Paul McNeive: Sustainability is moving centre stage in property valuations

The worst possible option for the owner of an older office building with a poor ESG rating is to do nothing

Paul McNeive

The sustainability of a building, or its environmental, social and governance (ESG) credentials was driven to the top of the property agenda by the requirements of tenants. Developers and investors reacted quickly and now a property’s ESG rating is a crucial part of its value.

But how does one incorporate sustainability into the valuations required by banks and investment funds? I spoke with Lena Clarke, a chartered surveyor and lecturer at TU Dublin, and she told me that valuation techniques have evolved since 2020 and reflect the mandatory valuation standards in the RICS Red Book 2022, which incorporate sustainability.