Energy efficiency delivers energy savings and therefore energy cost savings, as well as direct environmental benefits. Besides, as an indirect effect, it has smaller or larger consequences on other economic values.
This report reviews current knowledge about the impact of energy efficiency improvements on the value of buildings. In particular, the methodology that can be applied to quantify the increase or decrease of property value linked to the energy performance and sustainability components is explained and different methods are compared.
Secondly, the report demonstrates the impact of energy efficiency on the payment default risk namely the link between energy efficiency investment and ability of borrowers to repay their loans.
As a rule of thumb an increase of 3-8% in the price of residential assets as a result of energy efficiency improvements, and an increase of around 3-5% in residential rents compared to similar properties can be observed. For commercial buildings, the premium seems to be higher, over 10%, and in some studies even over 20% of sales price increase compared to similar properties has been reported. Rental prices of commercial buildings have also been positively affected by 2-5%. Differences across regions and countries, as well as different property types (e.g. apartments vs. houses) are shown. A change over time is also seen, because the labels and schemes become more well-known and understood. It is shown that higher energy performance is becoming the norm, therefore higher values are associated with better performance in latter times.
Energy efficiency upgrades change the basic characteristics of the buildings affected and thus have an impact on other value drivers: comfort, safety, maintenance, etc. Not only the energy performance, but rather the connotated features can influence the value of a property. Current demand for housing and location are still the main drivers to a building’s appraisal value and for a tenant’s selection of housing, however energy performance is becoming increasingly important across all reviewed countries.