As the world becomes more aware of mitigating climate, Ivy Sam reports on the call of the “green” in Malaysia’s property market. There is a growing trend of properties in Malaysia being labeled “green” or marketing itself through various standards of certification of being sustainable with superior of energy efficiency.

Analysts and key property consultants are calling this movement of green real estate a growing trend in Asia and Malaysian builders are certainly catching on. While most trends predictably dissipate with the emergence of a new one, being sensitive to climate change is certainly one which is here to say, as commercial and residential buildings make up one third of the world’s total energy consumption and a significant amount of carbon emissions.

Corporate social responsibility and good PR strategies aside, green buildings actually make financial sense for their landlords.

A key ongoing research by commercial real estate firm CB Richard Ellis found that sustainable buildings fetch higher values, better rent and enjoy higher occupancy rates that comparable non-green buildings.

According to CBRE’s landmark study of office portfolio managed by the company from mature markets in Australian and the United States (which began in 2009), owners of sustainably-managed building anticipate a 4% higher return on investment than owners of traditionally-managed buildings, as well as a 5% increase in building value.

“Roughly 79% of owners surveyed believed that sustainable properties perform well in attracting and retaining tenants, yielding a 5% increase in building occupancy and 1% increase in rental income” said Nabeel Hussain, vice president of CBRE Malaysia.

In research paper, the firm said green buildings attract higher rents that conventional ones, and they also enjoy higher rates of growth and cost savings in long-term energy usage.

“Evidence suggests that for any given level of oil prices, the energy usage savings are very significant. Depending on the level of improvement, these savings at least exceed 10% and could be well over 50%”, the report said.

Hussain noted that energy costs could make up a quarter of the buildings’ operational costs.

Furthermore, investment-grade buildings with premium values attached to it are the ones foreigners are vying for. Analysts said existing building owners would have to rebrand into the upmarket category to remain viable as a supply of newer, shinier, green technology integrated buildings springs up in the coming years.

“The Malaysian government is definitely aware of this, hence the implementation of the Green Building Index (GBI) certification. Owners obtaining GBI certification are granted tax breaks and stamp duty exemptions are given to buyers of GBI-certified buildings,” said Steve Tan, a property analyst from TA Research house.

The GBI, launched in May 2009, is modeled on existing international green building rating systems such as USA’s LEED and BREEAM and was jointly developed by the Malaysian Institute of Architects and the Association of Consulting Engineers Malaysia. It includes certification for both categories of residential and non-residential properties. Over 80 buildings have already applied for GBI certification, reiterating the growing focus on sustainability issues and corporate social responsibility.

CBRE’s HUssain said the company’s study found that “tenants on sustainably managed buildings report increased productivity, satisfaction and health” with some 10% of tenant respondents experiencing increased productivity, 94% higher employee satisfaction in a green space provides a healthier working environment.

“As awareness and the need to address climate change issues reach fever pitch, multinational as much as they can, to be perceived as being environmentally responsible,” TA’s Tan said.

Oil and gas company Shell People Services Asia Sdn Bhd is a prime example of multinationals leading the fore in Malaysia. The anchor tenant of the gleaming 348 Sentral development in Kuala Lumpur reportedly requested for the building to attain the US LEED-Gold certification.

Among the latest high-profiled green projects underway is the 6 billion ringgit KL Eco City which is located right opposite the vibrant retail hub of Mid Valley Megamall. Described as a green mixed development with a corporate tower, boutique offices and serviced apartments, the massive project by Malaysia’s leading property developer SP Setia Bhd is located on 9.7 ha of leasehold land in Kmapung Haji Abdullah Hukum and will be developed jointly with Kuala Lumpur City Hall (DBKL) in three phases within 10 years. The developers are vying for the GBI-Gold certification.

Malaysia Energy Center or the PTM Geo building in Selangor state became the country’s first GBI-certified building and is touted as the most energy-efficient building in Malaysia and ASEAN when completed. Other upmarket projects include the GTower – both LEED and GBI certified with some 500,00 sq ft of offices space, as well as the residential condominium Ken Bangsar which is designed with a glass façade design and has both GBI and the more stringent Green Mark certification from Singapore.

Lot G at KL Sentral is another prime property with LEED certification and The Intermark, a redevelopment of several other older landmark buildings at the Golden Triangle in Kuala Lumpur which will also consist of the LEED-approved Intergra Tower.