There is a premium on the construction of green buildings and this ‘green’ premium is often the catalyst for industry sluggishness when jumping into the green market for one simple reason. Some wonder whether incorporating sustainable features or a more environmentally responsible construction delivery into projects can really offer more return on the upfront costs.
One Australian industry project is proving that the green premium is a valuable asset, as it reaps a 33 per cent profit.
After retrofitting O’Connell’s OBM House, an office building in Brisbane, in order to allow for greater energy efficiency, the Harvest Group sold the building for a massive $12.25 million after purchasing it for $7.95 million two years ago. Minus the retrofit costs, this brings the total profit up to $2.5 million.
They achieved this one million dollar plus yearly premium through simple energy efficiency upgrades. These include the replacement of the base building lighting and metering and energy efficient air conditioning units and extensive metering.
However, the energy efficient tecnhologies used were not simply plucked from nowhere. With the support of Low Carbon Australia, the energy efficient upgrades were tailored specifically to the building, which has not only allowed for the impressive profit, but an energy reduction of 40 per cent and a NABERS rating increase from zero to the targeted four stars.
“Low Carbon Australia’s expertise and finance align well to Harvest’s objective of buying value add commercial office properties and undertaking cost effective refurbishments that improve NABERs ratings to deliver higher rental returns and capital value,” says Harvest Group director Chris Slack.
The industry needs to understand that the green premium is simple. There are no tricks involved; green now has one of the strongest investment potentials available in this market. More and more, energy efficiency and sustainability are coming to mean top of the line. Simply, it typically means a higher standard of building, and this country is willing to pay more for it.