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CONSTRUCTION WORLD
NOVEMBER
2015
Released in July 2015 by MSCI Inc,
a leading provider of research-
based indexes and analytics, the
IPD South Africa Annual Green
Property Indicators 2014 show that prop-
erties with top-quartile energy and water
efficiency delivered an ungeared total return
of 12,1%. Less efficient buildings, however,
delivered a total return of only 9,4%. Green
buildings therefore outperformed their
conventional counterparts by almost 30%.
The research was for the year ending
December 2014. It consisted of the IPD SA
database of 1 726 properties valued at more
than R264-billion, of which the Green Property
Indicators assessed a subset of 597 commer-
cial buildings across 14 property types.
Property owners contributing to the
indicator in 2014 were Growthpoint Proper-
ties, Hyprop Investments, Old Mutual Prop-
erty, Pareto Limited, SA Corporate Real
Estate Fund, Delta Property Fund, Vukile
Property Fund Limited, Emira Property Fund
Limited, Attacq Limited and the Liberty
Property Portfolio.
Wilkinson comments: “The total return of
12,1% on greener buildings illustrated in the
latest index results is 270 basis points (bps)
above the balance of the sample of proper-
ties. In 2013, green properties outperformed
normal commercial properties by 170 bps,
which means that the 2014 results show an
even higher return for green buildings. This is
remarkable and makes an even stronger busi-
ness case for investing in green buildings.”
GBCSA fully supports the IPD South Africa
Annual Green Property Indicators. Launched
in conjunction with the GBCSA, it is now in its
second year and is released annually to track
the performance of greener, more energy-
and water-efficient properties in South Africa.
“The index confirms that for property
owners, investing in energy and water
efficiency as well as green building practices
makes both environmental and economic
sense. This innovative index is set to become
an important tool in the evaluation of both
portfolio performance and in turn, asset and
portfolio value. We anticipate this will further
drive green building practices and invest-
ment in South Africa,” says Wilkinson.
The superior performance of green
buildings according to the IPD research was
driven largely by a higher capital growth of
INVESTING IN
green buildings
“The business case to invest in green buildings is
becoming more compelling every year,” says Brian
Wilkinson, CEO of the Green Building Council of South
Africa (GBCSA), citing the results of the latest IPD South
Africa Annual Green Property Indicators.
>
5,5%, compared to the significantly lower
1,8% achieved by the balance of the sample.
This capital growth was as a result of
higher occupancy rates and a superior net
income growth.
“Electricity, water and waste-disposal
are amongst the chief operational costs in
most buildings. Green buildings provide the
opportunity to significantly reduce these
costs. Given that utilities typically account
for more than 30% of a building’s operating
expenses, and green building significantly
reduces these, the impact on Net Operating
Income is substantial.
“Furthermore, and on a capitalised
basis, the effect of green building practice
on building valuation is indeed powerful,”
comments Wilkinson.
“There is no doubt about the hugely
positive impact green building, and espe-
cially energy efficiency measures, are having
on the commercial property sector in South
Africa. The benefits to occupiers of green
buildings have already been widely estab-
lished. Green building creates healthier, more
productive environments that are less costly
to operate. This research shows us that for
owners and investors in greener buildings,
these properties generate higher returns and
are more sustainable investments.
“We can now say with confidence that
green building creates dual value for both
owners and occupiers in South Africa. And
better still, this means that green buildings
not only ‘do good’ at an environmental level,
they ‘do well’ at an economic level,”
he concludes.
ENVIRONMENT AND SUSTAINABILITY