In the 20th century the concept of “ green building ” was a members-only club dominated by Birkenstock-wearing tree-huggers and environmental activists . But influencers of global warming at the beginning of the noughties rapidly engaged prosperous early adopters , who have in turn initiated a flood of mainstream market acceptance in the past decade as drought and the growing energy crisis have begun to hit home – and the bottom line .
Energy-efficient buildings consume about a third less electricity and half the amount of water than unretrofitted older builds , which not only significantly reduces monthly utility costs but also impacts long-
Energy-efficient buildings consume about a third less electricity and half the amount of water than un-retrofitted older builds
term financial returns , especially in the commercial sector . Recent research has revealed that energyefficient buildings enjoy higher occupancy levels and higher net incomes and income growth than their older or unrenovated counterparts .
Long-term advantage According to the 2015 IPD South Africa Annual Green Property Indicator released by MSCI in August last year , commercial properties in South Africa with top-quartile energy efficiency delivered a total return of 12.5 %, 140 basis points ( bps ) above the balance of the sample which delivered an 11.1 % total return for the same 12-month period .
The Indicator ’ s three-year report also ending December 2015 reflects a cumulative total return outperformance of 5.3 % and a 2.1 % higher net income . This was driven largely by superior capital growth as a result of higher occupancy rates , lower discount rates and a lower level of capital expenditure in energy efficient buildings .
Although “ green ” building is still a matter of choice in South Africa , revised building regulations promulgated in 2011 stipulate that all new buildings must be constructed in accordance with a list of energy-efficient specifications that cover aspects such as roofing , insulation , water heating and lighting .
Joff van Reenen , Lead Auctioneer and Director of specialist property auctioneers The High Street Auction Co . ( HSA ), says in recent years there has been a marked increase in the trend towards energy-efficient and eco-friendly conversion of older buildings , especially in Johannesburg ’ s most soughtafter business nodes .
“ The majority of the commercial and industrial buildings HSA auctions are at least 30 years old and , of these , 60 % to 70 % have been or are in the process of being completely refurbished and retrofitted by the new owners .
Moving off the grid “ Standard eco-friendly upgrades include replacing halogen lighting with LED lights , replacing old windows with UV resistant , double glazed glass , installing low water consumption plumbing and , increasingly common , the installation of smart building management systems with features such as passive infra-red technology that negates the need for light switches , which could number as many as 5 000 in a 10-storey building .”
Van Reenen adds that he is witnessing a growing number of rebuilds specifically designed to operate completely off the grid , with power supplied by energy sources such as solar panels and gas generators . Most buildings designed in this manner usually have the capacity to switch over to mains power as a back-up to ensure productivity is not lost , but if their systems are high quality , this is seldom if ever necessary . He attributes this design trend to the fact that eco-friendly construction has become a lot more affordable in recent years .
“ According to the Green Building Council of South Africa ( GBCSA ) Guide to Costs and Trends Report , energy-efficient buildings now have an average cost premium of only around 5 % compared to conventional construction , which means the additional outlay is quickly recovered , then investors only have substantial savings on running costs to look forward to down the line .”
Jack Bass and Rob Odendaal , Directors at Lew Geffen Sotheby ’ s Commercial & Industrial based in Cape Town ’ s Southern Suburbs say that although green building is still an emergent trend in the Peninsula , there are a number of companies and developers who have embraced the initiative and are setting the bar .
“ With energy costs rising steeply and water an increasingly scarce commodity , landlords are beginning to realise that it is well worth the capital outlay to refit older buildings with key elements like eco-insulation , energy-efficient lighting , water-saving devices .
“ We are also seeing a marked increase in mixed-use developments that are not only energy-efficient but also reduce individual carbon footprints by enabling people to live , work and play in one neighbourhood , with most amenities within walking distance .”
www . reimag . co . za AUGUST 2017 SA Real Estate Investor 13