Renovation assessment guide
REIMAGINE YOUR REAL ESTATE POTENTIAL
A practical guide to help property
portfolio owners and investors assess
the business case for renovation, as
well as insights on how to mitigate
risk and maximise rewards.
Respect what
already exists
To reach a more sustainable future, we must question the need for new construction
especially where existing properties can be repurposed. If planned and managed
correctly, repurposed property assets can become attractive to tenants, more
climate-resilient, and fit for multiple future uses.
For project viability, this guide centres around three key focus areas in the early
planning stages of property renovation:
01
Developing business cases based on regulatory,
financial, and sustainability drivers
02
Identifying and mitigating potential
reconstruction, financial, and climate risks
03
Assessing renovation opportunities and
constraints to realise their full potential
Contents
Why renovate? Assess your portfolio’s potential Renovation risks and challenges Renovation inspirations How can we help? Get in touch
Why renovate instead
of building new?
Renovation may seem challenging, but there are regulatory, financial, and sustainability
incentives for real estate portfolio owners to preserve existing assets.
Regulatory drivers Financial drivers Sustainability drivers
There is growing regulatory pressure supporting the retention of Financial drivers for renovation include potential increases in rent or One can define sustainability as the capacity to endure. Buildings
existing building stock, such as embodied carbon penalties and sales prices, energy efficiency savings, and the ability to differentiate can last a long time—like the Roman Colosseum. So why do modern
steepening energy performance parameters promoting retrofits. property in a competitive market to attract tenants or buyers. buildings only have an average lifespan of 39 years? A small number
of buildings’ materials experience accelerated deterioration, but
Within the European Union (EU), incentives stem from programmes A Ramboll study comparing the life cycle costs and carbon most are demolished solely for commercial reasons.
under the Green Deal such as EU Taxonomy and the Renovation emissions of renovations versus new builds in the Danish market,
Wave. Other increasingly stringent regional and national regulations found it is both cheaper and less carbon intensive to renovate over a More disheartening, new buildings come with a substantial amount
are also coming to prevent demolition, waste, and the development 50-year period. of upfront carbon emissions generated from extracting and
of greenfield sites. processing raw materials, transport, and construction itself. It can
Further, an asset’s historical or cultural significance can correlate to take up to 80 years for a new energy-efficient building to achieve a
higher property prices. A report by Realdania found single-family lower-carbon impact compared to a renovated existing building.
homes ‘designated’ of cultural or heritage importance typically hold
a 30% higher value than those without the designation.
Renovation assessment guide 4
Why renovate? Assess your portfolio’s potential Renovation risks and challenges Renovation inspirations How can we help? Get in touch
Renew, reuse, or build new?
Each property and investment portfolio are
unique. To understand your specific renovation
options, a detailed analysis is required to select Retain
or retrofit
the best implementation strategy for operational
optimisation, longevity, and commercial return. YES
YES YES Is the existing building, in whole
Is it technically feasible
or parts of it, suited to
Location, property valuation, investment horizon, to retain the building in
the requirements of
condition, local market demands, financial whole or in part? YES
the site? in part
opportunities, and more require consideration,
often with frictions and trade-offs. Partial retain
and refurbish
Use the decision tree to help determine which
may be the best course of action for your
existing asset.
Reuse on site
NO NO Disassemble
and reuse
Is there an Are there any building YES Is it technically feasible YES
Reuse on site
existing building materials or elements
available on the site
to recover the residual
value of the buildings nearby
NO NO
on the site? that can be used? elements or materials?
Demolish
and recycle
Reuse off-site
NO
New building
Source: Mayor of London
Renovation assessment guide 5
Why renovate? Assess your portfolio’s potential Renovation risks and challenges Renovation inspirations How can we help? Get in touch
Assess your portfolio’s potential
Transforming existing estate assets into new ones that meet current and future market needs
requires more than architectural or engineering consideration – you must assess many
asset-related features to understand your transformation options and justify investments.
