Fortunately there is a host of green building certification schemes which can help developers and investors assess the impact of their assets and recognise good performance.

Furthermore, there is increasing evidence that green certified buildings gain a rental and value premium over their browner neighbours. Studies in the US have identified a 6-9% rental premium for the best buildings, while a recent study by Hong Kong Polytechnic University and Zhengzhou University, claims LEED certified buildings in China gain a remarkable 19.5% premium over uncertified buildings. 

Additionally, the energy-saving measures needed for a green rating mean running costs are lower and that the building ought to be more attractive to staff, especially environmentally-conscious younger workers. In some markets, grants and incentives may also be available.

Sam Crispin, ESG consultant at Savills Asia Pacific, says: “From an investors perspective, certification also offers the prospect of future saleability and enhanced capital value in a business environment where sustainability is of increasing importance and the need to show continuous improvement under ESG reporting principles.”

There is a cost in building to green standards, which various studies have estimated to be 10-30% over a “standard” build. The costs vary significantly depending on the location, project and the scope of energy saving and other works. Certified buildings are appearing in many Asian markets, including Bangkok, home to the Park Ventures Ecoplex Building, the first LEED Platinum mixed-use building in Thailand, pictured above.

So, building green and getting certified sounds good, but what’s next? There are more than 600 green building certification programmes around the world and more are being added each day. A number of markets have their own standards, such as Hong Kong’s BEAM, Singapore’s Green Mark, Japan’s CASBEE and Australia’s Green Star, which are adapted to local markets – for example CASBEE uniquely includes earthquake-proofing in its assessment. 

However, there is a small number of international leaders in green building certification. BREAAM (Building Research Establishment Environmental Assessment Method) is the oldest certification programme, launched in the UK in 1990. The main international rival is LEED (Leadership in Energy and Environmental Design), which is run by the US Green Building Council.

There are more BREEAM-certified buildings worldwide, however LEED has the broadest geographical spread and is more widely-used in Asia. The two systems both focus on environmental factors such as water and energy use, and materials, however the method of assessment differs: BREEAM uses licenced assessors for the rating, while LEED makes its assessment based on data supplied by the developer.

A newer certification system with international scope is Edge (Excellence in Design for Greater Efficiencies), which was launched in 2014 by the International Finance Corporation. It has three levels of certification, with the highest being “Zero Carbon”. Edge also offers a free app which can show real estate owners in 160 countries how various systems and solutions will affect building performance.

Crispin says: “While there is substantial overlap, each standard is different and the purpose and emphasis of different standards needs to be considered. For a potential regional portfolio acquisition the buyer needs to work with experts able to understand the data behind the different certifications as part of their due diligence.”

Further reading:
Savills Environmental Policy

Contact us:
Simon Smith