Energy efficient assets recorded a stronger investment performance across all sectors last year, according to CBRE’s latest Sustainability Index report. Inefficient commercial property assets recorded a fall of -6% in capital value growth in 2023, compared to just -3.8% for efficient assets.
The research conducted by real estate firm CBRE demonstrates a correlation between the energy efficiency of commercial property assets and their investment performance. Total returns over 2023 were 0.8% for efficient assets compared to -1.0% for inefficient assets, while rental value growth was 3.9% for both the efficient and the inefficient sample of properties over this period.
Stronger performance for efficient assets was most pronounced in the office sector. Over 2023, total returns for efficient offices were -3.2% compared to -6.5% for the inefficient sample. Capital value growth was -6.6% for efficient offices compared with -10.6% for inefficient assets, while rental value growth was 4.1% for efficient assets and 3.2% for inefficient – indicating a widening performance gap between efficient and inefficient offices during 2023.
Similarly, in the retail sector, energy-efficient assets boasted total returns of 3.1 percent in 2023, significantly higher than the 0.3 percent reported for inefficient ones.
In the industrial sector, energy-efficient assets yielded stronger investment returns in 2023, at 5.6 percent compared to 4.5 percent for inefficient ones. However, inefficient industrial assets demonstrated higher rental growth at 6.6 percent compared to 5.6 percent for efficient assets during the same period.
Jennet Siebrits, Head of UK Research at CBRE, commented: “2023 saw interest rates plateau and capital value movements become less dramatic than in earlier years covered by the index. Yet inefficient offices saw a greater decline in capital values compared to more efficient offices, which is likely to reflect the impact of the capital expenditure needed to improve the energy efficiency and overall specification of secondary stock to a level that is acceptable to occupiers.”
To access the full data set – view CBRE’s latest Sustainability Index report here.
Energys Group is one of the UK’s leading decarbonisation businesses focussed on retro-fitting existing built infrastructures.
Founded in 1998 as an energy conservation consultancy, we are pioneering the delivery of turnkey low carbon products into both the private and public sectors. Our customer base includes over 1000 schools; hospitals; and other public sector buildings. We also offer energy efficiency retrofit expertise to private companies with commercial buildings and assets – including offices; shopping malls; and warehouses.
To find out more about how we deliver major energy savings to companies in the commercial buildings sector – view our case studies.
