Premium and Grade-A offices that are Green Star-certified provide an average one-year income return of 8.4, compared to an average of 8.3 for non-Green Star-certified Prime and Grade-A offices, according to the MSCI South Africa 2021 Green Annual Property Index.

Further, vacancy rates – based on floor space – for Green Star-certified Prime and A-Grade offices are also lower than those for comparable non-Green Star rated assets.

“These findings, coupled with the increased interest we have seen from tenants in Green Star-rated buildings, indicate a promising trend towards better financial performance in a difficult operating environment,” explains real estate investment trust Redefine Properties chief sustainability officer Anelisa Keke.

Keke adds that Redefine Properties anticipates that with increased demand from tenants for green buildings – and given the growing awareness of the importance of buildings that have a positive impact on resource consumption and health and well-being – the number of Green Star-certified buildings will increase in the local market.

The growth of the local sustainable finance market and the opportunities this presents will also lead to the green building industry taking on renewed strategic importance for many real estate companies, she notes.

“Our ability to attract and retain tenants who are also serious about environmental, social and governance (ESG) – and raise awareness around sustainability issues amongst our tenants more generally – is strengthened by our green building programme”.

She states that the company’s ability to attract tenants committed to ESG helps Redefine partner with tenants to address its respective carbon emissions reduction goals.

Further, she states that Redefine’s ability to raise sustainability-linked funding is also linked to the company’s green building programme.

She states that Redefine Properties will explore opportunities to enter into green leasing programmes with its tenants – particularly those in Green Star-rated buildings – providing an opportunity to decarbonise buildings at an accelerated rate.

The company also considers the integration of its local green building footprint into plans for integrating sustainability into its long-term funding strategy.

“We have identified a set of primary and secondary Sustainable Development Goals (SDGs) that underpin our ESG strategy. These were selected based on the progress that South Africa and the local real estate sector have made in achieving the United Nations (UN) SDGs so far, as well as the impact that Redefine has in terms of the UN SDGs through its core operations. The ESG targets that the company has set for itself are also based on the UN SDGs.”

Keke explains that by applying the criteria for the development of green buildings, Redefine incorporates building features – such as site-related stormwater management and energy and water consumption reduction – that contribute to the company’s overall climate risk management approach.

“Investors tend to assess the number of Green Star-certified buildings in the portfolio to gauge the coverage of the programme. They are increasingly measuring whether a building has met a certain level of environmental friendliness based on the level of green certification obtained for the building.”

Green Certifications

Keke states that Redefine has submitted applications for 82 certifications (inclusive of recertifications) by the end of the 2022 calendar year, which will significantly improve the company’s overall number of certifications.

“We are serious about ESG, and that means that we need to take tangible steps to improve the environmental performance of our portfolio. The Green Star certification provides a useful tool to measure the progress we have made in this regard, as well as the level of effort required to eventually transition our buildings to net zero.”

In addition, Keke emphasises that Redefine is investigating how advancements in technology – particularly regarding use of renewable energy sources – can help the company achieve its long-term goal to transition its entire portfolio to net zero.

The company has also managed to achieve 123 confirmed certifications to date. With its goal of obtaining 150 energy performance certificates by December this year, she states that Redefine is currently progressing meaningfully towards this goal to demonstrate the positive environmental performance of its portfolio.

“Redefine has been instrumental in selecting appropriate buildings for certification and recertification, in consultation with our external advisers. We anticipate that the current certification process will be finalised by the end of 2022. We will also manage those buildings in accordance with Green Star principles.”

Going forward, she confirms that the company has also set itself a goal of obtaining an additional 55 green building certifications – including recertifications – by the end of next year.

“The company aims to achieve its 2030 Moonshot strategy, which is to build the smartest and most sustainable buildings the world has ever known. Our ability to do so, and the work we must still do to achieve this, will be informed by our green building journey and the level of certifications we are able to achieve. We will continue to push this programme in our South African and Polish operations,” she concludes.