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News & opinion

22 JUL 2020

COVID-19: Driving sustainable change

With COVID-19 rightly dominating the current public mindset, there is a risk other urgent valuation issues in our sector may get forgotten or potentially underplayed. Key amongst these are sustainability and related ESG policies – ranging efficiency and carbon reduction to social impact and wellbeing. Indeed, there is a mutual relationship between the challenges presented by COVID-19 and those relating to sustainability, even if this is not obvious at first glance.

Throughout the crisis, RICS has engaged across sectors and markets to gain valuation insight. The immediate impact of COVID-19 highlighted several broad trends in real estate markets that relate to sustainability challenges:    

A flight to quality

In common with previous periods of market uncertainty, investment has seen a focus on higher quality assets, reflecting for example, location, build quality and heritage. A modern definition of quality incorporates sustainability and related economic resilience, and an increased attractiveness for these assets.  

Long income

Assets with longer term leases in place to governments and relatively ‘safe’ corporates have become increasingly attractive due to relative income security. This market is naturally suited to medium and longer-term strategies that sustainability factors often require. ESG policy of long income stakeholders also becomes increasingly important.   

Trading against the trend

While most markets were in some ways impacted by COVID-19, ‘essential’ operational assets from healthcare facilities to foodstores and logistics services highlighted those markets most needed for the wellbeing and welfare of populations, in itself, a key sustainability consideration.   

Covenant is king

With security of income uncertain in many markets the covenant of an occupier or owner (particularly where borrowing) is magnified. This can allow leverage for strong covenant holders to apply ESG policy and sustainability requirements.

Mutual assurance

In some markets, such as retail, the relationship between the provision of real estate and those businesses occupying them has become more overtly interdependent. In the example of a turnover lease, the success of the occupying business and the ability for a landlord to make a profit intertwine. These closer relationships allow a more coordinated approach around sustainability. Aligning ESG strategies and goals makes more sense in this context.  

A time for innovation

Online auctions, video viewings, digital valuation support and a more collegiate approach to data sharing has kept markets alive, albeit with restrictions in many circumstances. In addition to reducing travel and real estate utility, the adoption of a more digital approach is one that tends to benefit sustainable approaches, which can require a more sophisticated analysis of data.   

Can-do attitude

Governments, professional services, regulators and standards setters have been forced to act with greater agility in order to properly react to fast changing markets, behaviours and health concerns. This has demonstrated an ability to adapt that accords with the needs of sustainability goals and against the notion that adaptation must be slow moving and cautious.


Taking into account the above factors and wider issues around sustainability, what can RICS as a standards setter do? Standard setters give investors, organisations and other stakeholders reassurance that we regulate our members and processes but have the dexterity to move with the times on what is a fast-changing issue. This is a key part of our wider role in seeking to align commercial and public interests in this area, developing practical solutions that enable our profession to help educate and drive positive change.

The latest edition of the RICS Red Book Global standards includes a mandatory requirement to consider sustainability at the reporting stage, supplementing previous stipulations around inspection and investigation. The perspective of stakeholders, including in the light of COVID-19 will be an important factor in the application and understanding of these standards and related outcomes – which includes updating the 2013 Sustainability and Commercial Property Valuation, 2nd edition.

  • Charles Golding is Associate Director of Tangible Assets Valuation at RICS

Key takeaways

Sustainability challenges remain key to the valuation sector; sometimes exacerbated by the COVID-19 crisis.
While quality and locality remain a major draw for investors, other factors such as long-term income resilience and innovation to reflect structural changes in markets   are helping drive sustainable decision making.
RICS will continue to engage with valuation stakeholders across the globe to evaluate sustainability and appropriately update standards.

Get involved with the debate by posting on the RICS digital community Yammer group or contacting