The evidence that resilient and sustainable buildings in Asia enjoy a distinct occupancy and rental premium, against their non-certified contemporaries, is now irrefutable, says JLL.
SINGAPORE (EDGEPROP) - According to a sustainability report published by JLL, occupiers in Asia are willing to pay rental premiums of up to 28% to lease office spaces in green-certified buildings in Asia. This comes as corporations prioritise ambitious net-zero targets as one of their corporate leasing real estate considerations, says JLL.
“The evidence that resilient and sustainable buildings in Asia enjoy a distinct occupancy and rental premium, against their non-certified contemporaries, is now irrefutable,” says Kamya Miglani, head of ESG research, Asia Pacific, at JLL.
For example, in Hong Kong where 29% of Grade-A offices are green-certified, the rental premium is 28%, while in Seoul, where green offices make up 37% of the Grade-A stock, the premium is between 7% and 22%. In Singapore, 90% of the Grade-A stock is green-certified and these developments command rental premiums of 4% to 9%.
The consultancy says: “The range of green premiums are correlated to the uneven supply-demand gap of green-certified versus non-green-certified buildings across many cities, which is insufficient to meet the occupier demand for sustainable buildings.”
The report states that green certification is gaining traction among owners of commercial buildings in Asia. About 75% of the existing, green-certified Grade-A office stock was added after 2015 with the adoption of the Paris Agreement on climate change.
JLL notes that demand for green buildings outstrips supply, with occupiers aiming to get nearly half of their corporate real estate portfolios accredited by 2025. “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 company ESG demands,” says Miglani.