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Australian cities ranked among the world?s 'greenest' in new study

Property Markets / Outlook

Australia

May 03 2018

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Major metropolitan office markets across the globe are seeing a significant increase in the adoption of “green” building certification programs, according to the inaugural International Green Building Adoption Index (IGBAI) – a study by CBRE and Maastricht University (Netherlands). The study reports that 18.6% of space in 10 markets across Australia, Canada and Europe is now certified “green” versus just 6.4% in 2007. 

Canadian cities set the pace, with 51.6 percent of the space in Vancouver and 51.0 percent in Toronto holding “green” certifications, while Australian cities Sydney and Melbourne ranked third and fourth in the index, having made significant strides over the past decade. 

In 2017, Australia’s Green Property Index figures demonstrated that on average the total three-year annualised return for “Green Star” six-star rated office buildings was 15.6% compared to a 12.8 % total return for the remainder of the market.

The study showed increased demand for more environmentally responsible buildings from governments, corporate tenants and institutional investors has been particularly evident in cities where “green” properties made up virtually no part of the office market just a few years ago. Highlighting this, Sydney and Melbourne saw their “green” office square footage increase from less than one percent in 2006 to more than 46 and 28.8 percent, respectively. Additionally, Warsaw’s “green” office market was essentially non-existent as recently as 2010, but now comprises 21.3% of space tracked by CBRE.

CBRE’s Pacific Head of Sustainability Emma McMahon said the Australian real estate market had been well recognised as a leader in sustainability and adoption of green building certification for a number of years. 

“Australia has topped the GRESB leaderboard for the past seven years in a row. The country’s industry driven integrated approach to sustainability and associated reporting is testament to efforts to create efficient buildings and precincts, healthy working environments and inclusive communities,” Ms McMahon said.
 
“Green building certification tools such as Green Star and NABERS are now hygiene factors in this mature market and largely an expectation of tenant customers leasing office space, reflected in the outperformance figures within the research report.”


Vancouver, the top ranked city, has a formal initiative and action plan – “Greenest City 2020” – toward becoming the greenest city in the world by 2020. In Vancouver and Toronto, green building trends will continue to drive both new development and redevelopment of office product. 

Even the markets that reported the smallest percentage of green office space relative to their total office property inventory saw noticeable growth. Paris, the largest market in the study, saw green building certifications increase from 0.1 percent in 2007 to 9.1 percent in 2017; while the second largest market, London, went from 0.2 percent in 2010 to 8.7 percent in 2017. 

Similarly, Frankfurt reported 17.5 percent green product, up from 1.4 percent in 2009; Stockholm reported 12.6 percent, up from 1.2 percent in 2011; and Amsterdam reported 11 percent, up from 0.1 percent in 2011.

“Despite the presence of a wide variety of local building certification programs, internationally recognised green building certificates tend to be more widely adopted in the commercial real estate market. Tenants and investors need such standardised measures of environmental performance,” said Dr. Rogier Holtermans, project lead on the International Green Building Adoption Index.

CBRE’s International Green Building Adoption Index is an expansion of the firm’s annual U.S. Green Building Adoption Index, also produced in collaboration with Maastricht University, which details the growth and distribution of “green” buildings in the country’s top 30 office markets. However, there are key differences in the reports. Specifically, in the U.S., “green” office buildings are defined as those that hold either an EPA ENERGY STAR® label, USGBC LEED® certification or both. In the markets studied in the international report, the green certification programs differ from country to country, with some overlap, particularly in the European markets. However, no matter a market’s certification programs, each city studied reported increased adoption of those programs.

The report’s full market findings are as follows:

Photo by Frances Gunn on Unsplash

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