Why green real estate equals growth in the Philippines

Article by Mark Williams
green park in Manila
Image credit: Shutterstock

Green development has traditionally ranked low down on the priority list in the Philippines but now increasing demand from multi-national companies is driving a demand-led surge in LEED-registered buildings.

Across the country more real estate developers are adopting environment-friendly practices in their commercial, industrial, and residential projects; at present, there are a total of 245 so-called LEED activities in the country, of which 61 projects have already obtained certification.

And more will soon be joining the Zuellig Building in reaching the highest standards of environmentally friendly construction. Located in the financial center of Makati, it was the first in the Philippines, and among the first buildings in Asia, to be Platinum-certified.

Just north from Manila at Global Gateway Clark, in the Clark Freeport Zone, a new city is under construction – one which will be twice the size of Hong Kong’s business district and catering for 500,000 workers. Currently, One West and Two West office towers have been pre-certified Gold and those buildings, along with a further three office towers, which are scheduled for construction later this year, are targeting a post completion certification of Platinum status.

Another project, the Clark Green City will draw on expertise from the private sector to develop key environmentally friendly initiatives. Japanese companies Hitachi Asia and The Power Grid Solution will work with the Bases Conversion and Development Authority (BCDA) to set up an energy management and storage system, a district cooling system, a total energy network system and a private utility company across the 23,400 acres site which is projected to accommodate over 1 million residents.

The appeal of sustainable development

Such projects are part of a bigger government vision to lighten the load on the Philippines’ congested capital city Manila and encourage more international companies to set up bases in the country. Clark, which has an international airport and connectivity to Manila, is seen as a good alternative to become the country’s next business hub.

Yet green credentials are becoming ever more important for new and existing developments if they are to gain traction with an increasingly sustainability conscious business community.

The global market for green buildings grew to $260 billion in 2013. According to World Green Building Trends 2016, it is estimated that the percentage of firms anticipating to have over 60 percent of their projects certified green would grow from 18 percent last year to 37 percent by 2018. For the Philippines, going greener is essential as it positions itself as a low-cost business hub.

Green certification is much more than applying labels that add a positive image to real estate projects. From a business perspective, these certifications show that the investment has a higher asset value and is recoverable through reduced operating costs and higher return on investments. While energy savings is a direct advantage, it also has other benefits such as greater company marketability and increased employee productivity.

The future of green in the Philippines

Despite rising awareness and willingness to develop sustainable projects in the Philippines, there is still much to improve regarding commitment, action, and government support.

That’s not to say there hasn’t been progress in recent years. Aside from LEED, the Philippines also has its green building rating scheme called Building for Ecologically Responsive Design Excellence (BERDE) from the Philippine Green Building Council. The establishment of this domestic rating system, together with the launch of the Green Building Code by the Philippine Department of Public Works and Highways in mid-2015, shows that the Philippines is indeed shifting towards a greener real estate industry.

And there are schemes to reward green initiatives. Take Quezon City, part of Metro Manila, where land developers and planners are awarded tax credits and tax discounts for their compliance with eco-friendly infrastructure design and construction standards under the Green Building Ordinance of 2009.

While the Philippines still lags behind its Southeast Asian neighbors such as Singapore and Thailand, sustainability is rapidly coming to the fore when building new developments and retrofitting existing ones.

The rapid expansion of the green building industry globally sets the bar high for the local real estate sector, and should ultimately encourage developers to keep up with the demand pressure for livable spaces as a result of increasing urbanization and the inflow of foreign businesses.

 

Mark Williams is the Chief Executive Officer of Global Gateway Development Corporation, which owns Global Gateway Clark.

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