Certification: proof of a sustainable property
Certification is on the increase
The number of buildings certified as sustainable has significantly increased in recent years, and almost all market players expect the figure to continue to rise. Certification is widely regarded as useful in the real estate sector and often insisted on by tenants. For rating agencies and other stakeholders, it is often the first and possibly only way to find out how sustainable a building is.
There are currently numerous sustainability certification schemes in use nationally and internationally, all with different levels of coverage and varying standards. This variation means that comparing buildings certified to different standards based purely on their accreditation is difficult and not very meaningful. Furthermore, construction standards vary widely from country to country. What is rated as exemplary in one country may have long since become the norm in Germany, for example, without necessarily warranting green certification.
The most widely adopted standard worldwide for green buildings is America's LEED (Leadership in Energy and Environmental Design) scheme, which distinguishes four levels based on a points system. The oldest standard comes from the UK: BREEAM (Building Research Establishment Environmental Assessment Method) has been on the market since 1990. It comprises five levels, ranging from Pass, Good, Very Good and Excellent to Outstanding. Also in common international use is Australia's Green Star system, which awards four, five or a maximum of six stars to environmentally friendly buildings.
Certification in Germany
In Germany, the DGNB (German Sustainable Building Council) has been awarding the German Sustainable Building Certificate, developed in conjunction with the Ministry of Transport, Building and Urban Development, since 2009. The assessment incorporates ecological, economic and social aspects. By mid-2015, more than 1,100 properties had been certified, pre-certified or registered.
Technical inspection authority TÜV Süd also offers a proprietary instrument, called SCoRE (Sustainability Scoring of Real Estate), which is based on a comprehensive analysis of up to 150 criteria. These include factors such as energy efficiency, technical quality, location, water management and soil quality.
Doubts around added value
There is currently a lack of agreement as to whether certification makes a real contribution to boosting the value of an individual property, and hence potentially of a portfolio. While studies show that buildings with sustainability accreditation do achieve higher rents, these are often very high-quality, well-let core properties. It is thus difficult to establish whether certification itself offers any added benefits.
From the investor perspective, carefully considered certification would appear to make sense, as long as costs and benefits are properly weighed. That applies in particular to existing properties, where certification often involves extensive modifications and significant investment. For major new-build projects, on the other hand, certification is mostly already standard practice.
Green even without certification
When assessing a building, prospective occupiers should not simply rely on certification. Rather, it is important to evaluate the property in detail with regard to the user’s specific requirements. The good news is that a non-certified building can still be sustainable, with all of the practical benefits that entails.