New step towards fair valuation of circular real estate

The societal added value of biobased building is still insufficiently recognized in property valuations. To change this, Invest-NL together with Envalue, Copper8, Alba Concepts, and Impact Institute launched a study on incorporating circular performance in property valuations. The result is a clear framework that allows circular performances such as reuse, disassembly, and healthy materials to be included in financial valuations.

The value of biobased construction

Circular and biobased building methods deliver demonstrable societal value. Yet, these qualities are rarely considered financially. This hampers investments, while the need for sustainable construction is precisely increasing. Think of resource scarcity, CO₂ reduction, and stricter regulations such as the EU Taxonomy.

A new step in real estate valuation

The new framework makes four circular performance metrics measurable and linkable to cash flows within the Discounted Cash Flow methodology. This is the standard for professional real estate valuation. Consider aspects such as healthy materials, adaptive capacity, deconstructibility, and reuse potential.

A practical example illustrates how this works. For HoutWerk2, a circular office building in Utrecht, including these circular performances resulted in a valuation increase of 9% compared to a conventional scenario.

Working on the built environment

With this research, Invest-NL contributes to a financial system that better values sustainable and circular choices. An important step towards a future-proof built environment in the Netherlands.

By addressing the challenges in the financial and real estate markets, we truly make a difference. With this framework, circular buildings receive the financial valuation they deserve.
Madelon Abbes
business development manager