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The value of
sustainability
Evidence for a green premium in Asia
The value of sustainability: Evidence for a green premium in Asia
Is there a rental premium for
green certified buildings in Asia?
For occupiers and investors, many with more
defined environmental, social and governance
(ESG) commitments, the answer is a resounding
yes. However, the translation of green
ambitions into action has not always been so
straightforward. There are many factors at play
here across the real estate spectrum owing to an
uneven distribution of certified stock, the lack of
unifying sustainability standards, and an absence
of reliable data.
Given the currency now placed on sustainable
real estate strategies in Asia, JLL sought to better
understand not only the penetration of green
buildings, but also the price that occupiers are
willing to pay for them.
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Our in-depth analysis determined that in Asia
there exists a strong link between assets that
hold green credentials and rental performance.
Furthermore, in recent years, Asian markets have
seen occupier demand for green assets increasing,
with the primary drivers being energy cost savings,
sustainability goals and decarbonisation pursuits.
Additionally, regional governments have also
stepped up efforts to implement minimum green
standards for existing and new developments.
While all signs point to the advantages of green
buildings, the big unknown has remained the
cost. Although divergent across the region’s
largest office markets, JLL research shows that
when location, building age, and amenity factors
are held constant, assets with green credentials
generate more occupier demand and achieve
rental premiums.
 JLL compiled data from 3,089 Grade A1 office
buildings in 14 cities (refer to Appendix) across
Asia to assess regional and market-specific
indicators related to supply and rents in green
certified versus non-certified assets.

For this research, we considered 10 green building

certifications (refer to Appendix), comprising
both international and national standards. Other
parameters included in the dataset are building,
age, location, gross floor area, rental values,
vacancy rates and net absorption.

We modelled the city-specific datasets for 11

key cities in Asia using a Hedonic Pricing Model.
We were able to determine the rental premium
between two identical buildings, green and non-
green certified, when location, age, and amenity
factors are held constant.

1. Grade A definition
The office stock tallied in this report is defined by two elements:
- Quality of the property: Overall internal and external finishes, layout of
floor plate, building management, accessibility etc.
- Geographical location

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The value of sustainability: Evidence for a green premium in Asia

Executive Summary

1 Green certified assets are the new

standard for occupiers in Asia
• One-third of CRE leaders plan to exit less
opportunity of 4% to 9%, whereas Seoul,
where 37% of stock is green certified, the
rental premium is between 7% and 22%.

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carbon efficient buildings by 2025. Since the Paris Agreement in 2015, green

2 Rental premiums exist for green

certified Grade A office assets across 11
cities in Asia
certified Grade A office stock in Asia has
shown a steady upward trajectory
• 75% of existing green certified Grade A
• Hong Kong has the highest green office stock was added post-2015.

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premium of up to 28% (LEED Platinum- The LEED rating system of the U.S Green
certified stock). Building Council is the most prevalent

3 Green premium is correlated to the

supply of green certified stock in a city
• Singapore, with 90% of Grade A office stock
green building certification in Asia
• Seven in 10 green certified Grade A office
buildings hold LEED certification, with the
green certified, provides a rental premium highest concentration in India and China.

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The value of sustainability: Evidence for a green premium in Asia

Green certified assets

are the new standard
for occupiers in Asia.
JLL research shows that sustainability credentials, along with
location and rental cost, constitute the top three leasing criteria for
corporate real estate leaders. Owing to their carbon commitments,
large corporates — both multinational and domestic — are factoring
green criteria into their decision-making when leasing commercial
real estate. Our research shows that one-third of CRE leaders plan to
exit less carbon efficient space by 2025 and this number is likely to
increase in the future. This alone should force landlords to evaluate
retrofitting for green and avoiding brown discounts in the future.

Fig1: CRE leaders’ sentiment

1 in 3
CRE leaders in Asia plan to exit less
carbon efficient space by 2025

Fig 2: CRE leasing criteria in Asia

Top 3
1. Location
2. Rental
3. Sustainability

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The value of sustainability: Evidence for a green premium in Asia

Since the Paris Agreement in 2015,

green certified stock in Asia has
shown a steady upward trajectory.
According to JLL research, 42% of Grade A office
Green Buildings
stock is green certified across 14 cities in Asia.
In this research, a green building is defined as
However, the clear upward trajectory of green
being certified under one of the international
stock is testament to the fact that green assets are
or reputable national green building standards.
gaining prominence in the region.

