Article

A closer look into real estate sustainability in the Philippines

November 12, 2021 / By

Real estate accounts for 38% of the carbon emissions globally, of which around 70% is in urban areas. Considering this significant contribution to global carbon levels, the need and importance of sustainability is undeniable.

The topic of sustainability is not new. Earlier, it revolved around green buildings and was heralded as a special feature, often a “nice to have”. Now, it has entered the mainstream, with real estate stakeholders demanding a certain gravity of sustainability in their spaces.

The uptick in conversations centred around this theme is anchored on shifts in the real estate landscape, as well as market needs and behaviour which have put health and safety as a focus. In addition, the benefit of engaging all stakeholders on the path to sustainability is also being recognised. The trend will enable occupiers and investors to fulfil their needs and demands to meet their sustainability goals while allowing landlords to increase their rentals, considering the premium[1] associated with sustainable spaces. A better tenant mix may also follow as lessees would likely be those who prioritise a green future. It is an overall win-win situation.

One of the top-of-mind paths explored is obtaining certifications issued by international and local governing bodies such as LEED , BERDE , EDGE, and WELL, among others. The growth of certified green buildings was evident in the past five years, recording a compounded annual growth rate of 4.6% as of 3Q21. Of this figure, around 67.1% are office buildings, while retail and residential developments account for 11% and 9.8%, respectively.

Figure 1: Number of Green Certified Buildings (1Q16 – 3Q21)

Source: JLL Research and Consultancy, Philippine Green Building Council

Although a commendable step forward, the road to true sustainability does not end with certifications. Common quick fixes such as energy-efficient lights, appliances and eco-friendly material are a good way to start. Mature developments can also consider de-densification and optimisation of technology to minimise human contact, improve cost savings, and provide an overall better customer experience.

Beyond these, local environmental factors should also be considered as crucial to becoming a sustainable development. Various local environmental laws have been established way before the pick-up of green building certifications. Republic Acts like RA 6969, RA 8749, RA 9003, and RA 9275 serve as good frameworks when starting and going deeper into your journey to sustainability.

There are players who are well advanced in this field, and even going to farther lengths, such as NEO who already achieved a net-zero carbon energy this 2021, gaining 5-star certifications under the Advancing Net Zero Philippines Program, as well as Arthaland who topped off Savya Financial Center North Tower, a multi-certified green building this 2021. For most, however, the journey is yet to start. The path to sustainability is a daunting task and requires commitment for the long haul. There is a lot to consider and learn, and experts are there to aid us along the way. The recent health crisis amplified and accelerated the move to a sustainable future. Neglecting this call will likely reduce asset value and obsolescence in the long term. On a broader scale, the Philippines also announced its target to reduce carbon emissions by 75% by 2030, committing to the Paris Agreement on Climate Change. This ambitious target requires support from the entire industry, be it old or new players, and everyone would need to have their skin in the game.

[1] Rentals for sustainable buildings are around 21% higher than “brown” buildings in 2020 based from JLL Philippines’ research

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