‘Green premium’ achieved through ESG-focused buildings in APAC

Real estate developers and asset managers are increasingly adopting sustainable practices for energy efficiency and net-zero goals.

ESG-focused building owners in Asia-Pacific are reaping the benefits of a ‘green premium’ thanks to sustainable building practices. 

Sam Crispin, Senior Director of Regional Sustainability & ESG at Savills Asia Pacific, said that while each developer adopts a slightly different approach, common practices include focusing on energy reduction, efficiency, and renewable energy. 

“Most companies now use green building certification for new buildings and are slowly embedding it into their existing portfolio,” Crispin said, adding that incentives like subsidies and costs for non-action, such as carbon tax, are significant motivators for change, especially in markets like Singapore.

Crispin identified several obstacles in executing decarbonization plans, including the complexity of making an effective plan, getting internal approval, and integrating data across portfolios.

“A common challenge is aligning the way energy consumption is reported across different buildings under a single asset manager,” he explained. 

He also said that effective data integration is essential for creating a comprehensive decarbonisation plan that can work with the existing maintenance and upgrade programs, adding that tenant engagement plays a pivotal role in achieving the green premium for certified offices. 

“Effective tenant engagement, supported by evidence, can contribute to a higher sustainability score for buildings and portfolios,” Crispin highlighted. This engagement helps identify and act on common sustainability targets, leading to higher tenant satisfaction and occupancy rates, which translate into a green premium.

“We typically see green premiums of about 3 to 5 percent, though it can vary based on location and other factors,” Crispin noted. 

He also pointed out that tenant engagement is not just about environmental goals but also social sustainability, like organising group activities for small tenants to meet their corporate goals efficiently.

Crispin emphasised the importance of data from activities like recycling and separate metering in leased spaces. These factors are part of a tenant engagement process that can lead to environmental partnerships, further translating into a premium for the developers.