23 May 2013 — The green building industry in Western Australia has taken a while to get into gear, but according to Georgiou Capital development manager Greg Hancock, the only way is up.
Georgiou Capital looks set to build a 15-storey office tower and hotel for Perth’s CBD, which will be chasing a five-star NABERS rating and a five-star Green Star rating, too.
The green property market is “definitely increasing” in Perth, says Hancock, and Georgiou are looking at capitalising on the trend and solidifying their place in the market.
The Milligan Square development will create an extra 21,000 square metres of office space to the tight Perth market and is likely to be valued upwards of $200 million.
Knight Frank state director Ian Edwards has just launched the leasing campaign for the yet-to-be-built project. He says going Green Star makes financial as well as environmental sense.
“If a building’s worth more than $50 million, it’s in the realm of an institutional purchase,” says Edwards. “And no one wants to buy these large buildings if they’re not Green Star-rated.”
And, to be honest, Green Star’s appeal isn’t in its environmental benefits.
“In commercial property you make your money when you buy a building,” says Edwards, “but you need an exit strategy.”
“If I have a $200 million building, I need to make sure someone will pay for it and that it will keep its value.”
Green Star is increasingly being seen as a way to ensure a building is going to be attractive to buyers in the future.
“It’s to do with long-term ownership strategies,” says Hancock. “We want to make sure our buildings don’t become redundant.”
He identifies a shift in the market over the last five years, and as mandatory disclosure legislation becomes “front and centre”, companies more than ever need to be seen to meeting environmental outcomes, particularly the resources-based industries the developer is targeting. For these companies, Hancock says, environmental sustainability criteria are crucial for corporate social responsibility goals. And Green Star and NABERS become important marketing tools.
Edwards says the environment is still a concern.
“People do care about the environment but they sometimes do things because they’re seen as politically good,” Edwards says.
He thinks Western Australia had some catching up to do with the rest of the country on sustainability, for a number of reasons.
Firstly, the physical isolation and distances between population centres had practical implications.
“Not a lot of industries are geared towards green outcomes,” he says. “It costs a lot more and the outcomes aren’t as good.”
Secondly, there’s an embedded skepticism towards the green movement and sustainability, something that is uniquely Western Australian.
Thirdly, there isn’t the “legislative teeth” to compel more energy efficient buildings. Where minimum standards exist in other states, Western Australia lags behind.
But the mood is changing, and Perth is looking to catch up.
“It’s changed a hell of a lot in a short time,” says Edwards. “Five years ago there were no Green Star buildings.”
According to the Green Building Council of Australia, there are now 69 certified or registered projects in the state.
Hancock says companies like Georgiou have to keep with the trends to remain relevant in the marketplace.
“If you’re not in front, you’re behind,” he says.
Strong interest has already been shown in the development, and Georgiou hopes to begin construction in early 2014.