For asset transformation success, assess both the short-and long-term financial, environmental,
and social costs and gains. To start, use the asset assessment checklist to guide asset
transformation selection and decision-making processes:
Asset assessment checklist
Feasibility and profitability Availability and capacity
Infrastructure and utilities
Preferred building types Water, electricity, telecommunications
Local real estate market conditions
Occupancy rates Proximity to natural features
Rental or sales prices Environmental impact and sustainability goals Minimising environmental impact
Proximity to transportation networks Achieving sustainability goals
Accessibility and connectivity Services and amenities Local zoning laws and building codes
Regulatory and zoning restrictions
Functionality and appeal Types of permitted uses
Sustainable design features Smart building technologies
Environmental and climatic conditions Energy efficient measures Operational efficiency and cost savings Sustainable materials
Resilience to natural hazards Reduced energy consumption
Preservation and architectural integrity Hover and click for an interactive checklist
Historical and cultural significance
Community impact
Renovation assessment guide 6
Why renovate? Assess your portfolio’s potential Renovation risks and challenges Renovation inspirations How can we help? Get in touch
Manage renovation risks
and challenges
Avoid issues like stranded assets and unforeseen costs by taking practical risk
mitigation actions. The following recommendations can help manage such risks
at both the asset and portfolio level.
Manage risks at the portfolio level
Everyone aims to avoid risk. So, it may be difficult and Portfolio owners can create a transition plan to map,
expensive to raise loans from a financial institution or coordinate, and prioritise renovation activities during
to get a project insured if stakeholders consider your the asset ownership period. Such a plan provides
assets at risk due to their location in an area exposed general details about portfolio energy consumption,
to climate-related risks such as flooding, storms, or carbon emissions, building conditions, climate risks,
extreme heat. and short-to-long-term improvement strategies to
reach performance requirements and align with
This is a major reason in-depth environmental, social, UN Paris Agreement goals.
and corporate governance (ESG) data is becoming a
pre-requisite for banks to assess risks on loans. Some
banks are even starting to require short- and long-term
risk management plans. Moreover, property sellers and
buyers can evaluate an asset’s real value and prepare
a business case to invest based on valid ESG data.
Renovation assessment guide 7
Why renovate? Assess your portfolio’s potential Renovation risks and challenges Renovation inspirations How can we help? Get in touch
Manage risks at the asset level
Here are the main asset renovation risks and related mitigation actions. Regular project team
communication and early-stage assessments are key to identifying and addressing these issues.
Risk Description Mitigation strategies
Economic downturns or fluctuations in the real • Conduct thorough market analyses prior to starting a project, including material prices
Market volatility estate market can impact the return on investment • Plan for a margin of safety in expected returns
for a renovated asset • Consider long-term market trends
• Conduct structural and architectural assessments at the earliest stage possible
Unforeseen issues or changes in plans can exceed • Obtain early-stage planning advice
Cost overruns
initial cost estimates • Investigate material condition, toxicity, and flammability using lab tests
• Define and regularly review budgets, as well as incorporate a contingency
• Create a realistic timeline with contingency buffers tied to higher likelihood risk scenarios
Unforeseen structural issues and material • Communicate regularly with contractors and suppliers to anticipate and promptly address issues
Delays
availability can cause delays • Update project risk register regularly
• Develop contingency plans for critical path activities
Failure to obtain necessary permits or comply
• Research local building codes and work with professionals familiar with local regulations
Regulatory compliance and permits with building codes can result in fines, project
• Obtain required permits before starting work
stoppages, or legal complications
Renovations can generate waste, emissions,
• Conduct thorough environmental impact assessments
Environmental impact or disturb natural habitats which may violate
• Implement waste recycling and reduction programmes
environmental regulations if not managed properly
• Evaluate contractors thoroughly
Quality of work Poor workmanship can necessitate costly rework • Define project specifications and quality standards
• Conduct regular inspections
Renovation assessment guide 8
Why renovate? Assess your portfolio’s potential Renovation risks and challenges Renovation inspirations How can we help? Get in touch
Renovation
inspirations
Unleash your
properties’ potential
Renovation assessment guide 9
Why renovate? Assess your portfolio’s potential Renovation risks and challenges Renovation inspirations How can we help? Get in touch
Transforming towards sustainable certifications
London, UK
3 Sheldon Square is a 10-storey London office building that
underwent a remarkable transformation. Now, in addition to a
60% reduction in energy use and a 100% net gain in biodiversity
compared to pre-development, the development is targeting
a BREEAM Outstanding rating, WELL Building Standard
precertification, and a Wired Score Gold.
