In recent years, sustainability has become increasingly important in the real estate industry. All stakeholders, including landlords, occupiers/tenants and investors, are taking various approaches and initiatives to demonstrate their commitment to building a more sustainable future for the city.
According to JLL Research, the average age of Grade A office buildings in Hong Kong is 27.1 years. More than 19% of the stock was built over 40 years ago when sustainability and green building concepts were largely absent. In total, merely 22.4% of all existing buildings and 31.1% of existing office space (GFA) are green-rated. Thus, the road to achieving net zero in the built environment appears long.
Nevertheless, major industry participants are paying considerable attention to their sustainability drive. As landlords’ awareness of environmental, social and governance (ESG) responsibilities has risen significantly during recent years, green certifications have become an important “amenity” of new buildings. Several much-anticipated new projects have obtained green certificates in the construction phase. For example, Two Taikoo Place of Swire Properties has achieved pre-certified platinum ratings, and The Henderson in Central has received accreditation for BEAM platinum (new buildings).
Many developers in Hong Kong are incorporating their corporate sustainability goals into their business targets and taking the lead in the industry. Swire Properties, for instance, is among the most vocal developers in this area. The company’s green practices reflect its commercial property portfolio with multiple green-rated office buildings and various pioneer programmes opened to its tenants and occupiers. Specifically, Swire has partnered with a sustainable asset management company to provide its office tenants exclusive access to premium commercial furniture, which the tenants may purchase at a cost from a dedicated showroom. This solution intends to help Swire’s tenants to reduce their organisation’s environmental impact and achieve their sustainability goals.
In addition, more and more corporate occupiers are taking action or actively planning to contribute to sustainability. As a clearly-defined pathway for companies to reduce emissions, initiatives following science-based targets (SBT) have become a benchmark of green commitment. The below chart shows the percentage of companies with a presence in Hong Kong who have fully or partially committed to SBT. Among those companies, 44% are professional services, for example, law firms, consulting companies and accounting firms, which are also listed as top tenant profiles in the Hong Kong Grade A office market. Therefore, the initiative could potentially translate to “low-carbon” real estate decisions and reflect in the choices of office space the company may pursue.
Figure 1: Companies commit to SBT by industry in Hong Kong
Source: JLL Research
While sustainability is likely to remain an ongoing topic in the office market in the foreseeable future, key industry leaders are driving an increasing number of initiatives to meet social and environmental responsibilities. New office buildings will focus more on sustainable credentials and wellness amenities to attract occupiers and investors and tap green building opportunities.
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