Matthew Phan, Business Times 5 Mar 08;
(SINGAPORE) Contrary to what some developers think, a majority of companies are willing to pay a premium for properties designed with 'sustainable' principles in mind, a recent survey by real estate firms Jones Lang LaSalle and CoreNet Global shows.
The bottleneck is, rather, on the supply side, where the ability to address market demand is 'presently sporadic at best and needs to be urgently addressed', says the survey, which was published yesterday.
Entitled Global Trends in Sustainable Real Estate: An Occupier's Perspective - Feb 2008, it was conducted on 400 corporate occupiers at conferences in Singapore, Denver, Melbourne and London last year.
Most occupiers recognise that energy-efficient and environmentally friendly property, such as buildings designed to US LEED or equivalent standards, could cost 10 per cent more to build.
However, 62 per cent of respondents globally, said they were prepared to pay a premium of up to 10 per cent, and 8 per cent indicated willingness to pay even more.
The willingness to pay varied across markets. American occupiers were most enthusiastic, with 77 per cent willing to pay more, followed by occupiers in Australasia and Europe.
In Asia, 48 per cent were willing to pay up to 10 per cent more, significantly less than elsewhere, but 16 per cent were willing to pay a premium of over 10 per cent, significantly higher than elsewhere. This was 'possibly due to the market scarcity of solutions', said JLL and CoreNet.
Globally, 'despite willingness to pay the price, a lack of options and services in some areas has been a limiting factor', the survey found.
Overall, 46 per cent of respondents felt there was minimal availability, while about 38 per cent felt it was good in some markets but not in others. The remainder felt there was good availability in all markets.
'Various elements of the real estate industry are not yet doing a good job in thinking and acting ahead', or at least that's what the market perceives, the survey said.
Appraisers, brokers, contractors and landlords, in that order, were perceived as the least proactive, though architects and designers were regarded as generally proactive.
The survey also asked the corporates what factors might influence their future attitudes to sustainability.
The most common factor, cited by four-fifths of respondents, was significant increases in energy costs - showing that cost-saving through green design is very much on the mind, said JLL and CoreNet.
Other well-cited factors were increased regulation, influence from customers or employees, and better technology.
Specific environmental issues like water utilisation and carbon emissions were 'ranked lower , and by a significant gap', suggesting that not all the details of sustainability are yet in full focus, the survey said.
'Corporate occupiers may not fully grasp how interdependent the components are in terms of their cumulative impact on the environment', it said.
