The effects of environmental technology on real estate development : how to increase asset value through the implementation of innovative environmental technology

Abstract

In response to the increased awareness of global warming and sustainable energy usage, methods to improve energy consumption in the real estate industry through innovative environmental technology were explored. Since the new stock of buildings each year represent a small portion of the total supply of real estate, improvements to the existing stock through energy-efficient upgrades can result in substantial reductions in overall energy demand. Since most of the buildings built prior to 1981 are inefficient in terms of energy usage, coupled with the fact that 60% of these buildings will still be operating in 2020, there is significant progress to be made for a sustainable energy system. This thesis explores ways to improve energy efficiency in building design through the implementation of innovative, environmental technology. The financial savings through energy efficiency may result in an increase in value of the underlying asset by increasing the net operating income. To test this thesis, over 100 case studies were analyzed in various sectors of the real estate industry over a vast geographical area to determine the effects of energy efficiency on building performance. Based on the results of the analysis, the potential increase in asset value was calculated by capitalizing the cash flow stream. The results showed that a significant increase in asset value can be achieved by implementing innovative environmental technology.