The Sustainable Advantage: Green Buildings in Singapore's Urban Landscape
In the dynamic and ever-evolving urban landscape of Singapore, the concept of sustainability has transcended mere buzzwords to become an imperative pillar of development. As experts and property developers continue to sculpt the city's skyline, the significance of green buildings can emerge as a powerful differentiator, not only for environmental conservation but also for benefits to occupants and developers alike.
In this context, Singapore's commitment to green buildings has yielded a commendable urban governance model since the Building and Construction Authority (BCA) introduced the Green Mark scheme back in 2005.1 First, the government oversaw the development and marketing of the Green Mark Scheme, adopting a number of legislative and regulatory frameworks to support the system.
Second, a variety of financial incentive programs, risk-sharing plans, and prizes have helped to lessen entrance barriers for new participants by establishing the government's promise as genuine. The government has also come to rely more on cooperative partnerships with a variety of stakeholders to produce favourable environmental effects over the course of buildings' entire life cycles.
The energy and utility savings from Green Mark buildings for its occupants are well-detailed. However, for developers, research shows that project type and size are key determinants of the cost premiums, which vary from an additional 5% to 10% for green projects. Moreover, the cost performance is typically 4.5% to 7% over budget.2 Yet, despite the possibility of additional upfront costs in developing green buildings, the other benefits combined with government incentives make social and economic sense.
Improved Well-being and Productivity
Singapore's tropical climate combined with rapid urbanisation can pose challenges to indoor air quality and occupant well-being. Green buildings have been shown to improve occupant well-being in both objective and subjective realms.3
Studies have demonstrated a positive correlation between Green Mark-certified buildings and Indoor Environmental Quality (IEQ) as well as reduced building-related health symptoms.4 In comparison to their non-green counterparts, green buildings maintained temperature and humidity more steadily and had lower PM2.5, bacterial, and fungal concentrations. The average satisfaction ratings in green buildings for comfort in terms of temperature, humidity, lighting, air quality, and indoor environment were also higher.
Additionally, there was a statistically significant decrease in the likelihood that residents would experience a headache, unusual weariness, or irritated skin.
Research done globally have found naturally that improved employee well-being consequently contribute to improved productivity metrics. Overall, survey results relating to employment satisfaction, value to clients and stakeholders, management appraisal, and corporate engagement showed higher ratings for buildings with green certification. Manager-assessed job performance tended to be better in structures with green buildings as well, although the subjective and perceived nature of these findings should be accounted for.
Worth A Premium
Green buildings aren't just environmentally friendly, they are also economically astute and command a premium over non-green buildings. Findings suggest that green-certified buildings in Singapore command higher rentals and occupancy rates compared to their non-certified counterparts.5 This observation echoes the growing trend across the globe where tenants and investors are placing a premium on environmentally conscious structures.
Arguments towards the business case of green buildings for property developers are not a novelty. An analysis of Green Mark-certified buildings back in 2013 determined the premium buyers are willing to pay. It was found price premium buyers would be willing to pay for green certification vary within the different levels of the Green Mark Scheme - ranging from 3.78 per cent for the Certified award to 7.98 per cent for the Platinum award.6
More recent empirical studies show green buildings consistently transact at an 8.5% premium on average, higher than the premium derived from previous and more sophisticated models after isolating the Green Mark certification effects. Projects with Green Mark Gold standards command a 10.9% premium over non-certified properties. An analysis of the Green Mark Status and Median Unit Price of OCR non-landed homes can be viewed in PropertyGuru For Business’ ESG Report.
The 2023 ESG Report titled ‘The Real Estate World in Transition provides a framework for ESG planning in real estate and discusses how property developers can leverage green building certifications as a differentiation strategy.
References
- Han, H. (2018). Governance For Green Urbanisation: Lessons From Singapore’s Green Building Certification Scheme. Environment and Planning C: Politics and Space, 1(37), 137-156. https://doi.org/10.1177/2399654418778596
- Hwang, B., Zhu, L., Wang, Y., Cheong, X. (2017). Green Building Construction Projects In Singapore: Cost Premiums and Cost Performance. Project Management Journal, 4(48), 67-79. https://doi.org/10.1177/875697281704800406
- Fu, Y. X., Wang, H., Sun, W., Zhang, X. (2021). New Dimension To Green Buildings: Turning Green Into Occupant Well-being. Buildings, 11(11), 534. https://doi.org/10.3390/buildings11110534
- Lee, J. G., Wargocki, P., Chan, Y., Chen, L., Tham, K. W. (2018). Indoor Environmental Quality, Occupant Satisfaction, and Acute Building‐related Health Symptoms In Green Mark‐certified Compared With Non‐certified Office Buildings. Indoor Air, 1(29), 112-129. https://doi.org/10.1111/ina.12515
- ESG and Real Estate: The Top 10 Things Investors Need to Know, 3 January 2022
https://www.cbre.com/insights/reports/esg-and-real-estate-the-top-10-things-investors-need-to-know - Heinzle, S., Yip, A. B. Y., Xing, M. L. Y. (2013). The Influence Of Green Building Certification Schemes On Real Estate Investor Behaviour: Evidence From Singapore. Urban Studies, 10(50), 1970-1987. https://doi.org/10.1177/0042098013477693
To view PropertyGuru For Business’ ESG Report, click HERE.
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