Why-Green-is-the-New-Black-for-a-Healthy-Real-Estate-Future

Why Green is the New Black for a Healthy Real Estate Future

25.09.17

Being green today no longer conjures up images of dreadlocked, patchouli-scented eco warriors. Nor, is the term ‘green building’ a fringe-status, tree-hugging trend. Instead, these past few years we seem to have cultivated an environmentally-astute real estate sector; one that increasingly realises that sustainable building practices not only respond positively to environmental issues, but that they also make 100% business sense.

To put it simply - green buildings use fewer resources. They’re also designed to foster a positive impact on the environment and enhance comfort, wellbeing and health. This is especially important when we consider that the average person spends a disproportionate 90% of their time indoors. Green buildings generally have 14% lower operational costs, 30% higher occupant satisfaction and typically have 7% increased asset value compared to non-green buildings. Quite impressive, when you consider they only cost in the region of 1-3% more to build.

Buildings are responsible for 40% of the energy we use and 30% of greenhouse gas emissions. These are not renewable resources, and as such they’re directly responsible for climate change. In very dense city locations such as Tokyo, Rio de Janeiro and Bangkok where the temperature is already high, buildings create an urban heat island effect – they increase the temperature even further. This is largely due to the thermal effects of concrete which traps heat from the sun and can raise the mercury by as much as 4-5 °C. If we opt to build green, we have a direct solution to mitigate climate change. If we don’t, the environment is on a course to extinction. Unfortunately, chances are, that those who end up paying the highest price for climate change will be the ones who have played the least part in the use of fossil fuels.

Doing good by the planet is a laudable aspiration, but when there’s a financial incentive in the mix, it can’t help but ease the path of ‘come hither’ willingness of those involved. If a developer is building a residential project, the tenants benefit from significantly lower utility costs. Not a bad marketing tool being able to tell prospective investors they can save up to 14% on operational costs, 50% on energy and 40% on water. Units in green buildings also typically sell for and can be rented at 30% higher compared to ‘conventional’ buildings.

A recent study conducted by Jones Lang LaSalle found that 60% of commercial real estate buyers are now willing to pay more for green buildings, because they understand that building green directly links to employee productivity and reduced sick leave. It’s also been seen that schools display higher test results and hospital patients recover faster in green buildings.

All these benefits come about because we’re creating a healthier environment inside – the air is cleaner, there are fewer pollutants and particles, and we’re careful about the kinds of paints, sealants and filters used. There’s also better natural light, which incalculable studies have cited as a solution to depression.

One global destination making strides in terms of eco-build and sustainability is Asia, although there’s still a huge disparity between countries.

Singapore is hailed as the green model to emulate, but it also wastes an incredible amount of energy. China now has the second highest number of green buildings in the world after the US because pollution is such a big problem.

In Thailand, the number of certified green buildings has more than doubled annually since 2007, which is hugely promising in a build-high, build-fast nation state, but there’s still lots to do. Thai developers typically want to see return on investment within about two years – presently they’re looking more in the time-scale of returns before seven.

Currently Europe is streets ahead of most of the world in terms of ‘green development’. This is partly because building codes are aligned with green standards, but also because people have simply realised it’s a better way to build. Attitudes are changing fast, and developers are taking this into account, but we’ve still some way to go from fringe statement to mainstream status. The key will be rising demand for building energy efficiency. Now where do I sign?

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