What is Sustainable Value?

Sustainable Value is the notion of use value expanded to stakeholders, i.e. including the environment and the broader society.

Use Value refers to the capacity of a property to satisfy human requirements, want or need, or its capacity to serve a useful purpose. It is one of the 3 keys aspects of real estate property value: usus (use value), fructus (rental value) and abusus (disposal value).

Why is measuring Sustainable Value critical for an efficient and Sustainable Market?

Owing to its fundamental nature, Sustainable Value is the primary determinant of rental and disposal values. It also constitutes the nexus whereby Sustainable Development factors can be integrated into the valuation process. Thus, making Sustainable Value explicit at market level is the necessary condition for Financial Value to claim its “market” qualification, and for decision-making processes to integrate Sustainable Development factors.

How does the rating work?

Market Sustainable Value assessment allows to position a property on its market hierarchy represented on the rating scale by tranches ranging from E to AAA. At the top of market hierarchy culminates the AAA tranche, which corresponds to the group of properties generally qualified as prime. The rating scale is market-specific, i.e., AAA properties exist on every market. It is the relation of a property’s score to its market-specific prime score that determines its position on the rating scale.

How is Sustainable Value measured?

The metric used to reveal Sustainable Value is called Integral Quality. Integral Quality represents market participants’ value perception with respect to property’s attributes. Integral Quality is holistic and preferences-driven, i.e., it is reflective of market participants’ preferences collected annually via market-wide surveys. Integral Quality is measured as a score over 1000 points.

What does “preferences-driven” mean?

The criteria constitutive of the rating model and their respective importance in the score are determined by market-wide surveys and consultations per property type and region. These surveys are targeted at the entire real estate industry, starting with tenants and property owners. This process is repeated on a periodic basis in order to account for changing underlying preferences. Consequently, ratings reflect market value perception at any point in time.