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ESG initiatives are having a positive impact on property values
Landlords who prioritize ESG at their properties can expect higher rent, tax credits and incentives, and an overall higher market value of their real estate investments
To assess the financial impact of sustainability, Ernst & Young LLP (EY US) recently conducted a hypothetical case study to analyze and quantify the impact of environmental, social and governance (ESG) on property valuations.
The takeaway from the study is clear: Green building investment has a compounding effect on property value. A focus on ESG produced a range of impacts to revenue and expenses at the case study property, including a premium on rental rates, savings in operating expenses and a resulting lower capitalization rate. Those impacts, in aggregate, can have a compounding effect and result in a potentially significant value increase for real estate investors.
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EY US’s hypothetical green building yielded between a
10% to 21%
increase in market value compared with the non-green building.
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