Sustainability ultimately acts as an enhancing element to property even though it may not necessarily have an immediate effect on any valuations, according to National Australia Bank environmental finance solutions director Patrick Dale.
There are more obvious influences on property valuation other than sustainability such as a sound asset, a decent location, and a good tenant but it didn’t mean sustainability had no role to play, Dale told delegates at the joint Australian Property Institute and Australian Direct Property Investment Association conference held in Sydney yesterday.
“Well executed, non-over capitalised sustainability is a real way of future proofing your asset,” he said.
“It doesn’t really offer an immediate cash benefit to the owner but over the long-term we certainly think it avoids your assets becoming stranded assets of the future,” Dale said.
From a funding perspective this would definitely be advantageous as banks would prefer to lend money to facilitate the purchase of properties that will be attractive in the future.
Despite sustainability having a more noticeable long-term effect on property it was already having a growing influence on the lending activities of the banks, Dale said.
He pointed out though that the level of understanding regarding sustainability issues still needed some attention.
“Property bankers could certainly do with a better understanding of sustainability. I think if you canvassed property bankers generally they would have a limited understanding of some of the simpler concepts,” Dale said.
When considering incorporating sustainability into properties Dale advised the process itself was a slow one.
“Sustainability is not a big bang. It’s not a transaction, it’s a journey and an ongoing commitment to sustainability really requires quite a clear strategy,” he said.
