Responsible Property Investing (RPI)

‘Responsible Property Investment (RPI) is an approach to property investing that recognizes environmental and social considerations along with more conventional financial objectives. It goes beyond minimum legal requirements, to improving the environmental or social performance of property, through strategies such as urban revitalization, or the conservation of natural resources.’ (UNEP-FI, 2010.What meaning does it hold for real estate investor, can be explained through current sustainability risks/problems and their affect on property value:

1. Resource use:  Volatility to energy and water supply costs will lead to increased replacement, renovation and running costs of the property.

2.   Obsolescence: 
• Physical –  natural wearing out of the building;
• Functional – arises where new tenant needs  existing building is no longer capable to accommodate;
• Legal – where building standards are forced to change;
• Aesthetic – appears when design or specific use features becomes out-dated;        (IFMA, 2010)

3.  Transparency and stakeholder Influences; higher disclosure of energy efficiency and reporting. (Runde, Thoyre 2010) 

As result this leads to decreasing return on investment yields, longer void periods and status of “second best” in the market place. (Dent, Patrick, XU, 2012). Expectations and Reasons for Investments in Sustainable Property:  Fiscal benefits, Improved usability by third parties, Longer economic life, lower transaction period at resale, lower risk and reputation erosion, lower risk of changes in asset value, expected higher returns at resale, Improved competitiveness, command higher returns, decrease of vacancy risk, increased tenant demand, lower operating expenses, corporate social responsibility; (IFMA foundation 2010) Motivators Behind Energy Efficiency Financial consideration, marketing advantage, market differentiator, indicator of management and paradigm shift are the key motivators identified behind energy efficiency. (IFMA foundation 2010)Summarizing (RPI) is ‘pursuit of greater durability, adaptability, usability and efficiency of buildings and the building stock, leading to enhanced productivity, well-being, and economic benefit measured in terms of financial, natural, manufactured, human and social capital.’ (RICS 2008) RPI should be implemented from the property planning, design, and development stages and continually practiced throughout the property lifecycle. (UNEP-FI, 2010)