New report shows that energy performance is increasingly important for the value of buildings

The new report by the European Commission’s Joint Research Centre (JRC) evaluates existing literature that discuss the impact of energy efficiency improvements on the value of buildings, as well as the methodology that can be applied to quantify property value linked to energy performance. It also demonstrates the impact of energy efficiency on the payment default risk – the link between energy efficiency investment and ability of borrowers to repay their loans.

Current demand for housing and location are still the main drivers to a building’s appraisal value and for a tenant’s selection of housing, but energy performance is becoming increasingly important across all reviewed countries, according to the report.

The main findings include:

  • Energy efficiency improvements seem to result in an increase of about 3–8% in the price of residential assets, and an increase of around 3–5% in residential rents compared to similar properties.
  • For commercial buildings, the premium seems to be over 10%, and in some studies even over 20% of sales price increase compared to similar properties has been reported. Rental prices of commercial buildings have also been positively affected, by 2-5%.
  • There are differences across regions and countries, as well as different property types (e.g. apartments vs. houses).
  • A change over time is also seen, as labels and schemes become more well-known and understood. As higher energy performance is becoming the norm, higher values are associated with better performance.

Energy efficiency upgrades change the basic characteristics of the buildings affected and has therefore an impact on other value drivers, such as comfort, safety and maintenance. According to the report, the lower default risk linked to energy efficiency should also be considered and reflected in financial products.

Read the full report here

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European UnionThis project has received funding from the European Union’s Horizon 2020 research and innovation programme under grant agreement No 723858. Disclaimer: The sole responsibility for the content of this material lies with the authors. It does not necessarily represent the views of the European Union, and neither EASME nor the European Commission are responsible for any use of this material.

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