Peter Mayer comments on the Green Construction Board Valuation and Demand Working Group Outputs
- Date: 16/07/2014
Peter Mayer, BLP Insurance’s Research and Development Manager, comments on the recently launched Green Construction Board Valuation and Demand Working Group research projects:
1. Mapping the Real Estate Lifecycle for Effective Policy Interventions
2. Evaluating the Effectiveness of Energy Efficiency Policy in the Domestic Sector
3. Mapping the Impacts of Minimum Energy Performance Standards for Commercial Real Estate
From these very stimulating and well researched set of reports two overriding general themes seemed to emerge. Firstly that policy should be evidenced and secondly that the industry would like further clarity from the government. This should not only set out short term goals, targets, interventions and standards but also flag future intentions which would provide the industry with a level playing field and certainty for planning purposes in the longer term.
Output 1: Mapping the Real Estate Lifecycle for Effective Policy Interventions
Presenter: Charles Woollam of SIAM (Sustainable Investment & Asset Management)
Research comprised mapping the real estate life cycle focusing on:
- key events;
- who is involved;
- who are the decision makers; and
- when might be a good time to intervene.
The research is aimed at policy makers to provide a framework on which to base policy.
The modelling approach provides an excellent framework within which to understand property, over a nominal 60 year life.
The starting point for analysis is the RIBA work stage model. This has been extended in particular to the in-use phase which is the longest phase, and therefore possibly the most significant in terms of policy direction.
Types of event include: financial e.g. rent payment (high frequency event) and physical e.g. refurbishment (low frequency event). Events such as voids or vacancies are highlighted separately as these represent ‘prime’ opportunities to intervene.
The real estate industry is not only complex from the point of view of enormous variety of buildings but there are many participants, including principles, advisors, influencers and regulators who all impact on real estate in various capacities and at different times in the property cycle. The relative influence of each event based on frequency of occurrence and potential for interventions is charted. There may be a case to accelerate policy by targeting high frequency - low impact events rather than low frequency events such as major refurbishment which may only take place once every 15 – 20 years.
It was noted that perhaps focus should be on owners rather than landlords. While investor landlords may own 65% of buildings by value this equates to about 20% by floor area. Furthermore if a landlord is letting the building on a full repairing and maintenance lease it will be the occupier who has control of potential interventions.
Output 2: Evaluating the Effectiveness of Energy Efficiency Policy in the Domestic Sector
Presenter: Phil Birch, Sweett Group
23 domestic energy efficiency policies were reviewed.
An Excel spreadsheet was produced which analysed the impact and effectiveness of the policies (available on the GCB website – see link below).
Policies were grouped into five categories:
- Supplier obligations e.g. ECO
- Grants e.g. Warm Front
- Market mechanisms e.g. Green Deal
- Pilot demonstrations e.g. Retrofit for the future
- Standards and codes e.g. code for sustainable homes
A spreadsheet model showed that the biggest contributors to reduction of carbon emissions were Part L and CERT. When considering total carbon usage all 23 measures have reduced carbon emissions by approximately 15% in 2012.
The detailed analysis of each policy should provide a very helpful guide for future policy decision making.
This is a unique appraisal of recent policies and one wonders if this sort of approach might not be a useful output for government to emulate?!
Output 3: Mapping the Impacts of Minimum Energy Performance Standards (MEPS) for Commercial Real Estate
Presenters: Adam Mactavish and Phil Birch, Sweett Group
Research was based on analysis of EPC data and modelling of 14 archetype buildings including industrial, retail, naturally ventilated offices and air conditioned office types.
Energy efficiency varies greatly across the country, biggest variations are at a local level typically old buildings compared with new. This distribution suggests that targeting policy regionally would have limited impacts.
The costing analysis suggested in many cases it might be better value to upgrade from an F or G to a D rather than the expected minimum current level of an E and then have an additional cost in the future if the rules change to make D the minimum standard.
Some buildings would not meet the golden rule for upgrading for example if the rents are low and there is a high proportion of voids. There was a concern that investors may simply ditch ownership of G and H properties, this was balanced by consideration that others could capitalise on this opportunity.
Costs of upgrading varied across the country location and may be less than a year’s rent. However, in low value locations for industrial units the costs could be as much as 2-5 year’s rent.
The summaries, domestic report and domestic policy tool and also the non-domestic penalties and incentives report are all available for download on the GCB website: www.greenconstructionboard.org/index.php/working-groups/valuation-and-demand
If you would like to get in contact with Peter please email email@example.com.