ULI publishes valuation guidelines to deflate ‘carbon bubble’

The Urban Land Institute (ULI) has warned of a  “carbon bubble” in the pricing of European real estate and urged the industry to work together to preserve values across the sector as it aims to decarbonize to achieve the targets set in the Paris Agreement.

To support a more collaborative approach, at the inaugural ULI C Change Summit, the institute has published its Transition Risk Assessment Consultation Guidelines.  These guidelines set out a standardized method for assessing the costs of decarbonizing buildings and disclosing between owners, investors, potential buyers, and valuers the main transition risks and impact on values.

While most in the industry acknowledge the need to decarbonize the built environment in Europe, ULI believes that the cost of doing nothing, given the current lack of regulation driving change, is currently not factored into property valuations, which means current building values are too high, resulting in the carbon bubble.