Summary Report

This report summarises the main results of the Intelligent Energy Europe project IMMOVALUE. It includes some background information on the importance of linking property valuation and green/energy efficient building issues in general and on existing studies in this field is given, furthermore a condensed description of the modified valuation approaches for the income approach as well as for the sales comparison approach and the cost approach, and finally the results of selected case studies.

IMMOVALUE Summary Report, PDF 1,2 MB

Main results of IMMOVALUE

  • IMMOVALUE offers well working modified valuation approaches that ensure the integration of energy efficiency, LCCA and partly also other sustainability issues into property valuation.
  • The modified valuations approaches have been tested in 15 case studies taken from the real market and have been reviewed by well known experts. Therefore they represent the state of the art with respect to linking property valuation with energy efficiency and sustainability not only in a descriptive way but also in quantitative terms.
  • IMMOVALUE results and methods are reflected in the actual Guidance Note for the integration of energy performance and LCC into EVS which has been prepared by the European Group of Valuers’ Association (TEGoVA) which is the publisher of the European Valuation Standards (EVS).

Draft of TEGoVA Guidance Note, PDF 170 kB

Main Lessons Learnt

  • During the last years the interest of real estate industry in energy efficiency and other sustainability issues increased in general. Several recent studies in the US in Europe confirmed a certain willingness to pay for environmental features. There is, however, still a considerable gap between the general acknowledgement of importance and the practical integration of energy efficiency and LCCA into valuation practice. At the moment practically all valuation reports deal with these issues only in a qualitative, descriptive way and are not able to reflect the issue in quantitative terms.
  • The IMMOVALUE project came in right time to contribute to bridging the gap between theoretical importance and the practical application in integrating energy efficiency, LCCA and other sustainability issues into property valuation by offering modified methodologies which are based on standard valuation approaches but reflect energy efficiency and LCCA in a more transparent and quantitative way.
  • By means of 15 case studies (property valuations) IMMOVALUE demonstrated that the modified approaches work well and deliver reasonable results. The value impact, however, is in general limited. Only for very energy efficient and sustainable properties would come up with a premium of 5-10%. Higher value impacts depend on an increased market sensitivity towards energy efficiency and sustainability (i.e. if the markets do not only account for cost advantages but account also for better comfort levels, for better productivity etc. to be achieved in sustainable buildings).
  • In valuation practice it is the lack of data that sets limits for broad application of the modified valuation approaches. In most cases data on energy efficiency, LCCA and other sustainability aspects is very vague. Although prescribed by law EPC are still missing for many valuation processes, LCCA is practically not available at all. For a broad application valuers need reliable data bases on reference buildings (comparables) including not only data on building site, rent level and building equipment but also on energy efficiency and different operational cost categories. In addition valuers require training making them capable to interpret energy benchmarks, results of LCCA and other technical characteristics of the building in a correct way.