Rethinking the Office Sector in Asia Pacific

LARGE VARIATION IN SUSTAINABILITY ACCREDITATION

ALTHOUGH AN OFFICE BUILDING IS LIKELY TO REQUIRE SEVERAL SIGNIFICANT REFURBISHMENTS OVER THE COURSE OF ITS EFFECTIVE LIFESPAN, THIS DOES NOT MEAN THAT LANDLORDS SHOULD IGNORE NEAR-TERM AND LESS CAPITAL-INTENSIVE OPPORTUNITIES. TARGETING A SUSTAINABILITY RATING IS ONE SUCH EXAMPLE.

Over the past few years, sustainability has dramatically increased in importance. Both occupiers and investors are pushing the market towards becoming more sustainable, not least to meet their own stated sustainability goals. In this vein it is now practically universal for major occupiers, especially blue-chip multi national corporations (MNCs), to have minimum sustainability requirements for any space they are looking to lease.

Notwithstanding, we see significant bifurcation across the region. In part this is reflective of government legislation, though it is noted that government intervention has not (yet) occurred to the extent seen in Europe where minimum sustainability standards have been legislated. In this regard, Australia and Singapore lead with over 90% of prime office stock sustainability-rated, with Tokyo at over 70%. However, government legislation in these markets continues to be tightened meaning sustained efforts to improve building performance are required.

In contrast, less than 50% of prime stock across the rest of the markets considered has been rated. It is important to note that this does not mean these buildings are not rateable, rather that landlords have not sought sustainability accreditation. Given the widespread shift to a greener future, it’s likely that pressure on landlords to demonstrate their assets’ sustainability credentials will only increase. More widely, there is little to no standardisation of sustainability accreditation across markets. Unlike in Europe and the U.S., which operate under a common regulatory environment, this does not exist in Asia Pacific. Rather sustainability accreditation tends to follow local norms such as NABERS in Australia, BCA Green Mark in Singapore and BEAM Plus in Hong Kong, as well as DBJ’s Green Building Certificate and MLIT’s CASBEE accreditation in Japan, making comparison of standards more challenging. Only mainland China and India have been more inclined to adopt an international standard, mainly choosing to use LEED certification.

FIGURE 5: PROPORTION OF PRIME ASSETS WITH AN ACCREDITED SUSTAINABILITY RATING

Source: Cushman & Wakefield

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