A Regional Overview

The Growing Importance of ESG in Real Estate

ESG comprises three fundamental areas considered essential for functional businesses and societies. While the social and governance aspects relate more to company culture, environmental considerations play a critical role in the race to net zero. While previously ESG was thought to only assess and influence the social impacts of business, these decisions are becoming key to attracting and retaining staff, enticing customers, and ensuring long-term sustainability.

Accounting for 20 of the world’s 36 megacities, the Asia Pacific forecasts a 52% increase in its urban population and a 65% rise in property stock by 2050, according to Savills Asia Pacific ESG report. The challenge for developers, investors, and property managers is how to cater to rising real estate demands while ensuring sustainability and minimising carbon emissions.

Our research also suggests that Australia, Hong Kong, Japan, New Zealand, and Singapore are the front-runners in the realm of sustainability, and markets such as mainland China and Viet Nam are progressing rapidly.

The Rise of Green Offices

Sustainability is one of the key drivers for the commercial property sector. As demands for green buildings increase, investors need to consider how ESG practices influence and interact with risk management, transparency, cost savings and increased revenues. Green offices could mean a healthier working environment, reduced operational costs, or future-proof workplace strategies.

Troy Griffiths, Deputy Managing Director at Savills Viet Nam, said: “ESG is becoming a fundamental and mandatory requirement for modern corporates. Environmentally friendly buildings, owned by ESG-compliant companies, are more likely to attract occupiers in the long term. As most global and multinational corporations (MNCs) now need to satisfy ESG requirements, they will see ESG-compliant properties as a good investment. That, in turn, reduces risks and increases potential business outcomes.”

In Savills Impacts 2022 publication, Sam Crispin, Regional Head of Sustainability and ESG, Savills Asia Pacific, noted that highly rated green buildings in the region are seeing premiums in rent or capital uplift. Rental premiums for newly built, highly rated sustainable building are between 5% and 10%.

He added “We hear of transactions that have not gone ahead because environmental ratings weren’t met. We see that as an opportunity for investors with the expertise to come in, upgrade a building and then achieve the premium when they exit their investment.”

In Singapore, 95% of its Grade A offices are green certified. Kuala Lumpur follows with 64% and Hong Kong is next with 47%. By volume, Tokyo has the largest supply with 8.6 million sq m of green stock, followed by Bengaluru with 7.4 million sq m, Shanghai with 6.0 million sq m, and Beijing with 5.0 million sq m. In the next ten years, China and India are expected to drive green office supplies.

Opportunities for Viet Nam

Is Now the Time to Start?

Yes. Although Viet Nam started its sustainability journey later than its Western counterparts, there are huge green opportunities. Demands for sustainable offices have increased after the pandemic, with occupiers looking for green, flexible, and collaborative spaces. Savills not only provides bespoke green solutions for investors and occupiers looking to transform their properties, optimising ROIs and productivity but has also created its own hybrid office in Ho Chi Minh City, and soon another one in Ha Noi.

Green and Sustainable Offices in Ha Noi

Although green certifications are not yet widespread in Viet Nam’s office market, many buildings that do have accreditations have LEED certifications. LEED (Leadership in Energy and Environmental Design) awards were created in the 90s by The U.S. Green Building Council. They were created to ensure an open and balanced green rating system. Globally, LEED is one of the most popular green rating systems and is a symbol of sustainability achievement and leadership.

Apart from LEED, other esteemed green certifications include EDGE and LOTUS. While the criteria vary, they include sustainability, water and energy efficiency, material and resource use, indoor environmental quality, innovation, and in some cases, property management.

Office buildings with LEED, EDGE and LOTUS certificates cater to growing demands from occupiers looking for properties that align with their ESG, innovation, and sustainability goals. Green developments are expected to transform Viet Nam’s leasing market, especially in large cities like Ha Noi and Ho Chi Minh City.

Capital Place

Capital Place is the first LEED Gold-certified office development in Ha Noi. It provides over 90,000 sq m of Grade A offices that meet international standards. It is home to renowned tenants including Shopee, HSBC, Standard Chartered, Line, and CapitaLand.

Discover Capital Place

Techcombank Tower

Techcombank Tower will open in Q4/2022 as Hoan Kiem’s premier office building. The property is a world-class development, built and managed to international Grade A requirements. This building upholds LEED Gold standards and offers green, flexible offices in the heart of the CBD.

Discover Techcombank Tower

36 Cat Linh

36 Cat Linh is a prestigious retail and office complex in Dong Da District, Ha Noi. Neighbouring Pullman Hotel and Grand Mercure Hotel, this property boasts excellent connectivity to an international business community and the rest of the city. It offers quality, green office spaces that meet LEED Gold standards, and unique architecture inspired by Viet Nam's cultural heritage.

Discover 36 Cat Linh

Lotte Mall

Lotte Mall is one of the largest mixed-use developments in the city. It is positioned on Lac Long Quan and Vo Chi Cong streets. Its Grade A offices will provide excellent facilities, cutting-edge technology, and ESG management commitments.

Discover Lotte Mall Hanoi

Conclusion

We hope that you found this guide on green offices informative. To see more of our properties, browse our services and property listings, or contact Minh for bespoke green office solutions.