Fig 3: Proportion of green certified Grade A office stock in Asia (across 14 cities) as of Q3 2022

88%
84%
77%
72%

42%
67%
62% 58%

38% 42%
33% of Grade A office stock
28%
23%
12%
16% is green certified in Asia

2016 2017 2018 2019 2020 2021 2022

Green certified Not green certified

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The value of sustainability: Evidence for a green premium in Asia

In Asia, green certification activity gained be achievable considering there is not enough
momentum in the last decade and 75% of the supply to meet this demand.
existing green certified Grade A office stock was
added post-2015 with the adoption of the Paris As a result, the real estate sector needs to
agreement. However, demand for green certified rebalance its efforts from new construction to
assets continues to outpace supply. JLL research retrofitting. In other words, Grade A office stock in
shows that, if possible, occupiers in the region Asia has increased over the years but so have non-
would like to get almost half of their portfolios green certified buildings. This represents a huge
accredited by 2025. Their aspiration is unlikely to opportunity for green retrofitting.

Fig 4: City-wide green certified Grade A office stock as of Q3 2022

Singapore 90%
Delhi 49%
Chennai 49%
Mumbai 44%
Shanghai 44%
Jakarta 42%
Beijing 41%
Bangkok 39%
Seoul 37%
Tokyo 37%
Bengaluru 35%
Hong Kong 29%
Guangzhou 29%
Osaka 13%
APAC average 42%

Green certified Not green certified

Fig 5: Retrofitting potential in Asia

1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
2020
2021

Green certified Not green certified

Cumulative existing green certified Grade A stock as of Q3 2022 by building age

7 JLL
The value of sustainability: Evidence for a green premium in Asia
Clear evidence of a rental premium
for green certified assets in Asia.
From our research in Asia, we have found clear
evidence of a rental premium for green certified
assets. The current supply of green certified assets
is insufficient to meet the ambitious net zero
targets set by occupiers. This supply-demand
gap is leading to rental premiums for green
certified buildings. There is currently a premium
opportunity, but this will quickly become brown
discounts on less-sustainable buildings, once
regulations kick in.
Using a Hedonic Pricing Model (HPM), we have
modelled each city dataset twice to determine
the lower and upper range for green premiums for
green certified Grade A office buildings.
We found that cities with more availability of
green certified Grade A office stock have lower
rental premiums than those with less availability
— a clear sign of demand and supply economics
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at work. In Singapore, where 90% of the Grade
A office stock is green, rental premiums stand
between 4% and 9%, with the highest rental
premium commanded by buildings certified with
BCA Green Mark Platinum levels. On the other
hand, in Hong Kong, where less than one-third of
Grade A office stock is green certified, we found
the rental premium for LEED Platinum buildings
inching towards 28%.
This, however, is not true for the Indian cities.
Despite high availability of green stock as a
percentage of total stock, all Indian cities see an
upper premium range in the double-digits. This is
largely due to the vast presence of multinationals
in the Indian market with ambitious ESG targets,
for whom occupancy of green certified buildings is
non-negotiable. Among the Indian cities, the green
premium is highest in Mumbai (7% to 20%).
 The value of sustainability: Evidence for a green premium in Asia

Fig 6: Rental premium range for green certified Grade A offices in Asian cities

Beijing Seoul
2%-7% 7%-22%

Shanghai
4%-10%
Delhi Guangzhou
3%-17% 3%-8%

Mumbai Hong Kong

7%-20% 7%-28%

Bangaluru Bangkok
Chennai
5% - 19% 4%-11%
4%-12%

Singapore
4%-9%

MAP
Lower range:
Premium commanded by assets
with base-level green certifications
(E.g. LEED Registered, Silver).

Upper range:
Premium commanded by assets
with high-level green certifications
(E.g. LEED Gold, Platinum).

