select
|

Building green costs on average only 5 percent more than conventional building

The average cost premium of building green over and above the cost of conventional construction – or green cost premium – is a mere 5 percent and can be as low as 1.1 percent.

This is according to the Green Building in South Africa: Guide to Costs and Trends Report compiled by the Green Building Council South Africa (GBCSA), the Association of SA Quantity Surveyors (ASAQS) and the University of Pretoria (UP) which was released recently.

The study includes cost data on 54 Green Star SA office buildings certified through the GBCSA Office v1 tool up to the end of 2014 – 33 of which are in Gauteng, 11 in the Western Cape and nine in KwaZulu-Natal.

GBCSA chief technical officer, Manfred Braune, says the study was undertaken to analyse the actual cost premium of building green in SA, and challenge the belief that green buildings cost much more than conventional building.

“SA has experienced exponential growth in certified green buildings, from the first Green Star SA building in 2009 to the 165th in June 2016. Despite this, there are many more buildings that could be going green but are not,” he says.

“One of the barriers has been the apparent green premium that many developers or building owners have thought going green would cost them. In the early 2000s, globally and locally it was erroneously believed that green buildings cost 20 to 50 percent more than conventional buildings. Several international studies were done a few years later that dispelled this belief, but SA data had not yet been collected or reported on, so was not included in the studies. The findings of this study for the first time show that green buildings can be built for a negligible premium – between one and 10 percent – and that this premium is declining.”

Pursuing Green Star SA certification was found to result in an average green design penetration of 42.7 percent of the total project budget. Green design penetration indicates the extent to which the Green Star SA Office v1 Rating Tool has introduced green design into elements of a project, expressed as a percentage of the total project cost.

The study analysed the green design premium and green cost penetration in terms of location, construction area, base building cost, tenant mix, vertical façade to construction area ratio, Green Star SA rating levels (four, five or six star), rating type (design or as built) and certification date, and rating tool categories, of which there are nine, totalling 69 credits.

As would be expected, the green cost premium increases as the Green Star SA rating increases, with an average premium for a four star Green Star SA rated building being 4.5 percent, 6.6 percent for a five star Green Star SA rating and 10.9 percent for a six star Green Star SA rated building.

Interestingly, there was a slight difference in average costs in the three major economic hubs, and a correlation between the cost premium and penetration. Penetration was found to be slightly higher in the Western Cape (46 percent) compared to 41.8 percent in Gauteng and 40.4 percent in KZN, while the average cost premium in the Western Cape was 6.9 percent, 6 percent in Gauteng and 4.5 percent in KZN.

It was also found that construction area had a significant impact on green building costs, with costs dropping from 9.3 percent for a building under 5 000m² to 2.6 percent for buildings over 50 000m².

Danie Hoffman, programme leader for quantity surveying at the University of Pretoria, says that contracts for larger buildings often benefit from more competitive tenders due to higher levels of productivity.

“Economies of scale also result in larger developments having higher efficiency levels (and lower building costs a square metre) of installations such as lifts, escalators or air conditioning systems. So a large office development of say 28 000m² with a substantial budget of R350 million will often be able to afford green building initiatives more easily compared to a building with the same specification level but 1 000m² in size and costing R14 million. Larger projects will also offer design teams more green design options/scope which all support lower green cost premiums.”

There were some interesting findings in the analysis of tenant mix. First, from 2009 to 2011 only 20 percent of green buildings were developed for generic clients, or multi-tenanted buildings. This escalated to 40 percent from 2012 to 2014. In addition, it was found that a building developed for a single tenant showed a significantly higher premium (8.1 percent) than a multi-tenanted building at 3.4 percent.

Hoffman says this is because single corporate tenants often set more demanding specification levels and may also strive for a higher Green Star SA rating as part of corporate marketing and public image.

“Such tenants will in most cases also provide design teams with more substantial budgets that can allow for more expensive, state-of-the-art green design solutions,” he says.

Other noteworthy findings of the study include:


The green cost premium appears to progressively diminish over time, largely as a result of the growing maturity in the green industry.

Green cost premiums have been declining since 2011, indicating that the SA green industry is maturing; a higher vertical façade to construction area ratio yields a higher premium.

Two categories of the Office v1 tool (Energy and Indoor Environment Quality) received 58 percent of the allocation of the total green cost premium. This is because they carry a combined weighting of 40 percent and many of the credits of these two categories have a direct impact on the operating cost of buildings and on the quality of life experienced by building occupants. These credits are therefore often pursued by design teams.

Karl Trusler, ASAQS EduTech Director, says of the quantity surveying firms who provided professional services on these buildings: “Their skills were ideally suited to providing the sophisticated data required to arrive at the findings, and determine the trends of this study.”

“The findings in this report are very encouraging and, together with the findings from the joint MSCI/GBCSA Sustainability Index that shows that in SA green buildings yield a higher return on investment, they make a very strong business case for green buildings to developers, property owners and corporates,” says Braune.

More information and to view the report


  Comment on this Article

  Please login to post comments

Post to my facebook wall
  
2000
Characters remaining


    Latest Property News
    • 17 Jan 2018
      While the current property market may still favour buyers, it doesn’t mean that they shouldn’t be well prepared before putting in an offer to purchase.
    • 17 Jan 2018
      Lightstone lists Blair Atholl as the most expensive suburb with an average house price of R11.2 million, followed by Westcliff (R10.5 million), Dunkeld (R9.3 million), Sandhurst (R9.1 million) and Inanda (R7.2 million).
    • 17 Jan 2018
      As it currently stands, there are four main ways in which a home can be bought in South Africa, says Adrian Goslett, Regional Director and CEO of RE/MAX of Southern Africa, who adds that deciding in which legal entity to purchase the property is not a decision that should be entered into lightly, as each has its pros and cons.
    • 16 Jan 2018
      The start of the new year is symbolic of new beginnings. A good time to take stock of one’s possessions as well as how necessary they actually are. However, seeing as the process may appear daunting – a plan goes a long way.
    • 16 Jan 2018
      The Western Cape is still in the throes of a severe drought and many households have to adjust the way they use and save water. It is a little more complicated in sectional title schemes, however, as it is not that easy to implement grey water systems for multiple users and it is also difficult to monitor water usage accurately if there are no separate water meters
    • 15 Jan 2018
      In ideal rental situations, when a lease is signed the tenant will stay for the full duration of his lease without any complications and the landlord will uphold his obligations, creating a win-win situation for tenant and landlord.
    • 15 Jan 2018
      The Atlantic Seaboard’s housing market has stoically withstood the brunt of the growing economic and political instability, consistently achieving double digit growth way above the national average, however, in 2017 South Africa’s most resilient market finally began to yield to the pressure.
    • 15 Jan 2018
      Sectional title insurance can be a little confusing and, as a new owner, you may be tempted to just assume your body corporate has you covered. While this may be the case, understanding the extent of your coverage and your personal liability is the only guaranteed way to protect yourself against potentially costly oversights.
        
    X
    Subscribe to the MyProperty Newsletter

    Name  
    Last Name  
    Email Address  
    Email Frequency
    select
    X
    Share this Page

       
    For Sale Property
    Rental Property
    More Options
    About
    Connect with us
    FEEDBACK