A íMEDIUM TERMî ADD IN PROPOSAL FOR GREEN PROPERTY APPRAISAL
It is about time for evaluation modeling of buildings to include the green features and for investors and developers to consider the pleasing impact of green in property valuation and worth. Worldwide some researchers and appraisers have been working on evaluation methods to turn the buildings green features benefits into value, while reflecting the lower risks investors and developers may be taking. The USA real estate industry has made substantial strides in integrating sustainability/green into valuation (S. R. Muldavin, 2010) as real estate decision makers have understood that sustainable properties can generate health, productivity benefits, recruiting and retention advantages, operations savings and reductions in risk. However, real estate decision makers miss a standard allowing the quantification of the impact of green features outcomes into the asset value. The objective of this paper is to give some clues for factoring green features into a DCF model in order to let stakeholders consider green issues opportunities in their property decisions. In accordance with its objective the paper deals with the question of how green buildings could be evaluated in a period where comparables are not available on the market, mainly in Italy. The proposal could be useful for investors also over this crunch period as green buildings represent an opportunity thanks to cost savings and risk mitigation. An analysis, discussion and preliminary conclusion of a case study is presented at the end of the paper as a preliminary starting point for showing that investing in green buildings could really be a competitive advantage also in Italy for all stakeholders either in terms of rental price premium or in terms of absorption rate, tenant retention and mitigation in risk. In conclusion, in order to allow all stakeholders to accurately assess the progress of the green property industry revenue and risk considerations along with payback and IRR analyses have to be considered.
