Property quality examined
Union Investment’s SI Check uses standardised questions to compare the sustainability of different properties. This internal tool thus enables the development potential of large portfolios to be recognised and unlocked.
What makes for a sustainable building
Sustainability is a very fuzzy term, which can cover a range of different characteristics and factors.
Sustainable properties, for example, not only have to be designed to be as environmentally friendly as possible, they should also meet the needs of the people who work and live in them. Accordingly, barrier-free access and a lift with the corresponding features are important aspects of an inclusive building. Alongside tangible factors such as these, sustainable processes are also of central importance. This includes good management of ongoing maintenance, for example, which results in lower operating costs over the long term. Subjective criteria are also part of a holistic approach, despite often being difficult to measure. Many people are uncomfortable using underground car parks, for example. Simply improving the lighting will make many users feel safer. Ideally, these concerns will be taken into account during the planning phase and the car park designed to be welcoming and with good visibility from the outset.
There are thus a myriad ways in which a building can be made more sustainable. As such, measuring the sustainability of a building is no easy task. A tool frequently used for this purpose is certification. For assessing individual properties, certificates can be a useful and meaningful method. For managing large portfolios, however, they are less suitable, because they don’t support comparisons between different properties. Rather, standardised instruments are required which capture and evaluate the criteria mentioned above, as well as a host of others. Using these tools, the results for different properties become comparable, while the associated data and analyses create a basis for continuous improvement and optimisation of the entire portfolio.
Obligatory sustainability check
As yet, there are no recognised standards or legal requirements in this arena. Union Investment made a virtue of this necessity and several years ago developed its own assessment system, the innovative Sustainable Investment Check (SI Check). This tool is used to analyse all existing properties on an annual basis. Any potential acquisitions also undergo an obligatory SI Check. This involves capturing and scoring qualitative criteria in multiple categories: energy, resource use, economics, user comfort, operation and location. In this context, Union Investment is able to make use of its proven Portfolio Sustainability Management software (SoFi-PSM).
Identifying development potential, boosting value
Union Investment’s SI Check is not limited to assessing the current status, and it is this capability which makes it so special and progressive. The tool was designed in such a way as to enable the specific development potential of a building to be identified. After all, the same sustainability measures will not be equally appropriate for every building. For some properties, collecting rainwater in order to water landscaped areas is an environmentally and financially appropriate option. But if a building is located on an inner-city site without any significant green space, the cost involved would outweigh any benefit.
It is therefore in the investors’ interests that close inspection and a differentiated strategy should be mandatory even for substantial portfolios. After all, not only does the scattergun approach make no sense environmentally, it is also not financially sustainable. The SI Check, which is continuously evolving, is therefore an essential tool for achieving closer alignment of portfolios with sustainability. As such, it makes an important contribution to maintaining and enhancing the value of properties and property portfolios.