Singapore Topped the APAC Sustainability Index
According to a Knight Frank study, the top five green-rated cities for commercial real estate in the Asia-Pacific are Singapore, Sydney, Wellington, Perth, and Melbourne.
According to Knight Frank's Rising Capital in Uncertain Times report, the top-ranked cities all have one thing in common: low carbon emissions per person, plenty of green space, and minimal urbanisation pressures. However, the report emphasises the region's vulnerability to harsh weather, particularly in cities near the equator.
Christine Li, Head of Research, Asia-Pacific, said:
“While the real estate sector in APAC is adapting to the risks of these events, investors should still brace themselves for the impact of climate risks and erratic weather changes on their investment portfolios.
“The Index is closely aligned to what investors are interested in when benchmarking their portfolio and individual buildings. For example, the number of green buildings in the green score reflects the willingness and proactiveness of the local government and organisations in pushing for a more sustainable built environment. It also highlights those cities with an established market of investible green assets.”
The amount of green space, the availability of sustainably rated commercial buildings, and urbanisation pressures are three common factors shared by the top ten cities.
“Singapore stands out due to a comprehensive green building certification scheme and an ambitious plan to become a low-carbon built environment. Liveable cities like Sydney and Wellington boast ample green spaces that have been critical for inhabitants during prolonged lockdowns, providing a reprieve from highly urbanised lifestyles,” Li noted.
Climate change awareness is growing in the region, with more renters opting for buildings with green features. However, because demand currently exceeds supply, landlords can charge up to a 10% premium for sustainably-rated houses. According to the report, in response to the increased demand for green buildings, developers are likely to accelerate the development of sustainable buildings.
Neil Brookes, Head of Global Capital Markets, said:
“Investors are placing more emphasis on strategies that maximise their returns from their ESG efforts. We have seen a swift uptake of ESG metrics benchmarking in the APAC region in recent years, motivated by the imminent need to curtail climate risks.”
“With debt cost soaring, yield-seeking investors will also be compelled to move up the risk curve to secure the desired spreads. Many will gravitate to more active asset management strategies, such as repurposing and value-add plays, to generate alpha. Adopting sustainable measures not only enhances portfolio security but has been proven to add a positive price premium to assets,” Brookes concluded.
Source: Retalk Asia
