Financial Analysis of Energy-Efficiency Measures in Commercial Real Estate : Quantifying the value adding characteristics of energy-efficiency measures in commercial real estate through asset value increase and yield on investment

Abstract: The purpose of this thesis was to establish and quantify the improved real estate appraisal value that’s a result of enhancing the energy performance of commercial real estate in Sweden. The study has been carried out in co-operation with the real estate investment company Sveafastigheter, which is a prominent real estate investment company in Sweden.The thesis was conducted by energy auditing two buildings in different temperature regions of Sweden in order to find energy-efficiency measures (EEM) that could be implemented in the buildings. These measures were then assembled to the most cost-efficient energy performance improving packages. After the EEM packages were identified the buildings characteristic economic performance has been calculated upon in order to see how the effects of energy-efficiency impact asset evaluation and subsequently yield on investment. The main objective was to produce an alternative way to evaluate EEMs as part of the audited buildings as a whole, taking into account the value increase of the asset allowing for a shorter investment recuperation period.Traditionally the profitability of EEMs is assessed by using the technical lifetime of the equipment as a framework for the investment timeline. The results in this thesis provide an alternative way to value the profitability of EEMs by taking into account the increased value of the building, and thus the increased sales income which makes an energy-efficiency investment perform inherently better in case the property is sold before the technical life time of the improved technology has come to an end.