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LEED is the most prevalent green
building certification in Asia.
Among the green building certifications
considered, seven in 10 green certified Grade
A office buildings hold LEED certification, with
the highest concentration in India and China.
These are Asia’s largest markets and the biggest
contributors to total green certified stock in the
region. While distinct green certification systems
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Report Title / Supporting copy
are not equal, large corporates aiming to maximise
their options within a country must consider
assets certified by national green standards.
Two examples are Singapore and Japan, where
most buildings are certified by national green
building standards.
JLL
The value of sustainability: Evidence for a green premium in Asia
Call to action
Occupiers
Leverage the built environment to
reach Net Zero
As awareness about Scope 3 emissions gains
prominence and its central role in reaching
Net Zero goals more apparent, aligning
decarbonisation plans with an organisation’s real
estate strategy becomes essential. Occupiers will
need to look to green-certified space that can
contribute towards their Net Zero commitment
from the get-go. However, to maximise their
options, occupiers must also consider assets
certified by national green building standards in
the target country rather than an exclusive focus
on those certified by the most prominent global
green building agencies. With the bar raising for
what it means to be green, relationships between
occupiers and landlords will need to evolve
into one that fosters greater collaboration and
alignment of decarbonisation goals.
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Investors and owners
Be the stewards of the retrofitting challenge
There is a strong financial incentive to go green
with evidence showing a rental premium for
green-certified assets. However, as demand for
sustainable assets peak and regulations kick
in, sustainable assets are bound to become a
standard. Landlords that do not evolve their
buildings to meet sustainability standards may
suffer financially, resulting in a “brown discount”.
Retrofitting is not only the quickest and most
cost-effective way to accelerate decarbonisation
in the built environment, but also presents an
opportunity for owners to meet the demand
for green office spaces and the associated
rental premiums that occupiers are showing a
willingness to pay.
JLL
The value of sustainability: Evidence for a green premium in Asia

Conclusion

Occupiers are increasingly demanding real estate

solutions tied to their sustainability agenda
and are pushing for buildings that are climate
positive. The result is resilient and sustainable
buildings in Asia enjoying a distinct occupancy
and rental premium against their non-certified
contemporaries. This willingness to pay a
premium comes as society shifts towards an
emphasis on green and sustainable spaces in a bid
to address the concerns on climate risk.

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Appendix
JLL compiled data from 3,089 Grade A office buildings in versus non-certified assets. We considered 10 green
14 cities across Asia to assess regional and market-specific building certifications, comprising both international and
indicators related to supply and rents in green certified national standards.

Cities

Beijing Delhi Mumbai Singapore

Bengaluru Guangzhou Osaka Seoul

Bangkok Hong Kong Shanghai Tokyo

Chennai Jakarta

Certifications
Origin Certification Name Abbreviation
Global Excellence in Design for Greater Efficiencies EDGE

Hong Kong Building Environmental Assessment Method/ Building BEAM/BEAM Plus

Environmental Assessment Method Plus

India IGBC Green Building Rating Systems IGBC

Green Rating for Integrated Habitat Assessment GRIHA

Indonesia Greenship GREENSHIP

Japan Development Bank of Japan Green Building DBJ Green Building

Comprehensive Assessment System for Built CASBEE

Environment Efficiency

Singapore BCA Green Mark Certification Scheme BCA Green Mark

Thailand Thai’s Rating of Energy and Environmental Sustainability TREES

United States Leadership in Energy and Environmental Design LEED

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Asia Pacific
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Research Susheel Koul

Roddy Allan Division President, Work Dynamics
Chief Research Officer Asia Pacific
Asia Pacific susheel.koul@jll.com
roddy.allan@jll.com
Marina Krishnan
Kamya Miglani Division President, Work Dynamics
Head of ESG Research Asia Pacific
Asia Pacific marina.krishnan@jll.com
kamya.miglani@jll.com
Riccardo Rizzi
James Taylor Head of Sustainable Operations
Head of Research, Work Dynamics, Asia Pacific
Work Dynamics riccardo.rizzi@jll.com
Asia Pacific
james.taylor@jll.com Elke Kornalijnslijper
Head of Energy and
Sean Linkletter Sustainability Services
Regional Research Southeast Asia
Director, Work Dynamics elke.k@jll.com
Asia Pacific
sean.linkletter@jll.com Andrew Macpherson
Executive Director
Business Head of Asset
Jeremy Sheldon Development, Asia Pacific
Head of Leasing andrew.macpherson@jll.com
Asia Pacific
jeremy.sheldon@jll.com

About JLL
JLL (NYSE: JLL) is a leading professional services firm that specialises
in real estate and investment management. JLL shapes the future of
real estate for a better world by using the most advanced technology to
create rewarding opportunities, amazing spaces and sustainable real
estate solutions for our clients, our people and our communities. JLL is
a Fortune 500 company with annual revenue of $19.4 billion, operations
in over 80 countries and a global workforce of more than 102,000 as of
September 30, 2022. JLL is the brand name, and a registered trademark,
of Jones Lang LaSalle Incorporated. For further information, visit jll.com.
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