Reed, Richard and Warren-Myers, Georgia 2010, Is sustainability the 4th form of obsolescence?, in PRRES 2010 : Proceedings of the Pacific Rim Real Estate Society 16th Annual Conference, Pacific Rim Real Estate Society (PPRES), Welington, New Zealand, pp. 1-16.
The long-standing theoretical approach for assessing the depreciated value of a building has commonly been linked to the identification, quantification and assessment of the effect of obsolescence. The future income streams of a property may be jeopardised if obsolescence is not recognised and dealt with in the management of the property. The value of the building is related directly to the degree of obsolescence evident in the building (Reed 2007; Myers 2009); accurately estimating the adverse influence on both the income levels and outgoings; particularly capital and operating expenditure, is critical. This is applicable to a wide range of land uses in the built environment including housing, commercial, industrial and retail (API 2007). Understanding what obsolescence is and how it exactly affects a property asset is critical although arguably is not fully understood outside the property field (Robinson et al. 2003). Whilst there have been many other forms of obsolescence identified, there are traditionally three core forms of obsolescence that affects all buildings: physical, functional and economic. More recently the concept of ‘sustainability’ has evolved from a radical green sector to a broad term which is accepted in and embedded throughout all facets of our society. To what extent it is treated as an obsolescence, however, is unclear.
This paper discusses whether a new form of obsolescence has emerged, namely ‘sustainable obsolescence’ and whether its’ addition to the traditional list of obsolescence is required. Whilst the term ‘sustainable’ is commonly perceived as relative to operating expenses and certification labels, there is a wider role that sustainability plays in our society. The concept of sustainable obsolescence applies to a broad range of considerations including the location of the property (locational sustainability), the amount of embodied energy in the building, the energy efficiency levels of the building and the degree of social sustainability. The debate about sustainable obsolescence must be conducted in light of the changing nature of the property market in wider society and increasing important issues such as corporate social responsibility, the higher profile of the environment and the increased importance of sustainability from view of stakeholders including the government and younger generations. Already it is not possible to undertake a valuation of a property asset without a comprehensive understanding of exactly what sustainability is, how it is defined and how it relates to property.
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Field of Research
150403 Real Estate and Valuation Services
Socio Economic Objective
970115 Expanding Knowledge in Commerce, Management, Tourism and Services
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