Hong Kong faces 68% demand-supply deficit for sustainable workplaces: JLL
APAC must accelerate retrofitting of buildings to meet this demand.
Hong Kong is expected to see a 68% demand-supply deficit for top-quality sustainable workplaces, according to a report by property consulting firm JLL.
The city will face one of the highest deficits in the Asia Pacific when it comes to available green office properties, beaten out only by Sydney’s central business district. Singapore (56%), Melbourne (43%), Delhi (44%), and Mumbai (62%) all have a narrower gap, according to JLL.
This comes as companies and occupiers face increasing pressure to align to real estate strategies with sustainability ambitions, and as firms make commitments to meet sustainability goals. As the promised dates for these net zero carbon (NZC) targets loom, occupiers will looki beyond green certifications and make decisions based on building-level sustainability metrics, including energy efficiency and green energy procurement.
“Leasing office space in green-certified office buildings is becoming a non-negotiable for occupiers, but currently there is very little correlation between these certifications and a building’s energy performance,” says Kamya Miglani, head of ESG Research, Asia Pacific, JLL.
“Even buildings with platinum grade green certifications may not be NZC-ready, partly because current regulations are not stringent enough to demand NZC-ready assets,” Miglani noted.
Miglani emphasized that APAC must accelerate the rate of retrofitting to meet future regulations to meet the growing demand of sustainable workplaces.
“Only a handful of office buildings in Asia Pacific match the criteria of a zero-carbon building today,” says Miglani. “The involvement of governments, coupled with corporate demand and action, will fuel the momentum and ensure a steady pipeline of NZC-ready office stock in the future.”
Redeveloping or upgrading assets to be NZC-ready will serve as the most efficient solution to bridge the supply-demand gap, JLL’s study suggested.
With over half a billion square feet of Grade A office space in the region built before 2011, retrofitting potential is substantial in Asia Pacific, JLL said.
“Furthermore, investors and owners are encouraged to start incremental upgrades now, including retrofitting, to gain a first-mover advantage, or risk a brown discount, or less rental income, as climate-related regulations become more stringent,” the property consulting firm said in a study.