Beyond the Pandemic: The Importance of Social Value in Development
Demonstrating social value and the impact of real estate on a community is becoming more integrated into the decision-making and investment strategies for real estate.
Nearly 60 percent of industry professionals believe that the field is moving toward using a wider range of nonfinancial measures to assess the value of real estate investment, according to a survey published in ULI Europe’s Emerging Trends in Real Estate® Europe 2019 report. With this in mind, and following the Institute’s previous work on smart urban development, ULI Europe is launching a research project focused on the measurement of social impact. To inform the research and get input from members, ULI assembled a webinar this spring to discuss the challenges, perception, and measurement of social impact.
Panelists said that the biggest challenge was addressing how the multifaceted nature of social impact can be measured accurately.
Christine Babkine, director of corporate social responsibility at Ivanhoé Cambridge, based in Montreal, said any business with an investment strategy needs to ensure that every pound spent will have a positive social impact.
Until now, the industry has focused on sustainability because the carbon footprint of a building or an asset can be easily measured. Assessing the social value of an investment through less easily quantifiable metrics such as mental health, social development, and increased opportunities for the disadvantaged, by contrast, is less straightforward.
Michele Giddens, partner and cofounder at London-based Bridges Fund Management, outlined how the company focuses on four themes of investment: the sustainability of a project, its educational value, its impact on public health, and the economic need due to a lack of prior investment.
These four metrics enable the company to assess the value of a certain project based on a cumulative score.
For Richard Meier, cofounder of development company Stories, based in London, all real estate companies should be using tools that improve the quality of investment, rather than relying on the quantity. Cost, he argued, should not be viewed as a barrier to social investment.
Engaging with all stakeholders at the beginning of the investment or development process can help a company understand its target consumers’ needs and lead to higher-value outcomes. Aligning the interests of the landowner and capital partner is a key mechanism for supporting broader aims.
Babkine saw social value as a long-term investment. She noted that, in the United States, for the past decade the Socially Responsible Investment (SRI) index has generally outperformed the S&P 500 stock index, showing that while impact investing does not always generate the fastest return, over the long term its value holds up.
Dilip Khullar, managing director at Estabona Management, based in Madrid, proposed that establishing meaningful partnerships with key stakeholders will ensure that an investment hits social impact targets. Companies should be working with nongovernmental organizations to determine shared-value strategies that work in tandem with—and not contrary to—the company’s whole strategy.
Other challenges facing social impact investing included the outdated planning system, and the lack of global standards for measuring and determining impact in order to manage it successfully.
Places play a huge part in shaping society, and as the discussion showed, the value of impact investment is going to remain a central focus for many.
SORREL POMPERT ROBERTSON is a London-based writer.