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Evaluating the Impact of Sustainability on Investment Property Performance

Author/s: Terry Boyd

Date Published: 1/01/2006

Published in: Volume 12 - 2006 Issue 3 (pages 254 - 271)

Abstract

There is general agreement that environmental and social features, particularly those improving health and productivity of workers, will impact on the functionality of investment property. However there has been a range of opinions on whether this impact can currently be quantified through a valuation exercise (Lutzkendorf and Lorenz (2005), Sayce, Ellison and Smith (2004)). This paper examines the current literature on the assessment of the impact of environmental and social characteristics on investment property. It adds to the debate on the need for advanced techniques to assess the triple bottom line and identifies the key performance indicators that require measurement. An appropriate methodology to assess the triple bottom line result is described. The paper also incorporates a triple bottom line case study assessment in Brisbane, Australia, that demonstrates the ability of the cash flow approach to assess the worth of environmental and social characteristics. In conclusion, the paper identifies the additional data and research required to assess the worth of investment property using a triple bottom line approach.

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Keywords

Cash Flow Valuation - Contingent Valuations - Environmental Benchmarks - Simulation - Social Indicators - Triple Bottom Line

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