The Impact of Energy Performance Certificates on the Rental and Capital Values of Commercial Property Assets: Some Preliminary Evidence from the UK

Franz Fuerst and Pat McAllister ()
Additional contact information
Pat McAllister: School of Real Estate & Planning, Henley Business School, University of Reading

Real Estate & Planning Working Papers from Henley Business School, University of Reading

Abstract: This paper focuses on the effect of energy performance ratings on the capital values, rental values and equivalent yields of UK commercial property assets. Of which a small number are also BREEAM rated, the study is based upon 708 commercial property assets held in the IPD UK Universe drawn from across all PAS segments. Incorporating a range of controls such as unexpired lease term, vacancy rate and tenant credit risk, hedonic regression procedures are used to estimate the effect of EPC rating. The study finds no evidence of a strong relationship between environmental and/or energy performance and rental and capital value. Bearing in mind the small number of BREEAM rated assets, there was a small but statistically significant effect on equivalent yield only. Similarly, there was no evidence that the EPC rating had any effect on Market Rent or Market Value with only minor effects of EPC ratings on equivalent yields. The preliminary conclusion is that energy labelling is not yet having the effects on Market Values and Market Rents that provide incentives for market participants to improve the energy efficiency of their commercial real estate assets.

Keywords: Energy Performance Certificates; commercial property; values (search for similar items in EconPapers)
Pages: 20 pages
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

Downloads: (external link)
http://www.reading.ac.uk/REP/fulltxt/0111.pdf (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:rdg:repxwp:rep-wp2011-10

Access Statistics for this paper

More papers in Real Estate & Planning Working Papers from Henley Business School, University of Reading Contact information at EDIRC.
Bibliographic data for series maintained by Marie Pearson ().