Sustainability in Real Estate Analysis and Valuation
Ion Anghel and
Alexandru Richard Ionescu
The Valuation Journal, 2011, vol. 6, issue 2, 60-75
Nowadays, we have substantial evidence that confirms the more and more important impact of sustainability upon real estate valuation. The concept of sustainability impacts the activity of the valuers, who must take into consideration the fact that vacancy rates and operation costs could be more reduced in the case of green buildings. Also, the expected increase of the sustainability recognition will lead to a reduced capitalization rate when selling a real estate and, implicitly, to a higher resale value compared to the traditional buildings. In Romania there is an incipient green building market, considering that there are only five green buildings, which hold a BREEAM certification and are located in Bucharest. On the other hand, the perception of the professions in the real estate industry does not always reflect reality: 41% of the architects wrongly consider that the green buildings' cost is 11-20% higher compared to the traditional buildings' cost, and 26% of the architects believe that its level is even over 21% higher. There is an important number of reasons for the immediate and rigorous consideration of sustainability in the valuation practice, but also in the "toolkit" of the other professions in the real estate industry.
JEL-codes: A13 Q01 Q51 R31 (search for similar items in EconPapers)
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Persistent link: https://EconPapers.repec.org/RePEc:vaj:journl:v:6:y:2011:i:2:p:60-75
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