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property firms can benefit from social concern

December 2007

Commercial investors can achieve greater returns on their property investments by considering and acting on social and environmental issues than by ignoring them, a new study reports.

Research by the Working Group on Responsible Property Investment, formed by the United Nations Environment Programme Finance Initiative last year (EP8, issue 8, p2), has found dozens of instances of companies benefiting financially from a socially responsible approach to managing their commercial property portfolios.

The examples include UK property company Pruprim’s sponsorship of a programme to encourage young people to tackle crime and safety issues in the neighbourhoods around its shopping centres, which led to a decline of up to 70 per cent in reported nuisance and criminal damage in its properties. In other examples:

New Gaia in Japan generated higher than conventional returns on an apartments development equipped with solar and other energy-saving devices through favourable bank financing, construction incentives, higher rents, lower vacancy rates and lower energy bills.
Shamrock Capital Advisors and Hughes Development in the US supported the use of public transport by building their own railway station next to a large development in Dallas, Texas – and found that they could therefore command rents 40 per cent above the market rate.

The working group, which stresses that responsible property investment involves both environmental and social measures, is collaborating with institutional investors on areas such as energy consumption and the community use of premises. Its members include Axa, Calvert, F&C, Hermes, Land Securities, Lend Lease, Pruprim and Morley Fund Management. The research, with case studies, is now online.




Further Information
http://www.unepfi.org/work_streams/property
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