations, en ener ergy effici cien ency cy 2% is inc is increas asing ing in in im impo portanc ance % Label A La La Label B Label C La Label D La Label E La La Label F La Label G In NL over In er 5 yea ears, green een prem emium -2% and and br brown n dis discoun unt inc increas ased -4% * -6% -8% 2010 2015
… And in Evidence from North West England 0,3% Average Value Differentials in 0,2% North West England 0,1% Results suggest presence of brown Re 0,0% dis discoun unt in in the he Eng nglis lish h mar market Label A-B Label C Label D-E-F -0,1% -0,2% -0,3% -0,4% * -0,5% 2012 2015
What is the impact of energy components on assessed valuations? Evidence from England 8% Average Value Differentials England 7% * 6% 6% 5% 4% 3% Double glazing has a significant Do t 2% ef effect on assessed valuations 2% 1% 0% 0% 0% d e g l r r r d ) ) m r a e d w e e e i m n e l t b l l e t l o i e i t e i o z a a o o t m n S M n a ( s e r b b u ( y f l r h -2% i -1% -2% G T o e s r i r r b o m t e n e -2% e r m a b o t e o l e a b l l i m l o l i F e s h o u a r C h i w o b e T e D e m g k s a g -4% c a m r a a G o r b I o t S t s S a g -5% m -6% o r F Wall Wa Gl Glazing Windo Window Hea Heating System em Type Boiler Ty Insulation/ In Frame Fr co construction
REVALUE Roundtable in Brussels The impact of Energy Efficiency on residential real estate values: findings from Round Table discussions with Valuers Sarah Sayce (RICS) Presented by Corne Koppelaar (Savills) REVALUE ׀ www.revalue-project.eu
Th The v valuer’s r role i is t to r reflect t the • 6 workshops with (mainly) RICS registered valuers ma market – no not to in influe luenc nce it it • Semi-structured discussions over 2 hours using building But they may give strategic advice Bu details as prompts wh which influences investment and le lending nding de decis isio ions ns • Explored practice regarding EE and the relation to value Th The RI RICS p provides gu guidance t to valuers va rs as to due diligence in relation to to sustainability; this has been en enhanced ced during the e per eriod of the e RE REVALUE UE project
Key finding 1: EPCs Valuers have found little evidence that EPC-ratings impact on the • market value of residential assets Confidence in EPCs varies between countries. Nowhere do they • play a key role in market behaviours Th The n new M Minimum E Energy E gy Efficiency y Values are driven by traditional factors • St Standards (MEES) S) regulations in the UK Where demand outstrips supply EE gets pushed down the agenda • ar are lik likely ly to im impac pact some in investment even further re returns and and in investor strategy Ho How it will ‘play out’ rem emains to be e Key finding 2: But some EE factors are priced in seen se The ‘normal’ specification continues to rise – double glazing in UK • (maybe triple in Germany) and effective heating systems are Other Ot er countries es also introduce ce similar expected regulations re These are not specifically seen as EE • A brown discount may apply if they are missing • EU policy remains linked to th EU the EP EPC But some new/innovative technologies are not trusted or • understood
Key finding 3: The nature of the Instructions is critical Many clients still do not ask questions about EE – nor are they • prepared to pay for additional work A previou A ous survey for or RICS ICS showed ed It is easier to reflect EE in ‘investment worth’ but this needs rents • that th t most t valuers have never been to adjust in response to investment – for SHP this often cannot be instruc ins ucted d to cons nside ider sus ustainabilit ainability in in the heir ir repo ports done. Banks are beginning to ask valuers for comment - and there is • The n Th new R Red B Book p k places a a evidence that this may increase st stronger requirement on valuers to investig in igate and and store da data. a. Key finding 4: To build in EE needs greater knowledge of technologies – and more data Th The ‘ ‘Lenders’ p project s suggested A valuation is not a building survey or an energy audit • banks link bank link the heir ir ‘lif lifestyle le analy analyses’ In Spain many valuers are engineers by training – elsewhere they • to to energ rgy outgoings are not The Ee Th EeMAP pr project ma may le lead ad to A more ‘forensic’ examination of EE requires better data, • ea easier er finance ce for EE integrated professional services – and more fees refurbishment re
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