Can Sustainable Design Add Value To Your Property?
Sustainable design for buildings aims to reduce harm to the environment and create healthier spaces for the occupants. At its most complex are “living buildings” that produce their own energy and recycle all water and waste. At its simpler level, sustainable design can mean orienting living areas to the north for natural thermal comfort, creating natural cross ventilation, using non-toxic paint and materials, incorporating solar power and replacing all light fittings with energy-saving LED bulbs.
Here in Australia, the Green Building Council of Australia is the body responsible for rating new buildings for sustainability under a Green Star rating system, with six stars being the highest level. More than 1680 projects within Australia have so far achieved Green Star ratings, ranging from large commercial offices to shopping centres, hotels and hospitals. More than 37 per cent of commercial office space is now Green Star certified, reflecting large corporations’ focus on providing healthier workspaces and saving on energy costs.
“In the residential space,” says Romilly Madew, Chief Executive Officer of the Green Building Council of Australia, “a growing number of residential developers are choosing to achieve Green Star ratings for their apartment developments as consumers seek homes that are sustainable in every sense: cheaper to run, more comfortable to live in and providing better connections to community and transport.
“So far, 56 residential developments have achieved ratings, and another 65 more are registered for certification. Our greenliving.org.au website reflects this shift and is dedicated to sharing the stories of the increasing wave of consumers experiencing the benefits, and choosing to live in more sustainable developments.
“A raft of research has also found that green buildings are also better performing assets. The Building Better Returns report, published in 2011, found that Green Star rated buildings deliver a 12 per cent ‘green premium’ in value and five per cent premium in rent, when compared to non-rated buildings.”
And the business case continues to grow. Analyst Anthony de Francesco, who was responsible for the IPD Green Property Index for many years, said recently that “Green Star ratings also deliver investment returns that outperform all non-rated properties over a five-year period. Six Green Star rated buildings deliver the strongest returns. A Green Star rating delivers on average 23 per cent higher capital value, and 20 per cent higher net rental per square metre.”
Clearly, sustainable design is an issue of growing importance (and benefit) to commercial property investors and developers, but what about the average residential property investor?
“There are many reasons why investors choose to go green,” says Madew, “but one of the biggest is ‘future proofing’, which is about anticipating and adapting to change, rather than simply reascting to change. By choosing sustainable property, you will protect your nest egg against future changes to the regulatory environment or tenant demands. While investors are always on the hunt for capital growth, they are increasingly looking for assurance that they’ve made a sound financial investment that will meet shifting tenant demands, tightening regulation and the vagaries of a changing climate.”
Darren Hunter, Director of training company Inspired Growth Training, put the question of the importance of sustainability for residential property investors to his Inner Circle Members, including some of the top property managers throughout Australia and New Zealand.
“We’ve got the largest digital reach among property managers in Australia, with 18,000 subscribers to our Facebook page,” says Hunter. “When I put the question out there about whether sustainable design was important it just didn’t resonate with any of our members. Homebuyers no doubt look for sustainable design features but tenants are looking to suit their immediate needs and are more interested in whether a property is pet-friendly, has plenty of storage and good heating/cooling.
“Owners of rental properties looking to make improvements need to invest in what tenants want in their location. This could include insulation or solar power but think carefully and look at your overall strategy before investing in anything tenants aren’t asking for.”
Professional renovator Cherie Barber concurs with Darren that sustainable design is simply not on the radar of most residential property investors or their tenants. “I’ve been running my Renovating for Profit courses for nine years now,” says Barber, “and over all that time only one student has even mentioned sustainable design. Many students, however, are keen on preserving as much as possible from the original property and recycling materials so by saving money in this way they are also making their renovation more sustainable.
“My advice would be that if your property is in one of the ritzier inner ring suburbs of a capital city then sustainable features could be important value-adds. Most residential investment properties in Australia, however, are in locations where your tenants probably haven’t even heard the term ‘sustainable design’ so, as yet, it’s not really an issue.”
Original article: http://www.apimagazine.com.au/property-investment/can-sustainable-design-add-value-to-your-property