'Building Better Returns' - The Australian Property Institute

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6. Property Industry Implicationsand ChallengesThis report has clearly highlighted the added value of green office buildings in Australia, and the differencesin property financial performance green premiums across the NABERS energy rating and Green Star ratingcategories. This was particularly evident in the substantial green premium in values in the higher NABERS andGreen Star categories, as well as across most of the other property performance parameters assessed, withdifferences in green premiums seen between the Sydney CBD, Sydney suburban and Canberra office markets.The extra added value of the top NABERS energy rating (5 star) and the Green Star rating was clearly evidentin most green premium analyses, as was the presence of discounts in the lower NABERS energy ratings.Given the continued significance and importance of sustainability in the property industry, future challengesfor the property industry in this key area include:• The need to see green office building priorities more fully extended to existing office buildings via retrofitstrategies - this will see a more comprehensive green office buildings agenda across both new officebuildings and existing office buildings.• The need to assess other key Australian office markets (eg: Melbourne) and introduce cost data for a fullerbusiness case assessment of the amount of investment needed to produce these green premiums.• The need for valuers to fully understand sustainability issues when valuing green office buildings. Thisparticularly presents an opportunity for the API to provide strong industry guidance to valuers in this areavia practice standards and guidance notes for the valuation of green office buildings.• The need for improved sustainability data in property databases - this is a key ingredient for the rigorousidentification of green premiums for office buildings.• The need for ongoing analysis of green office buildings on a regular basis to assess the ongoing impact. Thisis essential to ensure up-to-date analyses are done; particularly as more green office buildings come on-linevia NABERS and Green Star ratings.• The need for ongoing active promotion of green office buildings by the API, PFA, Property Council of Australia(PCA), Royal Institution of Chartered Surveyors (RICS) and Urban Development Institute of Australia (UDIA)- this should be a key ingredient in their professional mandates to ensure the property industry and theirmembers are up-to-date with this increasingly important area. For example, expanded sustainabilitywebsites and relevant links are essential; both at a local and international level.• The need to assess whether these green premiums will soon reflect office market norms, subsequentlyresulting in discounts for non-green office buildings. This will soon see green office buildings as thebenchmark market rather than non-green office buildings. This feature has already become evident insome of the analyses in this report.42 ‘Building Better Returns’
Final commentGreen office buildings are a key element in the office property landscapes in Australia, supported strongly byall stakeholders in the sustainability agenda.This research has been the first key step in trying to explicitly articulate and assess the premium attached togreen office buildings in Australia in a rigorous manner, using internationally-accepted methodologies. Theresults are very positive and also identify significant opportunities for further research into this increasinglyimportant area.The research team would like to commend the API and PFA for driving and leading this important propertyresearch agenda of sustainability. Also, for the strong support from Jones Lang LaSalle and CBRE in providingthe property-specific information and the Office of Environment and Heritage and the Green Building Councilof Australia for the green office building rating information.Overall, this project has been an excellent example of a high level of positive cooperation between allstakeholders, pooling their high quality corporate resources to enable the full and rigorous assessment ofthe financial performance of green office buildings in Australia.“With the business case for green commercial buildings now deeplyrooted in a growing body of evidence, it should be crystal clear to propertyinvestors that there are significant performance gains to be made fromcompetitively pricing green assets, and by the same token, a uniqueopportunity to be in the driving seat of the current shift to a low-carbonand resource-efficient economy.”Paul Clements-HuntHead of United Nations Environment Programme Finance Initiative‘Building Better Returns’43
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'Building Better Returns' - The Australian Property Institute

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