RICS publish new edition of the Global Red Book – Key takeaways and insights
As the property market continues to evolve, the upcoming changes to the RICS Red Book, effective January 31, 2025, signal a significant shift in valuation practices. These updates, which incorporate Environmental, Social, and Governance (ESG) considerations and advanced technologies, reflect the industry's commitment to aligning with global standards and sustainability goals.
Understanding the 2025 Changes
The RICS Red Book has long been the cornerstone of valuation standards, promoting consistency, professionalism, and transparency in the property market. The 2025 updates introduce a stronger focus on ESG metrics, requiring valuations to account for energy efficiency, carbon footprints, and other sustainability factors. Alongside this, the adoption of AI-driven data analysis needs to be clearly stated within the report.
While these updates align with evolving market expectations, they present unique challenges for properties with varying characteristics and locations.
Charlie Crocker, Managing Director of Terracotta Property, comments:
"Whilst it is great to see an emphasis on ESG measures when approaching valuations, it will be harder to adopt these changes to a chippy in a period building with resi uppers in Dagenham than prime office buildings in central London."
Charlie’s observation highlights a key challenge in implementing the updated standards. Properties such as secondary retail units, in less prominent locations, may struggle to meet the new ESG benchmarks due to older building stock, limited investment in upgrades, and differing tenant requirements. In contrast, prime office buildings often benefit from modern design and access to sustainability-focused funding, making them better positioned to align with the new metrics.
“Notwithstanding, we welcome this change. Investors and developers who understand the significance of ESG, will achieve better returns.”
Navigating the Challenges
For secondary properties, applying ESG metrics can be complex. These buildings may require significant investment to improve energy performance or reduce carbon emissions, and the financial return on these upgrades might not be immediately evident. Moreover, the use of advanced AI tools in data analysis could be less impactful in markets where transactional data is sparse, as is often the case with niche retail or rural locations.
We recognize these challenges and are committed to tailoring our approach. By combining our local market expertise with innovative valuation techniques, we ensure that every property is assessed fairly and accurately, irrespective of its location or type.
Looking Ahead
The 2025 RICS Red Book changes offer both opportunities and obstacles. By embracing ESG integration and leveraging advanced technology, we continue to deliver valuations that are transparent, reliable, and reflective of future market demands. If you’re seeking expert guidance on how these changes might impact your property portfolio, contact our team today. Together, we’ll ensure your investments are well-positioned in a rapidly evolving market.