Why greens like Eskom
There was something like jubilation among delegates to the SA Green Building Council's second annual convention in Cape Town. Eskom's proposed 45% annual tariff rise for the next three years will give them a huge boost.
Not that the two-year-old council is languishing. It already has 500 corporate members; also, 1 050 architects, engineers and other professionals have undergone training for green accreditation, and 111 have passed the exam, according to council chairman Bruce Kerswill.
There were 700 delegates at the conference where sponsor Nedbank was awarded the first (four-star) green rating for the extension to its head office extensions in the Sandton CBD. Another 22 buildings are being prepared to be rated. "I wouldn't call it jubilation," notes Kerswill. "The Eskom tariff increases will be tough, but an impetus to save energy."
The moral argument for sustainable buildings is that the existing ones are responsible for about 40% of the greenhouse gases that contribute to global warming. But there is also a "sustainability dividend", Niall Enright, director of energy & climate change at Environmental Resources Management in the UK, told the convention.
This dividend is the result of using environmental science to create and enhance real estate asset value," he says. "An American Energy Star certification adds an average of 6% to rental value and 16% to the capital value of office buildings. In Australia, research by the green building council in 2008 showed certified buildings increased their value by 10%, rents were 5% to 10% higher, and return on investment rose by 14%."
Enright says green buildings cost less to run, have fewer vacancies, don' t depreciate so much and have lower insurance costs, so their net income is higher. "They are also more attractive to tenants, whose aspirations are changing."
Half the respondents to a survey by global property advisers Jones Lang LaSalle were willing to pay 5% more rent for a green building, and 25% were prepared to pay up to 10% more.
Listed US green property fund Innovest has delivered a 15% better share performance than its sector and has a 10,4% market premium. "The evidence is irrefutable," adds Enright.
What ensures that green buildings will come to the centre of the commercial property investment market is the recent "Valuation Information Paper 13" by the Royal Institution of Chartered Surveyors. It establishes methods for valuing green buildings separately from others.
Eskom's tariff hikes will amplify the difference in SA, and pump the sustainability dividend even higher for local developers. Paul Carew, head of Cape-based building environmental performance engineers PJ Carew, projects energy costs going from R150/m²/year now to R380/m²/year in 2012, then rising to over R500/m²/year in 2009 rand by 2028. He says utility costs in SA could be greater than in Britain, equal to the Netherlands and not far behind the most costly country, Italy.
In a talk titled "Water: The Next Carbon", PJ Carew's Mary Haw made it clear that water's cost and the focus on saving - and trading - was the next big thing.
Haw started with a photograph depicting the total water in the world as a globe, seen against the globe of the earth, to drive home the fragility of supply (see picture). She pointed out that surface and atmospheric water - the main supply form use - was only 0,4% of the earth 's total water body.
She then set out practical ways in which developers, owners and tenants could use water better.
It's possible that the most important new trend comes from Australian George Tieman, head of the state of Victoria's projects & planning organisation VicUrban. Green buildings aren't enough, he says. The future lies in the sharing of cooling, water purification and other systems. For instance, an office building doesn't have enough dirty water from basins, baths and showers to be purified into "grey" water for toilets and gardens. But a block of flats has too much.
And that's at the heart of possibly the fastest-growing trend outside of the iPod and iPhone.
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