Singapore's Asia Square Tower 2 made headlines in September when it was sold to CapitaLand Commercial Trust for $1.5 billion, setting the record for the biggest office deal in Asia-Pacific this year. In 2016, Asia Square Tower 1 was acquired by Qatar Investment Authority for $2.45 billion.
There is something else that sets these properties apart: They are among the most sustainable buildings in the region. In 2012 Asia Square Tower 1 became the first commercial development in the city-state to receive the Leadership in Energy and Environmental Design Platinum Certification, a standard granted by U.S. Green Building Council. Tower 2 followed two years later.
It used to be that real estate developers saw sustainability practices as a luxury. But times have changed. According to a recent white paper by LaSalle Investment Management, investors recognize that investing in sustainability boosts asset-level and portfolio-level financial performance. Large institutional investors such as APG and CalPERS adhere to Environmental Social and Governance guidelines, while a forward-thinking developer like Singapore's City Developments is among the top 50 most sustainable corporations in the world as ranked by the World Economic Forum.
JLL's landmark Offices 2020 report released in 2014 reveals that occupiers not only perceive green buildings as quality ones, they place emphasis on energy savings derived. Companies paying attention to employee productivity want the best work spaces. They are aware of studies linking sustainable offices to higher employee comfort and engagement.
Greater value and demand aside, there is no doubt that we need to play a stronger role in ensuring a sustainable future. The real estate industry is a significant contributor to carbon emissions and a heavy energy user. Figures from the United Nations Environment Program show that buildings are responsible for about 40% of the world's energy consumption and consume 40% of global resources. They also generate one-third of global greenhouse gas emissions. And in highly urbanized areas such as Hong Kong, buildings account for a far greater percentage of energy and greenhouse gas emissions than any other sector.
Governments in Asia are implementing stricter regulations to promote sustainable buildings. This includes two of the world's biggest construction markets. China's 13th Five-Year Plan unveiled last year includes a requirement for 50% of all new urban buildings to be certified green by local authorities by 2020. India currently has nearly 280 million sq. meters of green building projects registered and targets a green building footprint of 930 million sq. meters in the country by 2022, says Indian Green Building Council.
There is an urgent need for efficient, sustainable buildings in livable cities to house rising urban populations, particularly in the emerging markets of Asia-Pacific, which are poised to need more real estate for people and businesses alike. Indonesia will have 68% of its population living in towns and cities by 2025, and its cities are growing an average of 4.1% annually, according to data from the World Bank.
Developed cities in the region are helping to lead the way. In Australia -- named the world's most sustainable real estate market seven years in a row by the Global Real Estate Sustainability Benchmark -- Sydney's Barangaroo precinct is on course to become the country's first large-scale carbon neutral community. Part of this involves devoting 50% of the site to public open spaces and parkland. The buzz around Barangaroo has, in turn, attracted companies such as Industrial & Commercial Bank of China, KPMG and Westpac to take up offices there.
Given the wealth of gains and positive externalities, going green for your real estate has become a corporate fundamental. Policymakers and authorities are making sustainable buildings a priority as awareness of issues such as urban resilience, climate change, future-proofing, talent attraction and quality of life increases.
The real estate industry needs to do more to make sustainable buildings the norm, both in the developing and developed world. Buildings are assets that can make a world of difference to how we live and work today, and in the future.
Anthony Couse is the Asia Pacific CEO at JLL.