The Impact of ESG Components on Market Value Changes in Commercial Property Valuation: Challenges and Insights from Sri Lankan Valuers

Abstract

The study empirically verifies whether ESG components play a significant role in impacting the market value of commercial properties in the context of Sri Lanka along with identifying the issues and challenges associated with the ESG application in commercial property valuation. The study employed both qualitative and quantitative research approaches that involved scaled questionnaires and structured interviews with preset samples. The findings from quantitative analysis reveal the highest mean value is recorded in the environment component (3.72), while the correlation is positive with overall ESG and significant on all three ESG components. The issue of limited concern of ESG by the small-scale commercial properties and the challenge in quantifying ESG components present as the major challenges that the valuers face was highlighted in the content analysis. This research contributes to the literature on the relationship between the perspective of the ESG consideration by the valuers and market value and the challenges and issues faced by professionals in the valuation of commercial properties in Sri Lanka. The study draws the attention of responsible authorities to consider developing a framework to consider ESG in property valuation.