JLL's survey also revealed that four in ten investors will only invest in buildings with energy-efficient features and renwable energy access by 2028 (Picture: Albert Chua/The Edge Singapore)
Sustainability features are becoming deal breakers for real estate investors in Asia Pacific (Apac), according to research by JLL. A survey conducted by the firm found that four in ten investors intend to only invest in buildings with energy-efficient features and renewable energy access by 2028.
The results reflect a fundamental shift from intent to action among investors when it comes to sustainability, says JLL. Beyond green certifications, investors are now focusing on the measurable performance of buildings and factoring it into how they evaluate and price real estate assets.
In JLL’s survey, 63% of investors indicated that sustainability considerations impacted their bid offers over the past 12 months. Four in ten investors increased their offers for sustainable properties, while three in ten decreased their bids or withdrew from deals involving non-compliant assets.
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Kamya Miglani, JLL’s Apac head of research for work dynamics, observes that sustainability obsolescence is now a key concern among investors, with 44% of survey respondents indicating worry over assets losing value to due to non-compliance or the inability to meet tenants’ sustainability demands.
She attributes this to building regulations and international reporting standards that are compelling investors to apply a “brown discount” to non-compliant properties. This regulatory influence is set to intensify as Apac governments strengthen building codes and mandate climate disclosures.
In Singapore, more regulations are being rolled out as part of the nation’s broader net-zero ambitions, including the upcoming Mandatory Energy Improvement Regime (MEI). The MEI, which will require owners of energy-intensive buildings to carry out an energy audit and implement measures to reduce energy use, is targeted to commence this quarter.
Against this backdrop, Miglani argues that investors and owners need a holistic, data-driven strategy that balances upgrades with on-the-ground operational realities and the tenant experience. “Those who get this right are not just complying with future rules; they are positioning their assets to outperform the market,” she adds.
According to JLL, such upgrades offer compelling returns, with immediate annual savings of over $40,000 estimated for light-touch retro-commissioning of a building’s systems. For comprehensive retrofits involving chiller and building management system upgrades, annual energy savings can go up to $500,000 for a single commercial building.
“As corporates and investors increasingly prioritise climate-resilient assets, those who future-proof their portfolios today will capture a distinct competitive advantage and secure long-term value,” says Miglani.