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Carbon Tax System - will it influence the property market?

The combined energy crisis and looming carbon tax system, might influence the way property investors build on their property portfolios.

A recent study conducted by Investment Property Databank (IPD) and the Green Building Council of South Africa (GBCSA) concluded that energy efficient (EE) buildings deliver better financial returns than non-EE buildings. The proposed 2016 carbon tax system also falls in line with the assessment as EE becomes an important investment decision for property and business owners.

During the study 461 commercial buildings were investigated and found that the top quartile EE properties delivered a 15.9% total return. That is a 170 basis points higher than the remainder of the buildings, which delivered a total return of 14.2%.

In existing buildings, changes to how the property is managed might increase the EE margin of the property. The three main components which will make a building more energy efficient are lighting, climate control, and operational equipment such as IT and data processing. These are small changes but over time it will not only increase the building’s EE but also have a positive impact on the owner and business’ bottom line.

The longer an owner waits to implement these changes, the greater the risks of potential financial losses becomes and with the looming carbon tax system it becomes even greater.
Therefore buildings with an holistic EE strategy in place are going to become more attractive to property investors in the long run.

Going green will no longer just be good for the environment but will also be good for your property portfolio.


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