Highest Percentage of Green, Grade A Office Stock

Singapore Leads Asia For Highest Percentage of Green, Grade A Office Stock

SINGAPORE – As of Q3 2022, 90 percent of the Grade A office space in the city-state were certified as eco-friendly, according to the latest sustainability report published by Jones Lang Lasalle (JLL) on Tuesday afternoon (30 November, SGT).

The real estate consultancy said this is the highest percentage in Asia Pacific. It is also significantly higher than the regional average of 42 percent and Hong Kong’s 29 percent.

Nonetheless, Hong Kong’s green certified Grade A office buildings command a higher rent of up to 28 percent compared to non-rated workspaces in the Chinese territory. This is the highest rental premium for such commercial properties in Asia Pacific. Comparatively, the rental premium in Singapore ranges between 4 percent and 9 percent.

JLL said the higher office rental premium comes as businesses prioritise ambitious net-zero targets as one of their property leasing considerations. More importantly, the rental premium was the highest in Hong Kong among Asia Pacific markets due to the tight supply of green-certified Grade A office buildings as compared with other cities.

“The evidence that resilient and sustainable buildings in Asia enjoy a distinct occupancy and rental premium, against their non-certified contemporaries, is now irrefutable,” noted JLL’s head of ESG research for Asia Pacific, Kamya Miglani.

“The range of green premiums are correlated to the uneven supply-demand gap of green-certified versus non-green-certified buildings across many cities, which is insufficient to meet the occupier demand for sustainable buildings,” explained the property consultancy.

Moreover, the report underscored that eco-friendly certification is gaining traction among commercial property owners in the region. In fact, around 75 percent of the current green-certified Grade A office supply was added after 2015 with the adoption of the Paris Agreement on climate change. Around 42 percent of Grade A office space across Asia Pacific were rated as of Q4 2022 versus just 12 percent in 2016.

Notably, JLL compiled statistics from 3,089 Grade A office buildings in 14 cities across Asia, including Hong Kong and Singapore.

Furthermore, the real estate consultancy shared that demand for green office buildings greatly exceeds supply, with tenants targeting to have nearly 50 percent of their corporate property portfolios green-rated by 2025.

“Occupiers’ willingness to pay a premium will likely continue as society shifts towards an emphasis on green and sustainable spaces in a bid to address the concerns on climate risk and to meet company ESG demands,” added Miglani.

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