Asian occupiers demand green space, but won't pay for it

Asian office occupiers demanding green buildings but are unwilling to pay a premium for them, a new survey from CBRE found.

The broker’s 2023 Asia Pacific Office Occupier Sentiment Survey, which questioned 130 corporate real estate executives in 80 companies, found that 64% of office occupiers want to increase their use of ESG-certified buildings. 

However, only 23% were prepared to pay a premium for environmentally sustainable space and, of these, only 10% were prepared to pay a premium of more than 10%. Nearly two-thirds said they would not pay more than 5%.

CBRE suggests the result is partially because so many Grade A offices in the region are already green certified, 43% in 2022. This means green certification is already becoming the norm for Grade A offices in some markets. 

Consequently, the “green premium” is much stronger in markets where the stock of green certified buildings is lower. For example a rental premium of 15-25% might be achieved in Shenzhen or Guangzhou, says CBRE. In leading markets for green certification, such as Singapore and Australia, the premium might only be 2-8%.

The report suggests that a “brown discount” for non-certified buildings will become more apparent as green certification becomes standard for Grade A office buildings.