The climate agenda will lead to a two-tier national real estate market, according to the latest IPAV update

The climate agenda will lead to a two-tier real estate market, with those that incorporate sustainable practices achieving higher values ​​and those that do not experience “brown discounting”, said IPAV, the Institute of Professional Auctioneers & Values.

Speaking ahead of the launch of a special guide, Sustainability, Climate Change and Your Business, a publication for auctioneers, appraisers and estate agents, on how to instill good sustainability practice in all aspects of their business, Pat Davitt, Managing Director of IPAV, said, “significant changes will be required in the way buildings are developed, constructed, operated, renovated and demolished in the future and the whole of industry must accelerate to meet the challenge.”

He noted that sustainability considerations are already guiding the behavior of buyers, tenants, investors and lenders, in both residential and commercial real estate.

“Anyone who fails to recognize and plan for the new scenario will be left behind and the value of properties that do not meet the sustainability agenda will be less than those that do.

“The concept of better value “green” mortgages has already arrived. Within European and national policy, we will see a host of other financial and other incentives coming in the way. Consumers are already voting with their climate conscience and companies have no choice but to react.

“Appraisers, for their part, are becoming increasingly familiar with terms such as ‘green leases’; ‘life cycle cost analysis’; ‘green building certification’ and disclosure frameworks,” said Davitt.

Recent research by JLL into the impact of sustainability on values ​​in central London office properties found a green rental premium of around 6% to 11%, with vacancy lower in buildings with higher certification ratings.

“The future looks a lot like buildings with green credentials reaching higher sale prices and rents and the rest having ‘brown discounts’ applied,” Mr Davitt continued.

He said that to help property buyers, the IPAV believes that the Property Price Registry should record the BER or energy rating of the building.

“Currently they are not published on the site, but such transparency would support the case for green loans and green mortgage discounts for renovations,” he added.

The Irish Green Building Council said the heavy use of heating and electricity in the built environment makes it one of the highest sources of greenhouse gases per sector in Ireland, contributing 37% of total annual C02 emissions.

The national goal is to reduce operational emissions from residential and commercial buildings by up to 56% by 2030.