Originally built in 2002, the property can stand as a testament
to how reuse can spur more sustainable possibilities.
In addition to a 60% reduction in energy use and a 100%
net gain in biodiversity compared to pre-development, the
development is targeting a BREEAM Outstanding rating, WELL
Building Standard precertification, and a Wired Score Gold.
Renovation assessment guide 10
Why renovate? Assess your portfolio’s potential Renovation risks and challenges Renovation inspirations How can we help? Get in touch
Historic hospital turns into timeless university town
Aarhus, Denmark
In central Aarhus, an old municipal hospital from the 1880’s,
has undergone a transformation into a vibrant, functional, and
coherent university campus covering 110,000m2. The pioneering
project is pre-certified as DGNB Gold level for the entire district.
Retaining the existing buildings will save 6,600 tonnes of CO2
and 5,450 tonnes of materials – the equivalent of 1,580
detached houses.
The size and complexity of the project required the
involvement of more than 30 technical departments to meet
the client’s ambitions.
Renovation assessment guide 11
Why renovate? Assess your portfolio’s potential Renovation risks and challenges Renovation inspirations How can we help? Get in touch
Ranked the best hotel
Singapore
The five-star Capella resort was originally constructed in the
1880’s and used as an army barracks during World War II.
Following extensive restoration work designed by Foster+
Partners, the resort was ranked as the top hotel in Singapore in
Travel + Leisure’s World Best Awards 2023.
Capella’s vision was to preserve the integrity of the original
structure while integrating new elements. Most components
were prefabricated offsite and tailored to fit seamlessly with
existing structures, meaning that damage or modifications to
the original structures were significantly reduced.
Renovation assessment guide 12
Why renovate? Assess your portfolio’s potential Renovation risks and challenges Renovation inspirations How can we help? Get in touch
Finally fulfilling its purpose after six decades
Uppsala, Sweden
Financial struggles meant that construction of the original town
hall in Uppsala concluded prematurely in 1964 with one part of
the building incomplete and an envisioned courtyard becoming
a dull parking lot. 57 years later, the building’s intended vision
was finally realised following the construction of a new 14,000m2
extension that enables all the municipality’s activities to be
housed under one roof.
The transformed city hall engages with citizens by creating
inviting spaces featuring public services, a café and restaurant,
shops, and exhibition facilities. It was honoured as Sweden’s
building of the year in 2022.
Renovation assessment guide 13
Why renovate? Assess your portfolio’s potential Renovation risks and challenges Renovation inspirations How can we help? Get in touch
Want to maximise your
assets’ potential?
From large asset portfolios to individual properties, our Energy renovation Economic analysis and
including renewables access to funding
history of re-imagining existing assets speaks for itself.
To support your transformation of existing buildings,
our approach is to gain detailed insights into a Buildings, neighbourhoods, Regulation navigation
structure’s construction, condition, history, and cultural and in-use certifications and compliance
significance. We understand active collaboration and
continual dialogue is vital to realise all aspirations and
maximise asset potential.
Our team of experts can help you with:
How we help
Technical and environmental due
diligence (TEDD) services Portfolio and asset
including environmental, social,
Transformation: Designing alterations, rearrangements, and corporate governance (ESG) your business sustainability strategies
and extensions to meet end goals
Optimisation: Upgrading performance to create more
sustainable, safe, and serviceable spaces through
maintenance cycles and capital expenditures
Construction and Planning, architecture,
Conservation: Managing respectful change to historic project management and engineering design
assets using sensitivity, empathy, and local insights
Risk and environmental Integration with
impact assessments local infrastructure
Renovation assessment guide 14
Get in touch
Scott Brookes Mari Brandl
Director, Senior Director,
Building retrofitting Existing Buildings,
and refurbishment, Transformation
Ramboll
+44 (0)7971 987249 +45 51 61 63 63
[email protected] [email protected]Want to know more?
Explore ramboll.com/sustainable-renovation
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