REPORT- 3 March 2010 – The Global Financial Crisis has sharpened the appetite of investors for sustainable property and driven a new interest in slashing outgoings, according to a new survey from Jones Lang LaSalle.

Even more impressive was that 100 per cent of all investors surveyed recognised that sustainability issues had an impact on their assets.

According to the Survey of Investor Sentiment  31 per cent of respondents said they would pay more for a building with sustainability potential, up from 18 per cent in late 2008 and above the previous peak of 29 per cent in late 2007.

Anita Mitchell, Jones Lang LaSalle head of energy & sustainability services Australasia, said the results reflected that market expectations continued to drive sustainability despite the economic downturn.

“It is reassuring to see that, despite the difficult operating environment over the past 18 months, sustainability has remained on the business agenda and has now returned to its highest ever level of investor interest,” Ms Mitchell said.

For the first time in the Jones Lang LaSalle survey’s four-year history, 100 per cent of investors surveyed agreed sustainability impacts on their investment decisions.

Ms Mitchell said sustainability of buildings remained predominantly a “tie-breaker” factor in investment decisions, with 44 per cent of investors saying sustainability factors would sway their choice between two otherwise equal alternatives.

In other highlights from the survey:

  • About half of investors said the issue would become critical over the next one to five years, up from 45 per cent  of respondents in 2008
  • More investors view sustainability as an issue that is critical now or will be within the next 12 months – 38 per cent in 2009, up from 36 per cent in 2008
  • Fewer investors view it as a longer-term issue that can be addressed in five to 10 years -13 per cent in 2009, compared to 18 per cent in 2008
  • Six of seven nominated factors driving sustainability were rated more highly than in past surveys.
  • Tenant expectation – 88 per cent said it was important, up from 74 per cent in 2008.
  • Lower outgoings – Achieving reductions in outgoings was rated equally important as achieving NABERS Energy and Green Star ratings. (63 per cent of respondents agreed with this. Achieving reductions in outgoings was more important (58 per cent  than the year before (40 per cent).
  • Legislative and industry changes significantly increased in importance with 38 per cent of respondents compared to 29 per cent in 2008. This was more than double the relevant 2006 figure of 16 per cent.
  • Data measurement and reporting was continued priority – with 31 per cent of respondents compared to 29 per cent in 2008.  In 2006 the figure was 8 per cent.

Commenting on the importance given to outgoings in the wake of the GFC,  Ms Mitchell said: “It is unsurprising investors rated cost reduction factors much more highly than before and, currently, more highly than other investment return factors such as increased rentals (at 56 per cent) or building valuations (at 50 per cent).

“The fact that all these factors increased across the board in terms of importance does indicate that investors are starting to be more forward looking but that cost savings will remain on the agenda due to the short term direct benefits they provide.”

The results reflected the increased political, media and public focus on potential climate change legislation and the proposed introduction of Mandatory Disclosure of Commercial Office Building Energy Efficiency later in 2010.

“The increase in importance of data measurement and reporting is no doubt also being driven by legislative changes, including the Energy Efficiency Opportunities Act and National Greenhouse and Energy Reporting Act.”

Chief executive officer of the Green Building Council of Australia, Romilly Madew, said green building were no longer the exception, but the rule.

“More than 220 buildings around Australia have been certified under the Green Star environmental rating system for buildings.  The equivalent to 3.5 million square metres of building space has a Green Star rating, with another 470 projects – 6.5 million square metres – registered to achieve Green Star certification.  In total, around 10 million square metres of building space has been impacted by Green Star.  To put that in perspective, that’s around 181 times larger than Sydney Harbour.  Clearly, sustainability is here to stay.

The Fifth Estate – sustainable property
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