New paper: Social value in real estate

INREV has published a new paper, Social value in real estate: understanding pathways to financial outcomes, which explores how social considerations can contribute to investment performance and why they should form part of mainstream real estate decision-making.

While environmental factors are increasingly integrated into investment strategies, social value is often less consistently assessed despite its potential influence on occupier demand, income resilience, asset relevance and risk. The paper examines how social outcomes can translate into financial outcomes, providing investors and investment managers with a practical framework for evaluating these relationships.

Key highlights include:

• Social value can be financially material through its impact on demand, income resilience, asset relevance and risk.
• Social attributes can create value through multiple value creation pathways, including value conservation, tenant demand, tenant operations, social license to operate, essentiality of services, operational efficiency.
• The importance of social value varies by sector, asset type, and context, but is relevant across all assets and should be considered as part of mainstream investment decision-making. 
• Consistent social KPIs and clearer measurement frameworks can help investors evidence, test and optimise the relationship between social outcomes and long-term financial performance.

The paper is supported by eight social case studies that demonstrate how social value can be assessed and linked to financial outcomes in different contexts. In addition to the in-paper case studies, two new case studies have been added to the INREV case study library to further illustrate how social value can contribute to investment performance. These include:

• Harrison Street Asset Management: An analysis of 171 assets across North America and Europe explores the relationship between Fitwel certification, ESG initiatives and net operating income (NOI) performance.
• IPUT Real Estate Dublin: A five-year study at Wilton Park examines how placemaking and investment in the public realm can contribute to social value and long-term commercial performance.

The paper also highlights that real estate derives its value from its ability to meet the needs of the people who use it. As occupier expectations continue to evolve, understanding the connection between social performance and financial performance will become increasingly important for investors seeking to preserve and create long-term value.

Download the full paper and case studies below to explore the framework, value creation pathways and practical examples in more detail.