JLL releases its latest Sustainable Real Estate report

Shanghai, 17 August 2021 – With sustainability becoming a critical pillar of business success, 66% of Chinese corporates have incorporated carbon emissions reduction into their real estate strategy, according to JLL’s latest survey report “Sustainable Real Estate: From ambitions to actions – Where does China stand?”. In addition, a vast majority of occupiers proactively plan to prioritize locations that would help them reduce carbon emissions in the future.

According to the report, adapting the built environment in sustainable and responsible ways is creating upfront value for landlords, investors and occupiers alike; especially in the form of risk mitigation, potentially higher asset values and rents, lower operational costs, and a more productive work environment to attract and retain talent. Occupiers are more likely to gravitate towards sustainability-certified premises, hence driving higher occupancy and tenant retention while supporting rents and values of assets. In APAC, 7 out of 10 occupiers are willing to pay a rental premium to lease green buildings in the future.

Nelson Wong, Head of Research, Greater China, JLL, said: “The urgency to go sustainable and de-carbonize has been raised a notch as the government is committed to reaching carbon neutrality by 2060. For every company, real estate is a major source of resource consumption, accounting for a large part of its global greenhouse gas emissions. This makes a compelling case for a more responsible and sustainable corporate real estate portfolio.”

Chinese corporates are well aware of the grave importance of the need to de-carbonize, and many have already embarked on the drive towards net zero. According to the report, there are three levels¹ to the sustainability maturity journey: “leading”, “on the path”, and “starting out”. Notably, 93% of Chinese corporates are either “leading” or “on the path”, compared to 82% in Asia Pacific, suggesting the Chinese private sector has taken the cue early on.

It is worth mentioning that 80% of Chinese respondents have carbon emissions reduction as part of their sustainability strategy. However, only 20% have well-defined de-carbonization programs with strategic objectives to display continuous progress. Thus, Chinese corporates need to abandon their tentative approach to cutting down carbon emissions.

Collaboration between cities, investors, developers and occupiers will be instrumental in achieving the net zero ambitions of the built environment. Green leases² that commit landlords and tenants to co-operate and communicate have become increasingly prevalent. While 48% of occupiers in China have already adopted green leases, another 35% are planning to do so by 2025.

However, insufficient technological infrastructure is a major barrier to achieving de-carbonization goals. Technology has immense potential to help drive measurement and reporting standards to accelerate reaching the net zero carbon goal. Presently, the lack of consistent and validated data also poses a huge reporting challenge. At least two-thirds of Chinese corporates are looking to invest in technologies that underpin new solutions to bridge the gap.

“The ‘3060’ carbon target has undoubtedly brought new challenges and opportunities to each company and individual. As an advocate and leader of sustainable real estate, JLL has put helping clients achieve net zero carbon emissions as a key pillar in our strategy. In China, we proactively collaborate with developers, investors and occupiers to support their carbon emissions reduction goals and drive sustainability ambitions in real estate,” said Vickie Chen, Operations Director of Energy and Sustainability, Greater China.

The report, “Sustainable Real Estate: From ambitions to actions – Where does China stand?”, is based on the statistics of Chinese corporate real estate leaders, contributing to about one-fifth of all the 550+ respondents in Asia Pacific. It aims to understand better how Chinese corporates are translating their sustainability ambitions into actions while leveraging real estate.

To download the report, please click here.

Notes:

¹Maturity levels: leading (score 71+), on the path (score 41-70), and starting out (score 0-40).

²Green leases cover areas like data sharing and metering, availability of conservation and recycling programs, rights to carry out work and rent reviews that recognize the tenant’s contribution to the increased value of the building.