Impact of sustainability performance on property values 

The influence of sustainability extends to buyer preferences and investment strategies. A growing proportion of investors prioritize sustainable and environmentally certified properties, viewing them as more desirable and resilient assets. Conversely, properties with unfavourable energy ratings may face reduced demand and unfavourable loan terms, affecting their market value accordingly. 

Understanding the preferences and priorities of potential buyers and the financing market is key to navigating today's complex market scenery. Whether dealing with local investors, international stakeholders, or institutional funds, aligning with their sustainability objectives is crucial. In the context of green properties, which demonstrate resilience and desirability even amidst market uncertainties, aligning with investor preferences becomes vital. 

The driving force behind decision-making is also influenced by what the financing market, forexample, banks, considers important. This response varies over time: energy classification, governed by taxonomy, and a shift towards considering actual CO2 emissions will become increasingly significant. 

In addition, measuring the impact of social factors will play a more substantial role going forward. This trend is driven by banks and major investors seeking measurability across all sustainability aspects. In summary, sustainability is not just a moral imperative but a fundamental driver of property value. By integrating sustainability considerations into our analyses and client engagements, we are enhancing transparency and accountability and contributing to a more resilient and future-proof real estate sector. 

At Newsec, our commitment to sustainability is deeply intertwined with our property analysis and valuation approach. We have invested significant resources into educating ourselves and cultivating specialized expertise in this domain for years. Our ongoing dedication to monitoring various sustainability indicators enables us to identify how ESG influences property pricing. 

“Our valuation practices have become more sophisticated, and our analysis has improved not only because of the data but also because of how we have collected and structured the data. Currently, market evidence seems to indicate that Energy Class A properties and those with a clear path to Class A are of particular interest to investors. Similarly, the highest levels of LEED and BREEAM certification increase liquidity”, says Heikki Kangas, Head of Valuation. 

"Our management services include the creation of comprehensive ESG reports, tailored to support our clients' ongoing ESG management efforts. These reports track critical metrics such as energy and water consumption, CO2 emissions, environmental certifications, energy certificates, and the use of renewable energy. Beyond reporting, we collaborate closely with our clients to develop ESG programs. When agreed upon, we also manage these programs to ensure the client achieves their sustainability goals", says Pauli Autio, Head of Sustainability & Energy Management services

Our clients benefit from comprehensive reporting on sustainability parameters, providing them with valuable insights into property valuation and management. 

It is evident that sustainability considerations play an essential role in terms of income, expenses, and yields. For instance, reduced energy costs can enhance the attractiveness of a property, positively impacting its rental potential and net operating income. 

Additional information:

• Newsec's sustainability & Technical Management Services
• Sustainability at Newsec
• Valuation services

For more information, please contact:

Pauli Autio
Head of Sustainability & Energy Management services
+358 50 440 0802
pauli.autio@newsec.fi

Anna Aaltonen
Director, Sustainability and Quality
+358 40 179 398
anna.aaltonen@newsec.fi

Heikki Kangas
Head of Valuation
+358 50 320 9136
heikki.kangas@newsec.fi