ESG Top Consideration Among Singapore Property Investors, Tenants
SINGAPORE – Environmental, social, and governance (ESG) factors, particularly substantiality, are now significantly affecting the decision of real estate investors and commercial property tenants in Singapore, reported the South China Morning Post (SCMP) on Tuesday (9 August, SGT).
“From an investor’s perspective, ESG is at the forefront of every investment decision given ESG-compliant real estate would mean greater access to funding opportunities such as green financing,” explained Christine Li, Research Head for Asia Pacific at Knight Frank.
“From the tenant’s perspective, ESG is high on the priority list and we are observing more multinational companies reaching out to landlords to request for more ESG-related data such as water consumption and utilities.”
Moreover, some anchor tenants of commercial properties have established global-level targets for their property portfolio to secure green certifications.
“Renewable energy use such as solar energy has also been a plus for many occupiers. Wellness and safety of the workspace have also been mentioned by tenants when they sign up for workspaces. These come under the social aspect of ESG,” Li noted.
Aside from that, the significance of ESG in real estate investment was underscored in CBRE’s “Asia Pacific Investor Intentions Survey 2021”. The research discovered that more huge property investors are incorporating ESG in their investment criteria in 2022. These investors tend to focus on buying buildings with eco-friendly ratings, as well as upgrading existing commercial properties to improve its water usage and energy efficiency, as well as the wellness of its occupants.
CBRE stated that Singapore’s focus on ESG would continue to spur property investors to include ESG in property upgrading plans. This is not only to conform to regulatory requirements, but also to enhance brand image and preserve future asset value of their properties.
In particular, investors and tenants are expected to prioritise buildings undergoing major upgrades to comply with the higher minimum energy performance requirements set by Singapore’s Building and Construction Authority (BCA), on top of enhancing ventilation and indoor air quality to tackle issues that arose during the COVID-19 pandemic.
Furthermore, commercial property owners, particularly office landlords are expected to try to improve tenant experience by offering a wider range of rent-generating amenities, like areas where staff can relax and socialise.