According to Knight Frank’s Rising Capital in Uncertain Times report, Sydney was the second most sustainable city for commercial real estate, followed by Perth at number four and Melbourne at number five.
Singapore was named the most sustainable city, with Wellington, New Zealand, coming in third. The top-ranked cities all share common traits including low carbon emissions per person, ample green spaces, and low urbanisation pressures.
Head of Research, Asia-Pacific at Knight Frank Christine Li said Sydney stood out because of its open green areas. “Liveable cities like Sydney and Wellington boast ample green spaces that have been critical for inhabitants during prolonged lockdowns, providing a reprieve from highly urbanised lifestyles,” Li said.
According to the report, tenants are increasingly opting for buildings with green features, with landlords commanding up to a 10 per cent premium on sustainably-rated buildings. In response, developers are likely to expedite the development of sustainable buildings to capture the rising demand for green buildings.
Knight Frank Head of Global Capital Markets Neil Brookes said investors looked for a combination of strong returns and sustainability. “With debt cost soaring, yield-seeking investors will also be compelled to move up the risk curve to secure the desired spreads. Many will gravitate to more active asset management strategies, such as repurposing and value-add plays, to generate alpha. Adopting sustainable measures not only enhances portfolio security but has been proven to add a positive price premium to assets,” Brookes said.
