Bottom-line benefits like consistent increases in gross rentals, lower operating costs and less capital expenditure over a building’s life-cycle are three key reasons why property investors are embracing green buildings around the globe.
And at the third annual Green Building Council of SA (GBCSA) Convention & Exhibition, sponsored by Nedbank Corporate Property Finance, next month, those investment benefits of green buildings will be in the spotlight – and under scrutiny – for South Africa’s property investment community.
“The economic benefits and financing of green buildings are high on the agenda for investors as well as for built environment professionals,” says GBCSA CEO Nicola Douglas.
A respected sustainability expert Lisa Michelle Galley, managing principal at San Francisco-based Galley Eco Capital, a green real estate finance consultancy, will be one of the international speakers at the Convention.
She will tackle the topic of The Global Real Estate Game Change: Positioning Portfolios for Success and make a financial case for property investors to go green. Galley will also be facilitating a more detailed seminar on The Fundamentals of Green Building Investment Analysis, which is aimed specifically at commercial property investors, developer and financiers, and takes place on the Monday preceding the main Convention programme.
Galley uses no less an example than the Empire State Building in New York to illustrate her point.
“Tony Malkin, who owns the building, said at a conference recently that building is achieving a 38 Return on Investment on its retrofit measures,” she says.
“He also highlighted the fact that the property now attracts a whole new segment of brokers and tenants – in addition to the ones who were always interested in the building.”
For investors who are still sceptical, Galley points to three features of green buildings, confirmed by research that has universal appeal to property owners, whether in SA or elsewhere.
First, green buildings consistently show above average increases in gross rentals.
She points to faster take-up rates, a reduction in turnover vacancy rates, and higher retention rates of existing tenants.
“That translates into lower tenant installation costs on new leases.”
Second, green buildings have lower operating costs. Utility costs, maintenance expenses and insurance costs all tend to be reduced in energy-efficient and sustainably-managed buildings.
“Investors find that improved green operations and maintenance protocols mean fewer service calls from tenants,” she adds.
Third, green buildings require less capital expenditure over the building lifecycle, taking pressure off the property investor’s cash flow.
“Not only do investors reap the savings of more efficient systems, those systems also last longer and don’t need to be replaced as frequently,” she explains.
The bottom-line, she says, is that tenants prefer green buildings.
“The good news is that some of the most conservative landlords are reporting that their energy efficiency and green building programs are paying big dividends,” she says.
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