Of every five buildings that exist today, four will still be standing in 2050. That makes energy efficient refurbishment a top priority for Europe, and an important opportunity for owners and tenants.

Despite the potential savings, energy efficiency is rarely the focus of residential renovations in Europe – and with 3.1 million dwellings refurbished annually, that’s a problem that must be addressed. Adding weight to the issue is an increasing body of evidence that suggests that when renovations are completed with a view to increasing efficiency, the investments made are routinely suboptimal. The result is a long-term lock-in effect and a great deal of unrealised potential for energy demand reduction.

Among myriad factors influencing investor confidence are project risk, return on investment and government policy, but also valuation norms and standards. The crux of the problem is that current multinational valuation standards don’t directly account for the energy performance of a building. The appraisal of property is a vital instrument for enabling market actors to efficiently price real estate assets and finance investments in building activities (i.e. new developments or refurbishment).

This state of affairs would appear to be at odds with an increasing quantity of literature that documents positive rental and transaction premiums of between 3 and 11% for an energy efficient building versus a conventional building, as well as higher and more stable occupancy rates. Development of a set of norms & standards, along with an accompanying framework that recognises the value of energy efficiency in buildings would help to unlock the market.

For a typical residential renovation project financed by asset-backed loans, this could potentially equate to €17k of additional financing, or €19.7Bn annually at the EU-level.

The REVALUE project aims to lead the development of appraisal norms and standards that REcognise Energy Efficiency Value in social and private residential real estate. Specifically, it’s objectives are:

To develop a set of norms, standards and policies for the valuation of property that recognises energy efficiency in buildings

To create a framework that aligns property valuation techniques used by lenders (banks and other institutional investors), property owners (housing associations and private commercial landlords), and assessors (valuing bodies, organisations that measure energy performance) in valuing energy efficiency in buildings

To create and validate project examples on the application of norms and valuation techniques