An important part of the conversation about environmental sustainability is the topic of the built environment. We spoke with UniSuper member and Lecturer in Property at the University of Melbourne, Dr Georgia Warren-Myers, about the challenges and prospects of sustainability in the Australian property market.
How does Australia compare to other developed countries in the construction of sustainable residential property?
The Australian residential market lags behind other developed countries in terms of sustainability. Although we have mandatory new star ratings for new homes, the sector is plagued by problems and a lack of verification of the built product.
Part of the limitation is that energy ratings are restricted only to new homes. Whereas in the ACT, a mandatory rating system exists for all homes for sale and rent. Analysis has demonstrated that pricing premiums exist for increasing energy star levels—and communication of the ratings in the market is an important component to drive valuations. The ACT model suggests that an Australia-wide approach to mandatory ratings and communication of these ratings at point of sale or lease could drive sustainability nation-wide.
What’s the state of sustainability reporting in the Australian commercial property market?
The commercial market has a mandatory energy efficiency disclosure program. It requires all buildings over 1,000m2 to have a Building Energy Efficiency Certificate (BEEC), and disclose their National Australian Built Environment Rating System (NABERS) energy rating on any advertising material. This has increased the knowledge and perception of the rating. However, broader sustainability objectives and ratings have reduced market exposure and discussion.
What’s the relationship between sustainability reporting and valuations in the commercial property market?
Unfortunately, a recent study which examined the relationship between sustainability and valuations found that little information or consideration was given beyond noting that the building had a NABERS rating and BEEC. Actual comparisons or consideration of financial adjustment aren’t being undertaken, with valuers still claiming a need for more evidence.
Can you talk about your findings on pricing the risks of climate change for the Australian property market?
Action in relation to sea level rise is predominately the focus of local, state and federal governments. Much of this relates to planning and policies, yet actual implementation is highly variable. Further, in many locations the public awareness of proposed and future planning changes is lacking, and there has been little consideration, interaction or action by private property stakeholders. The implications to valuations are of utmost concern to property stakeholders. So the lack of discussion, mitigation and action coming from the property sector in relation to sea level rise is surprising.
The Australian property market and other property stakeholders need to start considering the implications of climate change for their portfolios.
At present there’s a severe lack of interest and discussion, and little adaption or mitigation strategies being developed. The political situation over the last few years has done little to drive much needed consideration and change in the sector. Given current predictions, there are range of issues that are going to face property stakeholders in both the short and long term.
My ideal retirement?
My ideal retirement actually involves enjoying the climate. I’d like to spend my summers sailing at the beach and my winters skiing in the mountains.