Property News District Heating seen as a positive

District Heating

Colliers A, a recent study done by Colliers International shows there is significant support from the real estate sector to develop or own buildings linked to an environmentally friendly District Heating (DH) scheme, provided there are cost benefits and reliable supply guaranteed. Occupiers similarly would favour such buildings so long as they are not required to pay a total occupancy cost premium for the DH supply.

Colliers International was recently commissioned to undertake a brief survey of investors, developers and occupiers to gauge their respective views on the merits of a DH scheme, and the potential impact the technology could have on property values and rental levels.

When respondents were asked how they would view a development serviced by a DH scheme, almost 90% gave a “favourable” or “very favourable” answer, with the remainder giving a neutral stance. There were no negative responses.

One occupier responded, “Anything that enables businesses to use energy more efficiently and cheaply while helping the environment has to be positive”.

Although respondents were in favour of a DH scheme, the results proved it would be just one factor in a long list of due diligence considerations, and the cost benefit of such a system would be closely scrutinised, particularly by investors and developers. Many were concerned with the reliability of supply and restrictions a DH system may place on the onward sale of a property. 

Nick Katz, Colliers International Senior Sustainability Advisor, said the findings were not surprising, and very much in line with how sustainability and most energy efficiency projects are seen from the business community.
“The responses in favour of the District Heating scheme were largely favourable to very favourable, with the belief that rents might be able to be modestly increased by 0-5%. However there is an obvious disconnect across the industry, with the majority of respondents feeling this would not have a positive impact on the value of the property.

“There is a lack of understanding about how these systems work and the cost benefits of these sustainable measures across the board, which presents the opportunity to advise and demonstrate that many of these systems actually have been successfully tried and tested and offer potential financial and environmental benefits for businesses,” Nick Katz added.

The District Heating Survey was conducted on behalf of Croydon Council by Colliers International Research in collaboration with senior professionals from Colliers International’s Sustainability division.

The survey was conducted in August 2011.