Asia Pacific cities facing shortage of sustainable office buildings: JLL
/ EdgeProp Singapore |
Singapore is expected to face a 56% undersupply of net-zero carbon-ready offices by 2027 (Picture: Albert Chua/The Edge Singapore)
SINGAPORE (EDGEPROP) - Major Asia Pacific (Apac) cities will face a critical undersupply of sustainable buildings as occupiers increasingly seek out greener buildings, according to an October research report by JLL. This comes as net-zero carbon (NZC) targets prompt companies to make real estate decisions that align with overall sustainability ambitions.
While more occupiers are starting to look at the green certifications of a building, the supply of offices that actually meet NZC requirements is inadequate, highlights JLL. “Leasing office space in green-certified office buildings is becoming non-negotiable for occupiers, but currently there is very little correlation between these certifications and a building’s energy performance,” says Kamya Miglani, head of ESG research, Asia Pacific, at JLL.
Miglani continues: “Even buildings with platinum-grade green certifications may not be NZC-ready, partly because current regulations are not stringent enough to demand NZC-ready assets.”
JLL’s Sustainable Offices City Index, which evaluates 20 cities in Apac on four themes — green stock, physical risk to buildings, city competitiveness and city administrations’ proactiveness with NZC targets — highlights that in the region’s top-ranked city of Sydney, current green building standards are not enough to achieve a NZC-built environment.
JLL defines an NZC building as all-electric, highly rated, energy-efficient and powered by renewable energy. Sydney is expected to face an 84% undersupply of NZC-ready office space by 2027.
Supply-demand gap of ESG-focused office space (up to 2028)
Source: JLL
Hong Kong and Mumbai, which are placed in the bottom half of the index, are likewise expected to see a 68% and 62% supply deficit of top-quality sustainable workplaces respectively. In Singapore, a 56% undersupply of NZC-ready offices is expected by 2027, while in Melbourne and Delhi, the undersupply figure is estimated at 43% and 44% respectively.
Miglani points out that demand for high-quality low-carbon workplaces will inevitably grow when lease expiries approach. “Occupiers risk being stuck with limited options if they fail to plan ahead and re-evaluate the sustainability credentials of their current premises,” she adds.
With this critical undersupply of sustainable orifice buildings in Apac, JLL says the region must accelerate the rate of retrofitting to meet future regulations in order to cater to the growing demand of sustainable workplaces. With over half a billion sq ft of Grade-A office space in the region built before 2011, retrofitting potential is substantial in Apac.
JLL points out that in some cities, governments have already started playing a role in addressing the supply-demand gap for NZC-ready office spaces. In Australia, an energy performance measure in the country’s National Australian Built Environment Ratings System was introduced in June to reward electrification of buildings and the procurement of renewable energy for building operations.
In Singapore, subsidies have been provided to building owners to lower upfront capital costs for energy-efficiency retrofits, depending on the level of energy standards attained. “The involvement of governments, coupled with corporate demand and action, will fuel the momentum and ensure a steady pipeline of NZC-ready office stock in the future,” Miglani says.
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