JLL analysis reveals a sizeable undersupply of net zero-carbon-ready office stock.
News release
29 October 2023
Asia Pacific cities facing an unprecedented shortage of sustainable office buildings
SINGAPORE, 30 October, 2023 – Major cities in Asia Pacific will be faced with a demand-supply gap for net zero-carbon-ready workplaces as corporate net-zero carbon (NZC) targets loom, according to new research from global real estate consulting firm JLL (NYSE: JLL).
Driven by commitments to NZC goals and the pressure to align real estate strategy with overall sustainability ambitions, occupiers will look beyond green certifications and make decisions based on building-level sustainability metrics, including energy efficiency and green energy procurement. However, according to JLL, a gap between commitment and action has emerged as a significant obstacle in achieving NZC goals.
“Leasing office space in green-certified office buildings is becoming a non-negotiable for occupiers, but currently there is very little correlation between these certifications and a building’s energy performance,” says Kamya Miglani, Head of ESG Research, Asia Pacific, JLL. “Even buildings with platinum grade green certifications may not be NZC-ready, partly because current regulations are not stringent enough to demand NZC-ready assets.”
JLL’s Sustainable Offices City Index, which evaluates 20 cities in Asia Pacific on four themes – green stock, physical risk to buildings, city competitiveness and city administrations’ proactiveness with NZC targets, highlights that in the region’s top-ranked city of Sydney, current green building standards are not enough to achieve a NZC-built environment. A NZC building is all-electric, highly rated, energy-efficient and powered by renewable energy. Sydney is expected to face an 84% undersupply of NZC-ready office space by 2027.
Miglani adds, “Demand for high-quality low-carbon workplaces will inevitably grow when lease expiries approach. Occupiers risk being stuck with limited options if they fail to plan ahead and re-evaluate the sustainability credentials of their current premises.”
Hong Kong and Mumbai, which are placed in the bottom half of the index, are likewise expected to see a 68% and 62% supply deficit of top-quality sustainable workplaces respectively. Meanwhile, Singapore, Melbourne and Delhi are also expected to be 56%, 43% and 44% undersupplied, respectively.
