Green Star investments show good returns
Data supporting claims that Green Star-rated buildings deliver a return on investment in environmental sustainability has been released by Property Council New Zealand.
The advocacy group for commercial property investors and developers, along with Investment Property Databank, has produced the first Green Property Investment Index - two years of collated information on Green Star certified commercial properties.
The index measures annual returns, income and capital of Green Star-rated commercial properties, to gauge if investment in green buildings represents good value.
The data from 12 participating commercial properties, representing $1.3 billion of Green Star-rated office buildings, and confirms rated office buildings outperform non-rated buildings with investment returns.
Green Star-rated office buildings reported 8.9 per cent in total returns, while non-rated buildings returned 6.4 per cent in the year to September.
The performance was driven by a positive capital growth of 1.7 per cent, with non-rated office buildings showing a capital decline of 1.4 per cent.
Rated buildings also showed stronger net incomes over the two years of data, making $366 per square metre compared with $358 for non-rated properties.
Property Council chief executive Connal Townsend said he was pleased with the outcome of the research.
"What we are seeing . . . is the value of environmentally sustainable property assets quantified and made available to those in the industry interested in increasing their capital returns," he said.
"This new index will help the commercial property industry benchmark properties and determine the level of value obtained from holding Green Star-rated property assets.
"We would hope that the industry reviews this information and uses it to plan for the future of property development in New Zealand, particularly with new builds, refurbishments and seismic strengthening works."
New Zealand Green Building Council chief executive Alex Cutler said the release of the index results was a timely and welcome reinforcement of the benefits of its Green Star-rating tool. The council operates the Green Star rating scheme.
"This type of evidence is backing up what we have seen anecdotally - that Green Star rated assets are outperforming non-rated buildings and challenging the definition of what a prime asset is," Cutler said.
"It is fantastic to see from these results that Green Star-certified ratings are de-risking property, making these buildings quality long-term investment propositions that will outperform non-rated assets.
"Green buildings also offer healthier working spaces and long-term operational savings for occupants, resilience against rising energy, water and other climate costs," she says.
"We encourage other property owners to put forward their Green Star buildings for the green property index."
There are now 81 Green Star certified projects throughout New Zealand and in the past year 16 commercial buildings have been certified.
The index will be released on a quarterly basis, making metrics such as capitalisation rates, discount rates and capital values available.