UGANDA, Kampala | Real Muloodi News | In the next six months, the Ugandan property valuation industry will adopt international standards requiring valuers and developers to consider Environmental, Social, and Governance (ESG) factors in their assessments. The drive towards sustainability and the increasing awareness of climate change are the driving forces behind the need for ESG considerations.
Aloysius Gonza, Vice President of the Institute of Surveyors of Uganda, explains that ESG has a valuation component that aligns property prices with current global challenges such as climate change. “If a property is affected by flooding, that has a direct impact on its value as well as how it is perceived by the market,” he says.
Herbert Okello, head of valuation and advice at Knight Frank, adds that the Royal Institute of Charter Surveyors has developed a guidance note on commercial market valuation that instructs valuers on how to value properties, including ESG factors. “We will be looking at the building’s source of energy, such as lighting, and the quality of air which affects the social aspect,” he says.
Richard Masereje, head of development of national valuation standards in Uganda, explains that ESG not only impacts assets and liabilities but also social value determination, such as the social impact of resettlement during compensation. ESG also affects the overall value of investment decisions by considering environmental elements. “When making investment decisions, capturing the influence of environmental elements is crucial to the overall value of the investment process,” he says.
Governance was previously overlooked in valuation but now holds significant weight, as seen in planning restrictions. For example, a planning regulator may inform you that you cannot build more than four floors surrounding an airfield, which limits the value of the property.
Although the concept of ESG is new, there is still a need for increased awareness and skills in the industry. Valuers and developers must adapt to the new standards and consider ESG factors in their assessments to ensure the sustainability and societal impact of their projects.
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