AbstractWithin the property research community consideration of environmental risk in relation to a tenant's polluting activities has received little attention. Whilst the profession has begun to address environmental issues through various research initiatives, the study of current land uses causing environmental problems and, m particular, the consequences for property investors, is at a very early stage.
Through the literature review, and the major empirical project undertaken in the course of this research, significant advancements have been made in this area. It has been possible to establish the following: that the property investment portfolios of financial institutions and property investment companies are unlikely to be completely devoid of properties occupied by tenants capable of causing environmental damage; where such damage occurs an increasing body of opinion suggests that landlords could be held criminally liable for fines and/or statutory clean up costs; even where the tenant has sole liability (perhaps because the liabilities arise from activities the tenant has undertaken at another site) there are income security repercussions for the property investor. Site specific case studies, where industrial properties were inspected by the researcher and discussed with environmental auditors, played an important part in obtaining the information to support these findings.
Consequently, improvements in the environmental performance1 of tenants occupying their properties, possibly, through the implementation of an environmental management system (EMS), will provide investors with a less risky property investment vis a vis other similar property investment opportunities occupied by tenants displaying low levels of environmental awareness. The empirical work within this thesis also found that property investors are beginning to acknowledge the concept of EMSs by considering it in the stock selection process.
The research introduces a new consideration into the catalogue of property investment risks, namely, the environmental performance of the tenant and the role of environmental management systems therein. This strengthens the existing academic literature on property investment risk, and as such provides an original and significant contribution to this field of knowledge.
|Date of Award||Sep 1995|