A recent study carried out by Investment Property Databank (IPD), alongside the Green Building Council of SA (GBCSA), has found energy efficient commercial buildings within South Africa deliver better returns, indicating they are better investments.
The research results of last year indicated that energy efficient buildings had larger occupancy levels, generated higher net incomes per square metre and delivered higher net income growth in comparison to less efficient buildings.
Additionally, these greener buildings consumed around a third less of electricity and half the amount of water, equating to lower utility bills for occupiers and allowing businesses to reduce operating costs.
The study took into account 461 commercial buildings owned by nine funds – Delta Property Fund, Growthpoint Properties, Hyprop Investments, Investec Property Fund, Liberty Properties, Vukile Property Fund, Old Mutual Property, Pareto Limited and SA Corporate Real Estate Fund. It compared the top quartile energy efficiency properties to the rest of a sample representing a great amount of the South African commercial property sector.
Results revealed that in the year to December 2013, properties with top quartile energy efficiency returned a total of 15.9% - 170 basis points higher than the balance of the sample, which delivered a 14.2% total return.
The income returns gained by the two sets of properties were identical at 7.8%, however the energy-efficient properties showed a higher capital growth of 8.1%. The findings were parallel similar studies conducted internationally.
The IPD South Africa Annual Green Property Indicators, with sponsors from the Old Mutual Investment Group South Africa (Omigsa), was released on Friday during the seventh annual GBCSA convention in Cape Town.
Chief executive of the GBCSA, Brian Wilkinson, explained the index confirmed that investing towards energy efficiency was good business for property owners and is set to become a significant tool to create even more sustainable and efficient buildings throughout the rest of South Africa.
This is as Wilkinson described Green leadership as having a great impact upon commercial property within South Africa. This is with the advantages for users of green buildings having already been greatly established.
The impact of green building and efficient-building management on the financial performance of a building was also hoped to be showcased to further support the case for green innovation within the South African property sector.
Wilkinson added the council could now confidently say that green buildings in South Africa was a true win-win as it was proven that both owners and occupiers of green buildings achieved significant and meaningful benefits as the environment also won.
Phil Barttram, the vice-president of IPD parent company MSCI in South Africa, said the energy-efficient properties were on average, ironically two years older than the balance of the sample, pin pointing the positive impact of retrofitting and other sustainability initiatives on investment performance.
The property managing director of Omigsa, Peter Levett, said that the index indicated a growing understanding that sustainability parameters, including resource efficiency, were a significant consideration for long-term financial performance within the property sector.
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