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Social Impact and Asset Value 

Amidst the ongoing repercussions of the COVID-19 pandemic, the notion of social value has surged into prominence within the real estate investment landscape. Since 2020, proprietors of office and multi-residential properties have experienced escalating pressure to quantify and reveal social value metrics.

Social impact refers to the improvement in the wellbeing of individuals and communities, and the enhancement in their ability to lead productive lives. Currently, the real estate sector is heightening its acknowledgment of social dimensions by focusing on housing quality and affordability, which are significant contemporary societal challenges. The Social Value UK’s Six Stages of Social Return on Investment (SROI) represent a framework that accounts for the aspects and measurements of social impact and its value. This accounts for the representation of ESG standards and the subsequent effects on the built environment and communities alike. 

However, the pressing question remains: Can infusing social impact meaningfully enhance a real estate asset’s value? The World Green Building Council uses the following principles to encapsulate social value through the lens of real estate:

  • Safeguarding human rights, particularly health, throughout the building and construction lifecycle.
  • Dedication to preserving the health and well-being of individuals in the construction industry.
  • Providing enduring value to communities, thereby enhancing local quality of life.

Essentially, the construction, maintenance, and management of buildings wield substantial influence over employment, economic growth, and community well-being.

The growing consensus is that operational expertise is pivotal in yielding superior financial performance for assets. This pattern consistently emerges across our client base at Measurabl. A building with effective carbon and energy savings is more resilient to the impacts of climate change. Considering this, why shouldn’t this principle extend to social impact as well? 

In an increasingly interconnected world, where asset well-being is intricately tied to community welfare, social impact is a crucial consideration for any forward-looking real estate strategy.

At Measurabl, we adhere to the Social Value UK’s Six Stages of SROI (Social Return on Investment) methodology.

  1. Defining Scope and Identifying Key Stakeholders:

The foundation involves clearly defining the purpose of measuring social value, determining the aspects to be assessed, and the assessment methodology. Identifying key stakeholders entails identifying those impacted by the activity, including service recipients, their families, the local community, and public or voluntary services experiencing reduced demand due to the activity.

  1. Outlining Outcomes: 

This entails creating an Impact Map, which includes inputs (financial investments or stakeholders’ time), valuing these inputs, detailing outputs (e.g., service hours delivered), and subsequently defining outcomes (employment, increased earnings).

  1. Validating Outcomes and Assigning Value:

Outcomes are selected and measured by quantifiable indicators. For example, improving residents’ fitness might involve metrics like weekly exercise hours. The duration of improved outcomes must be established. Finally, valuing outcomes involves various approaches, including existing research or methods like stated and revealed preference.

  1. Establishing Impact:

This step identifies whether the outcomes arise from the activity, attributes change to these activities, and differentiates from outcomes that would have occurred independently (deadweight), enabling quantification of impact.

  1. Calculating SROI:

Utilizing values gathered earlier, SROI is calculated, usually expressed as the ratio of costs to benefits. This stage also projects outcome values into the future, accounting for benefits’ decline over time.

  1. Reporting, Utilization, and Integration:

Findings are reported after the SROI process concludes, possibly externally verified, communicated, and utilized. Embedding the SROI process within the organization ensures its continuity and integration into decision-making.

The realm of social value in real estate investments is gaining prominence, driven by global challenges like the COVID-19 pandemic. Social Value UK’s SROI framework provides a reliable roadmap for portfolio managers aiming to integrate social value into their investment strategies. As the world navigates evolving challenges, understanding the potential of social value as a driver of resilient and sustainable real estate investment stands as a vital pursuit.