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Hong Kong offices benefit from ESG measures

27th May 2024

Sustainability measures generate a significant rental premium in the Hong Kong office sector, a study from Knight Frank found. 

The broker analysed the relationship between sustainability provisions and leasing performance in 181 office buildings in Hong Kong and found a “green premium” of up to 17.%.

Martin Wong, head of Greater China research and consultancy at Knight Frank, said: “In Hong Kong, office tenants, particularly Hong Kong-listed enterprises, are currently placing a significantly greater emphasis on ESG features when making real estate decisions. 

“In view of the ESG premiums, certain landlords are demonstrating a relatively swifter response compared to others. Their focus extends beyond the environmental aspect and encompasses the social and governance dimensions as well.

“While Hong Kong aims to achieve carbon neutrality by 2050, multinational corporations are expected to adhere to the standards established by their global headquarters, potentially as early as 2027-2030.”

The study highlighted the most attractive ESG factors for office tenants, such as providing EV charging infrastructure, renewable energy, and resilience to extreme climate conditions. 

Other investment priorities should be those which promote user well-being, such as art and culture integration, in-house amenities, as well as safety and security.

The BEAM Plus, LEED, and WELL sustainable certification standards are widely adopted in Hong Kong, Knight Frank said, while more recently, WiredScore and SmartScore have emerged as certifications specifically focused on smart buildings. 

The study also shows the growing adoption of green leases. Tenant engagement encompasses data sharing on energy and water usage, waste generation and recycling, fit-out guides, and reward systems. 

The full report can be found here.

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