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News & opinion

20 APR 2018

Does sustainability impact market value?

Does improving a building’s sustainability have an impact on its market value? We ask Chief Executive Officer of the Green Building Council of Indonesia Mr Surendro.

Indonesia has made many plans that focus on sustainable development over the past few years. The challenge, as is the case for all middle- and high-income countries, is to speed up this planned action and see it become a reality.

Last year, the Government of Indonesia issued Presidential Regulation No. 59, the ‘Implementation of the Achievement of Sustainable Development Goals’. This sets out the region’s commitment to achieve 17 Sustainable Development Goals. Furthermore, the government began to draw up national and regional medium-term sustainability plans.

Indonesia also signed the Paris Agreement, a commitment by many countries to respond to the global climate change threat via the mitigation of greenhouse gas emissions, and has committed to an emission reduction target of 29% by 2030.

Read more: RICS at COP

Driving market value

Indonesia has a focus on sustainability as well as encouraging local and foreign investors, so there is a need to discern whether sustainable features in buildings has a positive impact on market value.

“This is an interesting topic”, says Mr Surendro, “and the Green Building Council of Indonesia (with the International Finance Corporation) is currently developing a business case around. We are looking at whether green building and the addition of sustainable features to developments has an impact on sales or occupancy rates.

“Anecdotal evidence suggests that sustainable features, which have gained recognition in the form of green-building certificates, do have an impact due to the benefits they bring: lower utility bills, quicker sales, higher sale prices or future resale value.”

However, this does not come without it’s challenges. “The main issue the awareness and ability of building-sector professionals,” suggests Mr Surendro. “Proper valuation requires a transformation in mindset as to the importance of sustainable buildings, as well as the benefits they offer.”

Indonesia’s sustainable future

Mr Surendro believes that Indonesia’s government and businesses must move quickly to anticipate the needs of millennials and younger generations. “Sustainability will be significantly impacted and improved by technological developments,” he says, “everything will be easier and more integrated.

“Sustainability in the industry is often associated with building performance, but for sustainable development to be truly realised, we must also bear in mind the health of building users, not just building management systems. We will see trends like healthy building  designing buildings to encourage the active use of physical space  continue to grow over the coming years.”

Read more: The future of smart buildings: still under construction