How ESG criteria might influence the fair value of offices in France? / Hugo BARTHELEMY / 2023

Titre : How ESG criteria might influence the fair value of offices in France? Type de document : Mémoire Auteurs : Hugo BARTHELEMY, Auteur Année de publication : 2023 Importance : 19p. Note générale : Pour accéder aux fichiers PDF, merci de vous identifier sur le catalogue avec votre compte Office 365 via le bouton CONNEXION en haut de page. Langues : Français (fre) Langues originales : Anglais (eng) Mots-clés : Management ENVIRONNEMENT ; FINANCE D'ENTREPRISE ; FINANCE DE MARCHE ; INVESTISSEMENT Résumé : In this dissertation I tried to observe and understand the influence ESG criteria might have when valuing an office real estate asset in France. Nowadays, although recent and litle bit confusing due to all the definitions it has, ESG is a topic that has become unavoidable for all real estate players. Thus, I was wondering whether an ESG compliant office property would have a higher value in comparison with a conventional and traditional one. According to personal research, I observed that certifications such as BREEAM, LEED, WELL, or even HQE lead to an increase in the value of an office property in France. I carried out several interviews with real estate professionals, and they all confirmed to me the way certificates and the sustainable dimension of a property are reflected within the Discounted Cash Flow model. ESG influences the occupancy rate, the rental income, the capital expenditures, the yield, and the selling price. I found that certified office propertes have a higher occupancy rate than non-certified ones (90,7% compared to 88,4% in France as of 2020). From a survey conducted in the U.S among 71 office certified properties, the rental income was 0 to 23% higher, the yield was 0,36% to 0,55% lower, and the selling price was 0% to 43% higher. Thus, beyond laws and regulations that constraint real estate players to adapt their strategies and invest in a more responsible way, ESG compliant office properties represent a real financial and ethical opportunity for them. Nonetheless, two mainchallenges must be tackled by real estate playersin the coming years. The first one is the harmonizationof ESG. No accurate methodologyhas been yet developed to compute the fair value of an office byintegrating ESG. It thus appears that some work still needs to be done in that field to standardize ESG and make it easier to use when valuing an office property. The second one is the renovation and rehabilitation process of old and pollutng buildings that will become a necessity since 80% of the 2050 French building stock already exists. Programme : MSc Finance, Investment & Wealth Management Permalink : https://cataloguelibrary.neoma-bs.fr/index.php?lvl=notice_display&id=581899