English
contrastBtngrayscaleBtn oku-icon

|

plusBtn crossBtn minusBtn

|

This site
is mobile
responsive

sticky-logo

Evolution to emergence of green buildings in Malaysia

Evolution to emergence of green buildings in Malaysia

04 Dec 2023

Environmental, social, and corporate governance (ESG) and green buildings are the buzzwords in the real estate sector, but will companies and businesses benefit from implementing these new technologies?

  Developers and investors are faced with a crucial question: are green buildings really as good as they are made out to be, or is this just a marketing gimmick to enrich the minds of those who coined the idea?

  Green buildings are those that can lessen the detrimental effects that real estate development has on the environment and human health in order to promote sustainable living.

  Generally speaking, green buildings will cost 2.0 per cent more than conventional buildings, but they will save anywhere from 14 per cent to 19 per cent on operating costs, according to Samuel Tan, the executive director of KGV International Property Consultants.

Increased productivity, asset value, rental rate, and occupancy rate are additional non-direct financial benefits, he told NST Property.

  Tan said that on average, green buildings can save between 25 per cent and 50 per cent of energy, 10 per cent to 40 per cent of water consumption, and reduce maintenance costs by about 12 per cent. 

  “All these combined to a total saving of the operational costs of about 19 per cent and 34 per cent less CO2 emissions. By implanting sustainable solutions from the beginning of a project, the investment should be able to pay off within months or years, increasing the company’s revenue and helping to create a more friendly environment,” he said.

  Tan said that lower operating costs are one of the top three reasons in some countries that trigger future green building activities, ranking as the No. 2 reason in Australia, Brazil, and South Africa,and third place in the USA and Singapore (Dodge Data & Analytics, 2013).

  In Asia, lower operating costs are also the main reason for future green building activities.

  The Malaysia Green Building Index (GBI) announced on March 4, 2016, that they had approved about 150 million square feet of gross floor area for green building certification, of which more than half comprised residential development. 

  The compounded annual growth rate of the green building market in Malaysia is estimated at about 14.3 per cent until 2027. 

  The green building materials market is valued at around RM280 billion in 2021 and is expected to grow to RM520 billion in 2027.

  According to Tan, houses with a “green” concept remain a factor that attracts the interest of buyers and investors due to the premium they carry.

  “Many in the industry believe that the additional cost for green buildings is about 15 per cent more than the conventional types. Studies show that green buildings cost 2.0 per cent more than average but save from 14 per cent to 19 per cent in operational expenditures.

  “Essentially, developers are mindful of the costs and benefits of adopting such technology. While branding is important, financial considerations should not be ignored. Many perceived that the costs outweighed the benefits compared with conventional buildings.

  “However with an increasing number of sustainability certifications, new technologies, design concepts, and wide publicity, the need for green building certification becomes more pronounced,” he said.

  Tan urged the Malaysian government to consider better green tax incentives to spur green building development and demand, with a particular focus on GBI. 

  The private sector, including property developers and investors, must make a bold and substantial commitment to green building, he said.

Value added benefits

Tan said that the increased demand for sustainable buildings shows additional benefits in addition to the savings.

It is anticipated that their resale value will rise by 7.0 per cent to 18 per cent.

The growing number of businesses that are obligated to comply with ESG regulations is also supporting this trend.

“They want their staff to work in green buildings where possible health issues are mitigated,” he said.

According to Tan, there is a 5.0 per cent to 12 per cent expected increase in rental rates and a 6.0 percent to 16 per cent increase in occupancy rates.

“These percentages can, of course, vary greatly amongst regions, and there are other factors that could influence them. Intangible advantages like increased productivity are just as significant,” he said.

According to Tan, research indicates that enhanced lighting, climate, air quality, and sound levels boost employee productivity.

It is estimated that for buildings certified by LEED and Energy Star, productivity will increase by 5.0 per cent.

Additionally, green building technology improves wellbeing and health.

“Tenants are willing to pay higher rental rates in order to benefit from these benefits, though they are difficult to measure. Another factor propelling the rise of green buildings is the desire for prestige and branding. Buildings bearing these certifications are thought to be of superior quality, and the developers are thought to be ecologically conscious. When tenants and investors have the same mindset, this works well,” he said.

Source: NST

TwitterLinkedInFacebookWhatsApp
wpChatIcon