Office buildings with a ‘Green Star’ rating outperformed non-rated buildings, in the year to September 2012, according to the newly established Green Property Investment Index.
‘Green Star’ buildings, which promote energy and water efficiency, sustainability and material use, saw a return of 8.9 percent compared to non-rated buildings which had a 7.1 percent return.
Return outperformance for Green Star-rated buildings was driven by a positive capital growth component of 1.7 percent.
Conversely, non-rated office buildings experienced a negative 1.4 percent capital decline.
Another measure has shown Green Star-rated buildings showing stronger net income per square metre, which indicates stronger demand for green-rated assets.
Peter McGuinness, research manager at IPD in Australia and New Zealand, said sustainable buildings were a viable investment.
“Outperformance of Green Star-rated office buildings was driven by strong capital value growth," he said.
“Higher net income indicates strong tenant demand for Green stock and suggests these buildings have higher rents, lower vacancy and reduced timeframes to lease space."
The real estate commentator noted that owners who aim for sustainable buildings are more likely to experience stronger returns and lower investment risk.
The index, sponsored by Goodman and CBRE, is comprised of data from 12 participants – representing NZ$1.3 billion of Green Star rated office buildings.
The index details income return and capital growth on a quarterly basis and provides pricing and market metrics such as capitalisation rates, discount rates and capital values.