Roy Cokayne
ENERGY-efficient commercial buildings in South Africa deliver better returns for their owners and as a result are better investments, according to a new study conducted by Investment Property Databank (IPD) and the Green Building Council of SA (GBCSA).
The research results for last year show that energy efficient buildings had greater occupancy levels, generated higher net incomes a square metre and delivered higher net income growth compared with less efficient buildings.
In addition, these greener buildings consumed about a third less electricity and half the amount of water, which meant lower utility bills for occupiers, enabling businesses to reduce operating costs.
The investigation considered 461 commercial buildings owned by nine funds: Growthpoint Properties, Hyprop Investments, Investec Property Fund, Liberty Properties, Old Mutual Property, Pareto Limited, SA Corporate Real Estate Fund, Delta Property Fund and Vukile Property Fund. It compared the performance of properties with top quartile energy efficiency to the rest of the sample, which represented a large portion of the South African commercial property sector.
The results revealed that in the year to December last year, properties with top quartile energy efficiency delivered a total return of 15.9 percent, which was 170 basis points higher than the balance of the sample, which delivered a 14.2 percent total return.
The income returns achieved by the two sets of properties were identical at 7.8 percent but the energy-efficient properties recorded a higher capital growth of 8.1 percent. The findings were in line with similar studies done internationally.
The IPD South Africa Annual Green Property Indicators, sponsored by the Old Mutual Investment Group South Africa (Omigsa), was released at the seventh annual GBCSA convention in Cape Town on Friday.
Brian Wilkinson, the chief executive of the GBCSA, said the index confirmed that investing in energy efficiency was good business for property owners and was set to become an important tool to drive even more sustainable and efficient buildings in the country.
“Green leadership is having a huge impact on commercial property in South Africa. The benefits for users of green buildings have already been widely established,” he said.
“We also wanted to show the impact of green building and efficient-building management on the financial performance of a building to further support the case for green innovation in the South African property sector.”
Wilkinson added the council could now say with confidence that green building in South Africa was a real win-win because it was proven that both owners and occupiers of green buildings gained significant and meaningful benefits while the environment also won.
Phil Barttram, the vice-president in South Africa of IPD parent company MSCI, said the energy-efficient properties were ironically on average two years older than the balance of the sample, which highlighted the positive impact of retrofitting and other sustainability initiatives on investment performance.
Peter Levett, the property managing director at Omigsa, said that the index signalled a growing understanding that sustainability parameters, such as resource efficiency, were an important consideration for long-term financial performance in the property sector.