As urbanisation continues to surge, so does the demand for housing, commercial spaces, and infrastructure. With this growth comes the responsibility in ensuring a greener, sustainable and equitable future for Malaysia.
The real estate industry is no exception to this trend. Sustainable real estate development encompasses various practices aimed at reducing the environmental footprint of construction and ensuring that buildings are efficient, eco-friendly, and socially responsible.
ESG as a value driver for real estate
ESG considerations, which were primarily driven by regulatory compliance, have evolved into business strategies to mitigate market risks and drive added values. Today, both local and global market demands are placing a greater emphasis on ESG factors as they not only reduce risks and seize opportunities but also align with the evolving market expectations and gain a competitive advantage.
Representing Knight Frank Malaysia, its group managing director Keith Ooi said, ESG extends beyond new green building construction to include retrofits and fit-outs, contributing to urban regeneration and the rehabilitation of spaces while sustainable design focuses on conserving resources and reducing waste and emissions.
Starting with one building in 2006, Knight Frank Malaysia’s portfolio today exceeds a total of 45 million sq ft across various asset classes. As of 2023, the company is managing 13 million sq ft of high-rise office buildings, 35 strata management buildings, six million sq ft of retail malls, and 6.3 million sq ft under facilities management. They strive to create an environment within the real estate sector that's characterised by trustworthiness, sustainability, and ethical practices.
How do Knight Frank’s ethical real estate solutions initiatives benefit clients?
At Knight Frank, their ethical real estate solutions initiatives cover a broad spectrum of ESG practices, which includes:
consulting on energy management systems
conducting preliminary ESG and green building assessments
ensuring fair and equitable treatment for all potential occupiers or contractors
advising on the use of sustainable materials in fit-outs and renovations
offering ethical investment options like green leases
guiding the design of inclusive spaces that cater to diverse needs
According to the company's 2023 whitepaper, more than 90% of their respondents suggest that ESG concerns do play a role, either entirely or partially, in creating their real estate strategy.
Ooi said "the Age of ESG" elicits opinions from corporate tenants, landlords, and investors across the nation, demonstrating a shift in attitudes towards the sustainability agenda in the context of corporate real estate. More than 50% of respondents have taken tangible steps towards ESG integration, either by initiating ESG plans or establishing ambitious net-zero carbon targets. Among these proactive organisations, more than 40% aim to achieve their targets by the year 2030, while another 20% have set their sights on longer-term plans, extending beyond 2030 to 2050.
Shaping the real estate industry through a sustainable framework
Knight Frank also has their very own ESG framework for asset and property management that covers 15 themes and 45 indicators that serve as a benchmark to evaluate sustainability performance, foster healthy competition and drive industry-wide improvements. The framework objectives are to:
1) Assist clients in reducing their operation costs and carbon emissions by reducing energy and water consumption, as well as the volume of waste going to landfills.
2) Transition to sustainable products by choosing products that do not harm ecosystems or contribute to habitat destruction.
3) Improve occupiers’ safety, health, and well-being by implementing safety and health programs and improving indoor air quality.
4) Improve the customer experience and satisfaction by engaging the occupiers and stakeholders and implementing routine building audits for continuous improvement.
Importance of having a Green Building Certification
Green building certifications are important for ensuring sustainable business operations and preserving property values, subsequently making them more appealing to investors and occupiers.
“Our Global Knight Frank Research, Active Capital 2021 shows that in both hemispheres of the world (UK & Australia), green building ratings are already having a positive impact on building values, and we have quantified it. We combined proprietary Knight Frank data with green ratings and other geographical evidence for prime London, Sydney and Melbourne office buildings.
We found an 8-18% sales price premium for green-rated buildings compared to equivalent buildings without a BREEAM (UK) or NABERS (AUS) rating across these markets, depending on the level of green rating,” said Ooi.
We foresee similar trends globally with varying levels of premia (the results for sales prices are found at opposite ends of the globe (UK & Australia) and in different sized markets – suggesting a strong, global pattern between sustainability and value)”.
Ooi further explained that although features like solar panels and renewable energy sources incur extra expenses, these contribute to long-term savings by optimising energy effectiveness, reducing water consumption and operational efficiency.
The Green Building Index (GBI) indicates that green-certified buildings can achieve 30% to 40% energy savings compared to baseline buildings. As ESG practices grow, construction prices for such developments could decrease, making sustainable building more cost-effective. Green building increases marketability by attracting environmentally conscious buyers, renters, and investors, while also potentially reducing long-term operating costs.
Knight Frank launched eWaste project with Rotary Club Pudu
“Our primary aim in launching this project was to enhance awareness about e-waste within local communities. Simultaneously, we sought to minimise the environmental impact of e-waste through recycling and education initiatives. The project was also aimed to empower local communities through various recycling and educational programs while also providing essential equipment for schools.”
“Spanned over two weeks, from September 8th to September 22nd, we partnered with Rotary Club Pudu and TM Enviro to conduct e-waste education and collections from schools on a weekly basis. Towards the end of the project, we successfully collected a total of 1,083 kilograms of e-waste from five out of the seven schools, surpassing our initial target of 1,000 kilograms of e-waste collection,” added Ooi.
Giving back to the community
“At Knight Frank Malaysia, our CSR initiatives reflect our deep commitment to sustainability and community well-being. We have concentrated our efforts on three core areas: environmental stewardship, education and fostering community health,” explained Ooi.
To bring these objectives to life, Knight Frank actively collaborated with a diverse range of organisations, including NGOs, local schools, and agencies such as Persatuan Pembangunan Ekonomi Wanita Perak, Pusat Jagaan Nurul Hasanah, and Pusat Pembelajaran Komuniti Chow Kit, among others and came up with impactful programs that made a real difference to the communities.
“Our employees are the driving force behind our social impact efforts. They enthusiastically engage in volunteer activities, showcasing our company's commitment to building a culture of shared responsibility and inclusivity. Transparency is central to how we approach community giving, ensuring that our actions are guided by the needs and aspirations of the communities we support”
“In essence, ESG is not a passing trend; it represents a transformative paradigm shift in the real estate landscape. By attracting environmentally and socially conscious tenants and investors, organisations can establish themselves as frontrunners in the realm of sustainable corporate real estate,” Ooi concluded.
Interested to learn more about Knight Frank Malaysia, visit HERE for more info!
The views expressed here are those of the author/contributor and do not necessarily represent the views of Malaysiakini.
