Singapore and Hong Kong are among the top cities in Asia for green commercial properties as the rival hubs attract financing to support the development of eco-friendly urban projects.
The city-state ranked first in the U.K.-based property consultancy Knight Frank's sustainability index for the Asia-Pacific, released on Wednesday, The Chinese technology hub Shenzhen and Hong Kong were the next most highly ranked Asian cities, just below Australian and New Zealand urban centers like Sydney and Wellington. Tokyo rounded out the top 10. Knight Frank's ranking considers factors like the number of green buildings, the will of local governments to push for sustainable urbanization and also looks at the market for investable green assets.
"Singapore stands out due to a comprehensive green building certification scheme and an ambitious plan to become a low-carbon built environment," said Christine Li, head of research for the Asia-Pacific region at Knight Frank.
Knight Frank's report highlighted the city-state's "80-80-80 in 2030" plan, whose targets for the end of this decade are for 80% of buildings to have eco-friendly traits, 80% of new developments to be energy-saving properties, and buildings that are already leaders in environmentally sustainability to further improve their energy efficiency from 65% to 80%.
Singapore, like Hong Kong, is jockeying for green financing in real estate. Last year, property firms City Developments and MCL Land announced that they had secured green loans amounting to 847 million Singapore dollars ($610 million) to finance two projects in the city-state under a joint venture.
One is a condominium with around 630 residential units that will be equipped with solar panels to supply 30% of the power consumed in common areas. This development is bankrolled through a SG$418 million green loan extended by Singapore's United Overseas Bank.
The other one is a mixed-use project comprising around 400 apartments plus commercial retail space, with green features like energy-efficient fittings, as well as a pneumatic waste conveyance system. It is supported by a SG$429 million green loan financing package provided by DBS Group Holdings, Southeast Asia's largest lender.
In Hong Kong, Knight Frank noted, DBS's local unit provided financing for eight eligible green development projects under one of the city's most prominent property developers, Henderson Land, based on a three-year green revolving credit facility to the tune of HK$1 billion ($130 million).
Knight Frank's report highlighted that its top-ranked cities share common traits like low carbon emissions per person, ample green spaces and low urbanization pressures, but also warned of their vulnerability to extreme weather, particularly for urbanized areas located close to the equator.
While awareness of the impact of climate issues is gaining traction in the region, with more tenants opting for buildings with green features, demand currently outstrips supply for such properties, with landlords commanding up to a 10% premium on sustainably rated properties.