Green office towers in Hong Kong command the highest rental premium in Asia, JLL says
- Grade A buildings in Hong Kong with green certification fetched rental premiums up to 28 per cent more because of limited supply
- The premium for green buildings in Singapore ranged between 4 per cent and 9 per cent amid ample supply
Hong Kong has the highest rental premium for green certified buildings in Asia amid a shortage of supply, as tenants demand real estate solutions to meet their sustainability agenda, according to consultancy JLL.
There is a strong link between assets that hold green credentials and their rental performance in Asia, and landlords that do not evolve their buildings to meet sustainability standards may suffer financially, according to the report.
“The evidence that resilient and sustainable buildings in Asia enjoy a distinct occupancy and rental premium, against their non-certified contemporaries, is now irrefutable,” said Kamya Miglani, JLL’s head of environmental, social and governance research in Asia-Pacific.
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“Occupiers’ willingness to pay a premium will likely continue as society shifts towards an emphasis on green and sustainable spaces in a bid to address the concerns on climate risk and to meet ESG demands.”
Only 29 per cent of Hong Kong’s Grade A office towers, or 2.7 million square metres of gross floor area, have received green building certifications.
“Cities with more availability of green certified grade A office stock have lower rental premiums than those with less availability – a clear sign of demand and supply economics at work,” the JLL report said.
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JLL compiled data from 3,089 grade A towers in 14 cities across Asia, including Hong Kong, Shanghai, Tokyo, Singapore and Seoul. JLL did not provide a list of green certified buildings in Hong Kong.
Some 42 per cent of grade A offices have been green certified across these cities as of the end of the third quarter, compared with 12 per cent in 2016, according to JLL.
A total of 10 international and national green building certifications standards were included.
Seven in 10 grade A office buildings had been certified under the Leadership in Energy and Environmental Design rating system of the US Green Building Council, with the highest concentration in China and India.
In a separate survey of 100 real estate decision makers in Hong Kong by building rating platform WiredScore released on November 23, 98 per cent of respondents said it was important for landlords to make buildings environmentally sustainable using technology.
Meanwhile, 21 per cent listed sustainability as the most important factor when selecting an office, while 26 per cent said that they would be more likely to extend their lease if the landlord improved the sustainability credentials of the building.
“Tenants in Hong Kong have a strong appetite for smart technologies to meet their evolving needs for a more sustainable, healthy and inspirational work environment,” Thomasin Crowley, global director of Asia-Pacific at WiredScore, said in a statement.
