Dearth of Data Affecting Property Valuations And Sustainability, RICS Warns

Property Leaders Ask Tenants for More Data on Energy Consumption

Landlords and industry leaders have urged tenants to share more property data to help increase the sustainability of the UK's commercial real estate stock and ensure accurate valuation. Speaking at the launch of a white paper setting out best practice for delivering sustainable property portfolios, co-produced by the Royal Institution of Chartere Surveyors and property management platform Building Minds, experts said poor tenant engagement with data was a barrier to boosting ESG credentials.

Panellists at the event, which included Cromwell Property, Moody's and architectural practice SOM, argued that occupiers, particularly retailers, were often reluctant to share information on energy consumption and turnover rent.

They said this was leading to "slow progress" on improving building performance, while surveyors argued it was also leaving a blind spot in on property values, with professionals finding it harder to generate accurate building values without comparative data.

One attendee shared an example of a client that held no energy consumption data, despite owning hundreds of properties leased to major European supermarket brands, such as Lidl and Aldi, while another revealed efforts to buy data from a tenant were rebuffed.

Andrew Knight, global AI, data and tech lead at RICS, stressed that surveyors needed more data to "change the sector for the better", adding that the profession had a lot of"missing data", including information as basic as the size of buildings.

He said: "My plea to the sector is, fundamentally, we need the data [...] If you are going to compare properties and take into account their ESG credentials, you need the data, not only of the property that you are valuing, but of those comparable properties.

"If we all want to deliver really high-performing, green building, we need to share that data to understand not just the energy consumption, but also the waste, the materials that are being used and all those other factors".

Knight added: "When we have that data, not only can valuers take account of that when they look at the valuation process, but also the market can, more generally, think about their bid offer prices and understand how to build that into valuation".

The white paper aims to provide an overview of sustainable development and its growing importance in the real estate and investment industry, with Cromwell Property, GRESB Data, JWA Properties and Schindler other contributors.

The first two chapters, focusing on the role of technology in the future of property, produced by Building Minds, and ESG's importance in valuation, written by RICS, were published last week. The remaining six will be published in the coming weeks, all with a different focus.

Delegates at the roundtable also stressed the appetite among European investors for green buildings, a trend backed up by Building Minds' ESG Leadership Insights Survey, which shows that 97% of property leaders believe ESG performance increases asset value.

Cecile Babcock, head of distribution for Europe at Cromwell Property, confirmed ESG was a "major focus" for pension funds, with this being driven by their members, rather than from the top down.

She added sustainable buildings, such as offices built out of mass timber, were also commanding rental premiums compared with those constructed from carbon intensive materials, such as concrete, as well as leasing up faster.

"A lot of the demand that we are see from occupiers is based on their own internal net zero targets. We are seeing more and more companies setting their own net zero targets and their internal governments stipulate that they occupy spaces that work towards those goes".

"At a certain point, if you aren't following sustainable investment pieces, you won't have any occupiers, you might not be able to get financing for that [...] and, at a certain point, they become obsolete.

"There is an immense amount to be done, there are loads of opportunities, it just takes a bit of looking into it and takes a bit of education as well".

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