Go green in Hong Kong for environment, health, and wallet
Sustainability is increasingly vital in real estate, but are home buyers in Hong Kong willing to pay more for a green home?
Communicating the virtues of sustainable homes for homebuyers to appreciate green buildings is critical. We believe the environmental, health, and financial benefits of green housing will drive more widespread consumer demand as the understanding deepens.
One of the most direct benefits of green buildings is their capacity for energy savings over the project life cycle. This can be achieved in various ways, such as incorporating energy-efficient design features and utilising renewable energy sources. Green buildings can use natural ventilation to reduce the need for air conditioning or passive solar design principles to optimise daylight use and minimise heat gain. Also, energy efficiency of green buildings could be enhanced by technologies that analyse and optimise energy usage. For example, JLL Property and Asset Management helped housing estates save 40-50% of energy consumption by just replacing ordinary fluorescent lamps with LED tubes. They applied AI analytics on the building management system of the chiller plant, and retro-commissioning of the E&M system also achieved about 6-10% and 5-8% energy savings, respectively.
As highlighted in the BEAM Plus rating system, green buildings also emphasis occupants' health and well-being. For example, most green buildings prioritise superior indoor air quality and thermal comfort. The use of low-emission materials and effective ventilation systems in green buildings helps reduce indoor air pollutants and health risks. To create pleasantly liveable spaces, green building designs also consider other issues impacting the living environment, such as noise control and daylight requirement.
Alongside occupants, owners are also benefited from green buildings because of their potential for higher rental and resale values. Numerous studies have shown that green residential units have a resale premium of approximately 5-10% compared to conventional ones in many cities. In Hong Kong, the outperformance of green buildings is already evident in the office sector and will likely become more prominent in the residential sector. Furthermore, the growing population of environmentally responsible buyers will gradually drive demand for residential buildings with high green ratings while supply remains tight. As of May 2023, only 15 private residential projects in Hong Kong were awarded BEAM Plus Platinum ratings.
By minimising carbon footprint and preventing pollution, the development of green buildings provides positive externalities on social and environmental aspects. There is a clear need for increased awareness of green homes. Currently, only half of the banks in Hong Kong offer "green mortgage" plans on residential properties with BEAM Plus Platinum or Gold ratings. Moreover, the attractiveness of the actual incentives in these plans is lacking, typically cash rebates of only up to 0.2% of the loan.
The government can play a significant role in promoting awareness by educating the general public on the virtues of green homes. It can implement measures to improve the attractiveness of green building development, such as providing more GFA concessions and tax incentives to certified projects. By promoting green buildings, Hong Kong can work towards a more sustainable future and improve overall living quality.