Malaysia’s sustainable real estate landscape

September 27, 2022 / By  

It is no secret that the real estate sector is one of the largest contributors to carbon dioxide emissions. In 2019, the sector’s emissions hit a record high, being responsible for 38% of total global energy-related carbon dioxide emissions, according to the United Nations Environment Programme (UNEP). In Kuala Lumpur, Malaysia’s largest city, stationary energy (energy consumed within buildings) accounted for 41% of carbon emissions. As such, it isn’t easy to imagine a sustainable future for our planet without the real estate sector playing a key role in finding solutions.

In recent years, the conversation around Malaysian real estate has shifted more towards sustainability and green buildings. What was once a “nice to have” is now being pushed into the mainstream. Occupiers, landlords and investors, recognising the importance of sustainable real estate, have begun incorporating sustainability themes into their real estate strategies.

This is especially evident for government-linked companies (GLCs) and multinational companies (MNCs) in Malaysia, where JLL’s Sustainability Services team has undertaken several projects. One of these is the development of a hyper-modern sustainable building for a GLC where JLL led the advisory and guided the development towards WELL certification. Within the private sector, JLL advised a shipping company on a decarbonisation plan for their new warehouse development. These examples highlight how critical sustainability is for corporations. In today’s business environment, corporate strategies focused on sustainability can add brand value, meet consumer demands, increase efficiency, attract valuable talent and create new opportunities.

The shift towards sustainable real estate comes with additional benefits, which include:

  • Growing demand from occupiers. As more companies increase their sustainability commitments, they become more willing to pay premium prices for green buildings. Currently, out of 150 Grade A offices JLL Property Services (M) Sdn Bhd tracked closely, only 36% are certified as green buildings. These buildings typically command a rental premium of 5-15%, suggesting that occupiers are willing to pay that premium to move forward with their sustainability goals.
  • Optimising energy consumption. According to the Green Building Index, green/sustainable buildings could yield at least 30% to 40% energy savings compared to an average baseline building. Buildings with upgrades and higher levels of certification can realise further energy savings.
  • Access to incentives. Owners/occupiers of green/sustainable buildings are eligible for several tax incentives.
  • Avoiding brown discounts (referring to lower rents for landlords/decreased asset value when investors have failed to invest in sustainable upgrades).

While there may be a higher initial outlay in implementing green initiatives in real estate, it is a necessary step towards building a better tomorrow.

JLL’s Sustainability services team has the capability to assist corporations in building a sustainable real estate landscape in Malaysia, from strategising to implementation. The road to a sustainable future is long, and it’s crucial to start now.

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