The right performance of a building directly relates to higher comfort and thus to better living conditions for the users. Less unexpected maintenance costs and improved comfort conditions positively influence the real estate value and occupancy rate.
This is the conclusion of the AZEB study ‘Real Estate Value and Occupancy Rate in nZEBs’. It demonstrates how the AZEB methodology effects these values, now and in future.
After investigating 5 projects indifferent phases of their lifecycle the report comes up with 6 useful recommendations.
The occupancy rate is an important indicator for each building and it contributes to the overall real estate value, which maybe the most important parameter of any building.
Realizing a building is a rather expensive process, the result is usually measured in the achieved market price.
The real estate value incorporates many different aspects of a property, but they always sum up into a single price, which can be realized on the market.
However, this price and thus the real estate value is a very uncertain variable.
Since the market and business laws apply for it, it depends on many external factors like macro- and micro-economic situation, unemployment rate, inflation and so on.
Occupancy rate and real estate value correlate because these figures give a forecast of potential future cash flows to the investors.
3 ways to increase affordability
The AZEB project is concerned with creating an affordable nZEB. Affordability can be increased in three main ways, by:
- Lowering costs while keeping the performance the same
- Improving performance, while keeping costs the same (or lower)
- Increasing opportunities to finance any surplus investment costs, which will be offset by lowered use and maintenance costs.
The first two are about cost reductions or performance increases, which can be achieved by using better techniques and processes in each project phase.
The third is about redesigning the current financial (valuation) system to include lifecycle costs and non-financial benefits in addition to just investment costs and financial benefits in the valuation.
Comfort and health increase market value
Increases in real estate value and occupancy rate can improve affordability of nZEBs because investors and financial institutes might be more willing to cover investment costs for clients.
In a well built nZEB, investment costs might be higher compared to traditional buildings, yet the relatively lower costs in the use and maintenance phase can compensate for this.
The increased comfort and health benefits for the user of a well-build nZEB may further elevate real estate value and occupancy rates.
The awareness of this possible impact can improve decision making with respect to financial results of the project in the long term.
This might not only be important for professional investors and clients, but also for private home-owners, who might in some stage wish to sell their house.
A higher value and the related better occupancy rate, will make it easier to sell the property and at a higher price.
Designing for better energy performance, better social performance and better lifecycle costs, will then reflect in a building with higher real estate value and better occupancy rate, which is then a good measure for return on investment.
5 project researched
In this study 5 AZEB projects were researched to show how application of the AZEB steps influences real estate value and occupancy rate.
The case studies have been carefully selected with the aim of covering as many phases and applying as many methodology steps as possible.
- Single family house in Bulgaria
- Social housing building in Spain
- Primary school in Italy
- Eco district De Kiem in The Netherlands
- Social housing project Frankfurt in Germany
4 indicators for affordable nZEBs
The main focus of the AZEB methodology is to reduce costs of buildings with high energy performance. nZEBs being built using its methodology will achieve higher real estate value compared to standard buildings and become more attractive to society.
The case studies focussed on concrete indicators, these 4 were selected:
1. Uniqueness – This implies high value in any context. When discussing about energy efficiency, clients might not be excited, but binding high quality of the building with it will change this. Improving sustainability, envelope performance and energy efficiency is the way to be unique in the future construction sector.
2. Better living conditions/social impact factors - Creating a building is not essentially different than creating a new car design. But in the perspective of a home owner or company creating its office campus, this project is sometimes even a once-in-a-lifetime event. Improving the living/working conditions and ensuring good social impact is appealing to both owners and users of a property.
3. Less required maintenance - Considering the long life-span of a building, being sustainable in the energy use and efficient in the required maintenance is an important return on investment parameter.
4. Increase occupancy rate - It is important for both user and owner that space can be utilized as much as possible and is not blocked due to technical or construction reasons.
Performance, comfort and value related
The right performance of a building directly relates to higher comfort and thus to better living conditions for the users. Less unexpected maintenance costs and improved comfort conditions positively influence the real estate value and occupancy rate. This is the conclusion of the AZEB study.
AZEB methodology steps related to initiation and design phases have the major impact on the final real estate value of the future building, because the decisions then form the building’s qualitative and quantitative features.
Modern exterior design, combined with smart interior organization and state-of-the art building services will result in both an attractive building for the people looking for prestigious property and also attractive choice for people looking to get as much as possible value for their investment.
Using cost effective design principles and applying value optimization methods can ameliorate the investment performance, adding value to the building by means of a better application of the available budget.
6 important recommendations for nZEBs
The study underlines 6 important recommendations, which any construction project can use to achieve positive impact on real estate value and occupancy rate through the application of the AZEB methodology.
1. Real estate value and occupancy rate are parameters of a building, which result directly from the design.
They need to be considered as requirements as early as possible in the project, so that the design team can be aligned with the owner/user’s desires and can incorporate these in the best way possible.
2. During the initiation and design phases, always consider the interaction of the building with the district.
Take into account the local context and look for the synergy of the building and the surroundings.
Hitting the target with the location can significantly vary the value and the use of the building.
3. Conceive and assess several alternatives for the project and add real estate value and occupancy rate as scoring criteria for the trade-off.
4. Design, implement and systematically review a commissioning protocol with a Validation and Verification Plan.
A well – performing and well – maintained building increases its real estate value and becomes attractive to potential occupants.
Quality of the building is directly related with its value and occupancy rate.
5. Get a multidisciplinary team and go for an integrated design process. Focus on lifecycle time span to achieve a comprehensive point of view.
6. Comfort and air quality are fundamental topics for the users to value their experience in the building (living, working, learning, etc.) and, therefore, can be used as solid arguments to translate their impact into real estate value and occupancy rate increases.
Horizon 2020 program
AZEB has received funding from the European Union’s Horizon 2020 research and innovation programme under grant agreement number 754174.