Going Solar Inceases Your Property Value

Going Solar Boosts Your Property Value

An installed solar energy increases property value by 3-4%

According to Pakistan’s largest property portal zameen.com, Pakistan’s high inflation makes it appear that home prices are increasing strongly. But reality that is not the case. Nationwide house prices rose by 5.05% to PKR 10,875/- (US$ 77) per square feet (sq. ft.) during the first quarter of 2019.  However when adjusted for inflation, house prices actually dropped 3.98% over the same period.

Among multiple studies carried out in developed nations, a recent research by an affiliate of U.S Department of Energy, Lawrence Berkeley National Laboratory (LBNL) shows that homeowners who have installed solar energy systems on their houses can sell their property at a higher price compared to those without one.

LBNL’s 2015 report studied sales of solar-equipped homes in eight different U.S states over 11 years with the goal of determining just how much value solar adds to a home’s sale price. The key finding: on average, homebuyers are “consistently willing to pay PV home premiums” of approximately PKR 700/- ($4) per watt of installed solar capacity.  

For a standard 6-kilowatt (6 kW) solar panel system, this means that solar can add approximately PKR 3,900,000/- ($24,000) to your home’s resale value. Although this study is carried out in the U.S, it holds value in Pakistan’s real estate sector indicating a positive trend. 

Giving one simple example, suppose you own a house in F-7, Islamabad where an average monthly rent of a 1 kanal (20 marla) house without a solar energy system is around PKR 200,000/-.

If you were to install a solar energy system on your house, you would firstly be inviting more prospective tenants and also dictating your monthly rent. If by thumb rule of 3% along with the rent. there were a solar energy system installed on your home you could drive up the rental income by (plug and play) and want to give it on rent. Your prospective renters would pay you more because it ensures their convenience by not paying high utility bills.

Seeing the current market trends, buyers are keenly taking more interest in properties with solar installations and as homebuyers become more educated about solar, demand for properties equipped with solar energy systems will continue to rise.

As of August 2019, Pakistan’s inflation rate stands at 11.63 percent. Don’t worry you have no direct control over inflation; It’s the government that makes the policies and drives the economy.

Ask yourself a hypothetical question; is the cost of a Toyota Corolla the same it was twenty years ago? Common-sense says it’s not. Why is that? This is mainly due to inflation.

Taking this example, just imagine what would your utility bill be, say five (5) years from now? The current market trends indicate they would definitely be much higher. Over the last ten (10) years, electricity prices have risen up at an average of nine percent (9%) annually and the utility companies are known for their fluctuating and unreliable prices. 

The typical Pakistani home spends about PKR 180,000/- annually on electricity. If you buy a system that meets 100 percent of your electricity needs today, you will have an extra PKR 180,000/- in your pocket a year from now.

The following year, when prices rise up by 9%, you’ll save about PKR 196,200/-. Your savings will continue to grow for the 25+ years that your panels generate electricity, adding up to well beyond PKR 4,905,000/- over the lifespan of your system.

Even if you don’t have enough money to buy a solar energy system up front, you can still reduce energy costs by financing your solar panel system with a solar loan. Most solar financing options require no down payment and reduce your monthly expenses from day one of installation. As an added benefit, your monthly energy costs will no longer fluctuate – they will simply be the monthly

Now your expenses are:

  1. Predictable
  2. Lower than your conventional utility bill
  3. Consistent over time, without any fluctuations or increases

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