1. Incorporating Green Building Features and Initiatives (GBFIs) into Commercial Property Valuation: Perceptions of South African Valuers Saul Nurick Karen Le Jeune Emma Dawber Ryan Flowers Jennifer Wilkinson Department of Construction Economics and Management University of Cape Town Source: www.greentechforum.net

2. Research Question How familiar is the South African valuation profession with green building, and are they taking GBFIs into account when calculating market value?

3. Research Proposition As green building becomes an increasingly important factor for stakeholders of commercial properties, it is imperative for valuers to be able to take into account the effect on value of GBFIs in their valuation reports?

4. Green Buildings  South African Market for Green Building  GBFIs  Applicability of traditional commercial valuation methods in valuing green building  Green Building Valuation  Green Star rating  Rationale  Green Valuation Issues  Potential Value Impacts

5. Green Buildings

6. Research Methods

7. Findings  Green Building Awareness  Impact of Rating Tools on Value  Experience in Valuing Green  Impact of GBFIs on Market Value  Problems with Valuing Green  Valuation Methods Utilised

8. Findings Respondents were asked to rank the problems associated with green valuation

9. Research Methods

10. Valuation Simulation Source: Vunani Property Investment Fund

11. Valuation Simulation ValuationConventionalGreen Change in value Income Capitalisation Value R 30 267 680 R 35 507 120 ↑17.31% DCF Value R 29 629 074 R 34 762 339 ↑17.33% Valuation Variables Net Property Rental Values/m2 R112.38/m 2 R127.38/m 2 ↑13.35% Discount rates 15.50%13.50%↓2.00% Applied Capitalisation Rates 10.35%10.00%↓0.35% Exit Yield 10.80%10.00%↓0.80% Net Rental Escalation 5%3%↓2.00% Vacancy 0% - Change all the valuation variables

12. Valuation Simulation Valuation Conventional ( Refurbished) Green Change in value Income Capitalisation Value R 31 327 049 R 35 507 120 ↑13.34% DCF Value R 31 289 048 R 34 762 339 ↑11.10% Valuation Variables Net Property Rental Values/m2 R 112.38/m ² R 127.38/m ² ↑13.35% Discount rates 13.50% 0.00% Applied Capitalisation Rates 10.00% 0.00% Exit Yield 10.00% 0.00% Net Rental Escalation 3% 0.00% Vacancy 0% 0.00% Change in only Net Rental

13. Conclusions  There is currently a reluctance by valuers to incorporate GBFIs in their valuations.  Lack of transactional data is a major contributing factor.  Energy was identified as the most significant GBFI in green commercial buildings.  Valuers predict that GBFIs will slowly make an impact in the future.

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