Certified green buildings deliver better returns
Longkloof Studios is a green certified commercial office space in Cape Town, having achieved a 4-Star Green Star Existing Building Performance rating. Image credit: Growthpoint Properties
Too many buildings are being called ‘green’ without anything to back this up. As pressure mounts from investors and regulators to meet ESG targets, the difference between a marketing claim and real, assessed performance matters more than ever with green building certification providing the property sector a credible way to eliminate greenwashing and proving that a green certified building performs as sustainably as it claims it does.
The business case for green building certification is backed by hard data. According to the MSCI South Africa Green Annual Property Index 2023, green-certified office buildings consistently outperform their non-certified counterparts across key financial metrics. Findings show that certified offices achieve a 1.5% higher annual return, 30% higher net operating income per square metre, and stronger tenant retention and rental stability over time.
These financial benefits are driven by lower utility costs, operational efficiency, and increased demand from tenants prioritising healthier, more sustainable workplaces. Certified buildings also hold stronger appeal in a competitive rental market – particularly among corporates with ESG mandates.
“The MSCI data proves that certified office buildings can be more profitable. Stakeholders such as investors and those in sustainable finance are paying attention and it’s becoming a clear competitive advantage,” says Georgina Smit, Head of Technical at the Green Building Council South Africa (GBCSA). “In South Africa, we are proud to have local data and research that backs up the business case for going green.”
“Property owners need to understand that certification isn’t the end goal. Instead, it’s a gateway to deeper, more effective sustainable building,” says Lisa Reynolds, CEO of the GBCSA. “It’s how you prove that a building is actually performing in practice and on paper. Certification gives owners, investors, and tenants confidence that a building will deliver environmental and financial value over time.”
Green buildings are inherently more adaptable and resilient to climate change, policy shifts, and economic shocks. During the COVID-19 pandemic, green-certified buildings retained tenants and value more effectively, thanks to lower operating costs and healthier environments. Today, these assets are also better positioned to cope with load shedding, water scarcity, and volatile utility prices.
At the same time, certification is becoming a prerequisite for access to sustainable finance such as green bonds, sustainability-linked loans, and preferential lending terms. A report by a global alliance of the world’s leading green certification bodies, entitled Financing Transformation, highlights how third-party verified green buildings offer greater transparency, lower perceived risk, and are increasingly being prioritised by banks and institutional investors.
“When looking at sustainable finance and ESG reporting, certification provides investors with a sense of confidence. It’s an independent, verifiable measure of a building’s sustainability performance,” notes Reynolds.
As South Africa advances it’s Just Energy Transition and scales up climate adaptation, green building certification is gaining importance across both the public and private sectors.
Government is the country’s largest property owner, so its ability to lead by example is significant. Reynolds says that public buildings should set the tone for private developers to follow: “If every building saved just 10% of its energy use, the national impact would be enormous.”
For developers, owners, and investors, green buildings with green building certification are the most effective way to future-proof assets, reduce risk, and demonstrate real ESG performance. Certification is a business imperative, not merely a ‘nice to have’. Without it, green building risks becoming just another marketing term.
The GBCSA provides independent and credible certification through internationally and locally recognised systems including Green Star, Net Zero, and EDGE. To date, more than 1 200 projects have achieved certification. Developed specifically for the South African context, Green Star is GBCSA’s flagship certification and serves as the industry’s trusted mark of excellence in the design, construction and operation of sustainable buildings.
