South Africa’s green building movement has come a long way since its debut on the global sustainable development stage about 15 years ago. Back in 2010, a year after the Green Building Council South Africa (GBCSA) was founded, the country’s tally of certified buildings stood at five.
By 2014, the number had risen to 76. In the six years that followed, building projects certified by the GBCSA’s Green Star rating system rose sharply, reaching 647 by 2020.
Since then, another 776 certifications have been awarded (see graph). That brings the national total to a substantial 1,423, spanning 20.5-million square metres — and counting.
Of course, the post-pandemic adoption of eco-friendly building practices was inadvertently supported by load-shedding. Add to that the country’s looming water crisis and it’s not difficult to understand why going green is no longer simply a nice-to-have. In fact, industry players say access to back-up energy and water supply to ensure the lights stay on and the loos keep flushing has become non-negotiable for office tenants.
While increased demand for commercial premises with sustainability credentials is good news, it has also encouraged the rise of greenwashing, the industry term used for unverified environmental claims.
GBCSA CEO Lisa Reynolds says too many “brown” buildings (existing properties that were not sustainably designed or constructed) are labelled “green” without anything to back it up. “Just because a building has solar panels on the roof does not necessarily mean it’s a green building.”
She says a common example of greenwashing is adding bicycle racks in a building. While it can be a great way to promote low-carbon transport, she says there’s no point if the development is in an area that isn’t cycle-friendly.
The same applies to indoor or outdoor planting to create green or living walls. While the trend can add tangible benefits for users and reduce a building’s contribution to the urban heat island effect, it becomes a box-ticking exercise if the incorrect species are planted or there is no effective maintenance plan. “Living walls are often short-lived and become more of a marketing exercise rather than achieving a substantial environmental gain,” says Reynolds.
There’s also risk in designing a project with all the green bells and whistles but then not delivering sustainability measures over time due to poor building management.
Reynolds says building certification gives the property sector a credible way to eliminate greenwashing, as it ensures that sustainability claims are based on transparent benchmarks and “rigorous and evidence-based third-party assessment”. She adds that certification is how you prove that a building is performing in practice and on paper.
As pressure mounts from investors and regulators to meet ESG targets, the difference between a marketing tactic and real assessed performance will matter more than ever.
But what constitutes a truly green building and which metrics does the GBCSA use for certification purposes?
“A green building is intentionally designed, constructed and operated to minimise its impacts on the environment, and maximise how well it meets the needs of its occupants and owners,” says Reynolds. “It aims to reduce harm, strives towards net zero energy use, lower water use and carbon emissions, and seeks a positive, regenerative impact on the planet. Ultimately the aim is to transform the built environment into a place where people and planet thrive.’’
The most common features of a GBCSA-certified building — whether it has a 4-, 5- or 6-Star Green Star rating — are an energy-efficient design, reduced energy and water usage, use of responsible construction methods and sustainable building materials, and low impact on the environment through reduced carbon emissions. In short, a genuinely green building typically should reduce occupancy costs through lower electricity and water bills and promote the health and wellbeing of its occupants.
Ultimately the aim is to transform the built environment into a place where people and planet thrive
— Lisa Reynolds
But going green is not only about saving on utilities, meeting ESG targets and the push towards net zero carbon emissions (globally, buildings account for nearly 40%). The investment case for sustainable buildings is also becoming compelling — clearly underscored by the recently released MSCI South Africa green annual property index 2024.
The index, established in 2016, tracks the performance of JSE-listed and unlisted property portfolios worth R388bn in total. It confirms that certified green buildings deliver higher returns than noncertified ones.
Last year, certified green premium- and A-grade offices delivered a total return of 10.1%, 120 basis points ahead of the 8.9% achieved by noncertified buildings of a similar quality. In addition, there’s growing evidence of a “brown discount”, which refers to tenants and investors increasingly avoiding uncertified buildings or asking for rental reductions for properties that are outdated and inefficient.
Eileen Andrew, vice-president of client coverage for MSCI in South Africa, says certified green buildings perform better on both the capital and income growth front, as well as on key operational metrics.
For example, certified buildings have a markedly lower vacancy rate. In 2024, 11.1% of the space in MSCI’s certified building sample stood empty, against 14.8% for the noncertified sample. The same trend is evident in operating cost to income, with 2024’s ratio at 39% vs 46%.
This means that in nongreen buildings, R46 of every R100 earned in rental income goes towards running costs such as utilities, cleaning and security, while for green buildings it’s only R39.
The total return gap is more pronounced over the longer term. Since the index’s launch in 2016, certified offices have outperformed by a cumulative 28%, or an average 6.7% vs 4.7% a year (see graph).
Engelbert Binedell, COO for Growthpoint Properties, the country’s biggest commercial landlord, says there’s no doubt that big companies and listed entities are increasingly choosing certified green premises for their corporate addresses.
Binedell notes that in recent years, higher-for-longer interest rates and capital constraints meant that property owners were more inclined to repay debt than spend on greening their buildings. However, he believes that the growing evidence of certified buildings delivering better returns — backed by hard data from MSCI — is increasingly bound to turn green intent into action.
Still, industry players say there is a lingering perception that superior returns are outweighed by the additional costs of adding green features. But Georgina Smit, head of technical at the GBCSA, dispels the myth that sustainable buildings incur markedly higher design and construction costs.
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Referring to ongoing research by the University of Pretoria and the Association of South African Quantity Surveyors, Smit says the green cost premium has shrunk notably in the past 10 years — from an average 8.13% to 3.92% (see graph). This relates to single-tenanted office buildings expressed as a percentage of the total cost of the project. The reduction in the green building cost premium is largely due to the rising adoption of more efficient technologies that are cheaper than a decade ago.
In the latest study, conducted from 2019 to 2021 and based on a sample size of 170, the average base building costs for new office buildings (without any sustainability features) came to R18,063/m². Given that developers and owners are now only paying 3.92% more on average to build green, the additional capital outlay comes to R708/m², a cost premium that will no doubt continue to decline as South Africa’s green building industry matures.
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