Europe: IPD Sustainable Property Index (ISPI)
By Steven D. Cox (London) and Bonny Hedderly (London)
K&L Gates, through its London Office, has agreed to be co-sponsor of a new commercial real estate index in the UK called the IPD Sustainable Property Index (or ISPI for short).
In the United States, research has shown that energy efficient buildings can command higher rents and capital values than less efficient buildings, but in the UK there has been only limited corresponding research. This means that whilst many fund managers feel instinctively that sustainable buildings are a better investment because they should be more attractive to tenants in terms of lower running costs, less danger of obsolescence, improved indoor air quality etc, there is no hard data to support this view.
Until there is this data, valuation professionals are reluctant to reflect sustainability in valuations. One of the sources of this data for the future will be ISPI, which therefore means it will be likely to play a significant role in investment decision-making in the future.
What it is and how it works
ISPI is the only sustainable property investment index produced anywhere in the world. ISPI is produced by IPD - Investment Property Databank - which is the world's number one provider of in commercial real estate performance analysis and indices for the owners, investors, managers and occupiers of real estate. It operates in over 20 countries including most of Europe, the US, Canada, South Africa, Australia, New Zealand and Japan.
The other sponsor is an industry body called the Investment Property Forum (IPF) which is a leading industry group in the UK providing research, education and networking opportunities for fund managers, analysts and other real estate professionals. Over 60 funds have so far provided data to ISPI.
