At the end of 2021, the index sample comprised 303 prime and A-grade office properties valued at R59.1bn, of which 153 were green-certified buildings. These were compared to 150 non-certified offices of a similar quality.
“Once again, the MSCI index results reflect the business case for green-rated buildings. Not only are these buildings more efficient, reducing the cost of occupancy for tenants, but they also provide a healthier environment for occupants, which is particularly relevant as staff return to their offices. The fact that green buildings achieve better returns shows that tenants are recognising these benefits,” says Paul Kollenberg, Growthpoint’s head of asset management: office.
A key reason behind the strong performance of green certified offices is its comparatively high income return despite a 29% higher capital value per square metre. This was achieved courtesy of a 30% higher net operating income (NOI) per square meter compared to non-certified office buildings, again reinforcing the importance blue chip occupiers are placing on green office accommodation.
“Since the first green star certified building in 2009, the Green Building Council of SA and those certifying their buildings, knew – almost instinctively – that it made business sense to certify green. We spoke then of the ‘rands and sense’ of green buildings, with a lot of the business savvy couched within the lower utility bills, healthier buildings and highly productive occupants. The last six years’ worth of the MSCI SA Green Property Index results has moved the conversation to that of NOI and capital value. The conversation is not only about bottom-line savings, but about investment – ‘rands and sense’ to value of green,” says GBCSA CEO, Lisa Reynolds.
“In an extremely tough office market, it is encouraging to see that green certified buildings continue to outperform non-certified buildings. Not just because the perceived risk in the income stream is lower but is also underpinned by better property fundamentals - vacancies are lower and margins are higher. Certification provides a proven tool for asset managers to leverage off, giving investors an enhanced return,” says Eileen Andrew, vice president: client coverage at MSCI South Africa.
|Total Return (%)||2.2||0.5|
|Vacancy Rate (%)||15.6||16.3|
|Net Operating Income per square meter||144||111|
|Capital Value per square meter||20,998||16,226|
|Total Operating Cost % of Gross Income||35.6||39.8|
|Water Usage (m3 per annum)||0.5||0.7|
|Electricity Usage (kWh per annum)||138||156|