Commercial property valuation is increasingly required to consider not only what an asset is, but how it performs.

Location, income, covenant strength, tenure and comparable evidence remain fundamental. But regulation, lender requirements, operating efficiency, climate exposure, occupier expectations, capital requirements and obsolescence are increasingly capable of differentiating otherwise similar assets.

The RICS ESG and Sustainability in Commercial Property Valuation Standard, 4th Edition embeds ESG and sustainability considerations throughout the valuation process. Valuers are expected to identify relevant factors, assess whether they are significant to value, consider the quality of the available evidence and explain transparently how those factors have, or have not, been reflected within the valuation.

But this does not mean applying an automatic “green premium” or treating ESG as a separate valuation methodology.

The challenge is determining whether an asset’s performance is actually influencing market behaviour, income, risk, liquidity, costs or future capital requirements and whether there is sufficiently robust evidence to support that conclusion.

To help valuers navigate this in practice, we’ve produced The Performance Valuer a practical guide to assessing and evidencing real estate performance under the RICS ESG & Sustainability in Commercial Property Valuation Standard, 4th Edition.

Inside the Guide:

• How the role of the valuer is evolving as building performance becomes increasingly visible and measurable
• How ESG and sustainability considerations sit within the established valuation process
• A practical framework for defining real estate performance
• How to distinguish between relevance, significance to value and valuation treatment
• Five tests for assessing whether a performance factor may be significant to value
• How to assess energy, carbon, climate, occupier, operational, governance and certification evidence
• A structured evidence hierarchy for assessing reliability, currency, completeness and independence
• How performance may influence ERV, yield, rental growth, voids, operating costs, capital expenditure, DCF assumptions and terminal value
• How to approach significant costs, capital expenditure and specialist advice
• Practical guidance for working through a valuation instruction, from initial scope through to reporting
• Property inspection prompts, comparable evidence questions and benchmarking considerations
• Worked valuation scenarios showing how different levels of evidence may influence the analysis
• Practical appendices including a valuer information request, inspection checklist, performance evidence schedule and suggested report wording

At the heart of the guide is one principle: performance does not replace established valuation methodology. Better evidence strengthens the valuer’s ability to apply professional judgement, test assumptions, distinguish between assets and communicate uncertainty.

As buildings become more measurable, the challenge will increasingly be separating information from evidence and correlation from value causation.

Can your asset prove its performance? Download The Performance Valuer.