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This paper explores the potential link between the sustainability of a property asset and its investment worth. The research is based on the premise that sustainability represents an additional and changing set of risks for property investors and as such needs to be examined systematically for those risks to be properly understood and mitigated. It seeks to make the bundle of issues referred to as ‘sustainability’ explicit within the appraisal process in order that their impact on property worth can be more effectively examined and assessed from a property investment perspective. A series of relationships between sustainability and the functional performance of a property are theorized. A set of parameters quantifying the impact of that functional performance on rental growth and depreciation are then developed. The main findings are that sustainability is pertinent to property investment and can be analysed in relation to potential impact on standard investment appraisal variables. The paper presents a model for doing this as a foundation from which further work can be developed. Two example appraisals are presented to demonstrate the approach developed.
Ellison et al. (Sat,) studied this question.