OBG Event

11 Apr 2012

Green Buildings – Future Trends in Asia

Good afternoon, Ladies and Gentlemen, Distinguished Guests,

My name is Paulius Kuncinas – I am Regional Editor for Asia at Oxford Business Group. We have been covering South East Asia for more than five years focusing on new business trends and opportunities for investors.  Green Technology has recently emerged as one of the main drivers of additional value both seen as a public good as well as a source of efficiency and productivity.

Today I would like to give you our view on Green Buildings Future Trends from business perspective.

This is based on conversations we as Oxford Business Group have had with leading international and domestic companies in South East Asia – specifically – Thailand, Malaysia, Philippines and Indonesia.

These are our key findings

The main finding is that the idea of Green Building is very attractive to most serious people who care about the long-term sustainability of their businesses.

Be it an A-Class Office, Shopping Mall or Residential Unit –  Going Green attracts end users because it is new, it is smart and because it helps to save on costs.

However, there is confusion about what is a ‘Green Building’ – what are the technologies used – and what is the process of certification.

This  confusion stems partly from a lack of consistent standards in different countries, let alone the region as a whole.

Another disconnect is that the technologies and processes on offer are still very new with relatively little experience in hot tropical climates that require a very different approach.

Another issue that came up regularly in our discussions with decision-makers was the question of return on investment and break even point.

At what point does Green Building pay for itself?

How do you quantify the value add of ‘Going Green’ in adopting a more expensive technology?

Especially in the absence of tax and regulatory incentives.

Despite confusion and a lack of awareness, companies understand the broad value proposition of Green Buildings.

Landmark projects such as Park Ventures in Bangkok or G-Tower Hotel in Kuala Lumpur clearly show how ‘Going Green’ is good business and good economics:

It helps to differentiate from competition in terms of image, concept, brand and reputation.

It fulfils the need for serious companies to focus on environmental sustainability.

Above all properly executed it can save some 40-60% in energy costs

Businesses complain though that the governments across SE Asia are not yet full engaged in offering tax incentives, certification and technological guidance.

Another issue is that there are still very few local companies specialising in design, construction and maintenance of Green Buildings.  Meanwhile foreign companies are viewed as somewhat detached from realities in South East Asia or sometimes simply too expensive.

Perhaps the hardest question of all if you decide to go Green is how deep should be your approach.  Do you go all the way and build an energy neutral building which employs solar panels to generate its own electricity?

And what is the cost/benefit analysis ?

Perhaps the biggest risk in investing in Green Building is regulatory uncertainty. In the absence of clear guidelines companies fear that what is considered to be Green today may no longer be considered ‘Green’ in a couple of years time.

There are no obvious first mover advantages of making a large investment in Green Building when it is not clear whether a new law may be passed that gives an advantage to those who decide to invest at a later date.

Another challenge which I alluded to earlier is the outsourcing barrier. Green Building consists of both technological and organisational processes. While technology is relatively easy to adopt, many companies do not yet have in-house expertise to manage the Green building construction and design process.

Meanwhile, they are reluctant to outsource to third parties for fear of inflated budgets and getting a final product that does not necessarily fit their needs.

Some companies asked us whether there is any merit in Donald Trump’s argument that Green Buildings save on temperature control and light at the expense of employees’ health and comfort, which they worry leads to lower productivity.

This question again reveals the lack of awareness and guidance from authorities on exactly what constitutes a ‘Green Building’

Despite these challenges we see a bright future for ‘Green Buildings’ in Asia.   The current cycle of fairly low interest rates and intense competition favours investment in long-term solutions and smart technologies.

Companies already understand the business proposition of saving on energy and also see this as a form of Corporate Social Responsibility (CSR)

Our experience in Asia tells us all the leading development groups these days want the best available technology, the highest standard available. They aim big, they aim high

Going forward we expect more customisation, more individually tailored technological Green Solutions

But as I have said several times during this presentation – the main driver for Green Building Technology and materials will be CERTIFICATION

By auditing and rating buildings’ energy efficiency and environmental friendliness, certification systems provide a common point of reference for investors, developers and end-users to value green buildings

In the absence of clear and consistent certification it is hard for companies to reach an investment decision on what is the cost/benefit of Going Green

We therefore are hopeful that the dialogue that we have witnessed during conferences such as these will lead to a pan-ASEAN system of certification which will  help to Regionalise the Trend of Green Buildings –

On that note I would like to thank you for taking the time to listen to our key findings and wish you a very nice afternoon!