Green building certification in Apac office market hits halfway point: CBRE

Property consultancy firm CBRE says green office building adoption in the Asia Pacific (Apac) region has grown steadily over the past year, driven by net-zero targets. In a March research report, the firm says that 50.5% of office buildings in Apac have achieved green building certification as of June 2024, rising 6.5% y-o-y.

Leading markets include Australian cities like Sydney, Melbourne and Brisbane. CBRE also notes that the completion of several major green-certified projects in Tokyo has boosted its green office building stock, now with an adoption rate exceeding 90%.

Percentage of green-certified office stock per total office stock by market (floor space)

Singapore also stood out. CBRE notes that the city-state’s Grade A office market is now 100% green-certified. All new buildings obtain certification and existing buildings with a gross floor area of over 5,000 sq ft undergo major retrofitting to achieve minimum Green Mark certification.

The rise in the number of green office buildings comes as Apac countries seek to meet decarbonisation targets. According to CBRE, authorities in several Apac markets have committed to halving carbon emissions by 2030 and attaining net zero emissions by 2050.

A survey conducted by the firm last year found that about half of asset owners surveyed are aiming for net zero by 2050, which aligns with country-level targets. A separate CBRE survey also found that tenants hope to achieve net zero by 2030, indicating a gap in decarbonisation timelines.

Still, CBRE expects this gap between landlords and occupiers to narrow gradually. “Recent months have seen selected top global companies push back and refine sustainability goals or net zero targets,” the report says. It adds that some firms are considering delaying their targets by a few years or up to two decades due to various factors, including the need to balance business growth and challenges in securing green real estate.

Meanwhile, landlords are increasingly pursuing green certification of their portfolios and adopting new technologies to improve energy efficiency at new and existing properties. “We expect that the gap between what landlords offer and what occupiers commit to will gradually narrow, eventually leading to alignment between the two parties on the net-zero timeline,” says Ada Choi, CBRE’s head of research for Apac.

CBRE’s report found that office buildings in the Apac region have a green rental premium, which refers to a higher rental value for green office space compared to non-green spaces. This premium ranges from roughly 1% to 4% over non-green buildings. 

Green adoption and estimated overall green rental premium

Premiums were smaller in established markets such as Singapore and Australia, where green-certified properties are abundant and have become an expected feature for new properties, reducing occupiers’ willingness to pay a premium, says CBRE. In contrast, markets with low green building adoption rates such as Hong Kong and Mumbai, registered at the higher end of the premium range. 

However, Apac markets have a brown rental discount (the discount in rents of non-green buildings compared to market rents) ranging from 0% to 3%. Over time, CBRE anticipates green premiums to diminish further as green features become more widely implemented across more markets.

Despite narrowing premiums, CBRE adds that green asset owners enjoy higher occupancy rates, with green office buildings outperforming non-green ones by around 2%.