RICS calls for resilience to climate change to be factored into building valuations
The resilience of buildings to climate change should be factored into building valuations in a move aimed at ensuring Britain’s buildings are not rendered obsolete by rising temperatures, a new report has found.
A report by the Royal Institution of Chartered Surveyors found that many buildings will suffer climatic obsolescence by the 2080s because “they will no longer be capable of providing comfortable internal environments within the constraints of their existing central plant and building design”.
The research, which examined the Display Energy Certificates (DECs) of 64,803 buildings, found most building types would see sizable drops in the cost of heating, due to a warmer climate, but that much of these savings would be offset by the rising electrical costs from cooling as the UK’s climate was expected to rise by up to 5 °C.
This was most pronounced in offices and warehouses, which will experience substantial extra demand for cooling while heating charges become negligible, the report found.
It went on to recommend: “Resilience to climate change will affect the financial performance and lifecycle cost of a building, and should be factored into valuation methods.”
Gareth Roberts, director of consultant Sturgis Carbon Profiling and author of the report, said cap rates, which building owners use to calculate the value of their properties, could be changed by up to one percentage point for greener buildings vastly increasing the value of the buildings.
“If you can show you can get thousands of pounds extra [in value] then it helps start the market,” he said.
Mat Oakley, director of commercial research at property agents Savills, said: “The market is hungry for credible information. At the moment it’s very difficult to make the case to an investor that it should [value green buildings].”
But Richard Jones, managing partner at surveyors Jackson Coles, said the tipping point when buildings are worth more would be a “game changer” but doubted the depressed market was yet ready to accept greater costs attached to green buildings.
Box: Key Findings
- If prices remain constant then heating costs will decrease but electricity costs will rise due to increased use of cooling
- There needs to be more investment in cost effective cooling mechanisms
- For office buildings the aggregate benefit of the reduction in heating costs is estimated to be £405m a year by 2030
- The efficiency of subsidies for energy efficiency should be reviewed by location and building type
- Operating costs for offices are predicted to be £3.98 per square metre in 2030, but fall to £2.37 by 2060 and £0.80 by 2100
- Massive retrofit programmes will be needed to avoid obsolescence of non-domestic buildings