Yesterday (03 October 2024), I had the privilege of attending the 9th annual REITs and Real Estate Investment Summit 2024 as one of the selected media partners for the event, held at Sheraton Towers Singapore. I’d like to extend my thanks to the organiser, The Pinnacle Group International, for the invitation.

Deeply honoured to be invited to the annual event as a media partner for the second consecutive year.

This year’s theme, ‘Profiting through Sustainable Technology and the Net Zero Imperative,’ brought together industry experts who shared valuable insights through presentations and panel discussions on the importance of sustainability and how REITs and property developers can leverage technology to reduce the carbon footprint of their buildings.

Very insightful sharing by the industry experts during the event.

For me personally, the sessions were incredibly insightful. Before the event, my knowledge of sustainability was pretty much limited to the fact that REITs are required by the Singapore Exchange to issue annual sustainability reports. The event also provided a valuable opportunity to engage with industry experts during lunch and tea breaks – an experience I found immensely rewarding.

Here are some key takeaways from the event I have compiled to share with the community:

i. Introduction to Global Carbon Emissions

Global carbon emissions have increased by more than 70% since the advent of the digital age, with the majority of emissions stemming from the burning of fossil fuels, primarily carbon dioxide.

The top three contributors to global greenhouse emissions are China (26.1%), the United States (13.4%), and Europe (7.4%).

ii. The Urgency of Achieving Net Zero

Achieving net zero emissions is critical to aligning with global climate goals.

Currently, less than 1% of buildings worldwide are carbon neutral. Property owners cite the lack of expertise (16%), high costs (32%), and complexity (52%) as key barriers to adopting sustainable practices.

iii. The Role of Retrofitting in Sustainable Real Estate

While incorporating sustainability features into new buildings is important, the real estate industry must also focus on retrofitting existing buildings.

A tech-first approach yields the highest return on investment with minimal disruption to business operations. Savings between 50-70% can potentially be achieved through such efforts.

iv. Investor Awareness and Market Impact

Investors and property owners are increasingly aware of how climate risks affect long-term returns.

Properties that fail to comply with sustainability standards face reduced demand, lower tenancy rates (as seen in non-green certified CBD buildings), difficulties in securing funding, and higher insurance premiums. Non-ESG-compliant properties are also subject to lower valuations and higher carbon taxes.

v. The Growing Importance of ESG in REITs

For REITs that prioritise environmental, social, and governance (ESG) criteria, the benefits include attracting more institutional investors who seek to mitigate potential downside risks.

Many institutional investors are also mandated to invest in companies with strong ESG management.

vi. Sustainability in Corporate Operations

Many organisations are making sustainability a central focus of their business operations, with one common strategy being the occupation of green-certified office spaces.

This aligns with both operational efficiency and ESG goals.

vii. Singapore’s Green Initiatives and Government Support

The Singapore government has implemented various measures to encourage landlords to green their buildings, including tax incentives, research and development (R&D) tax deductions, grants, and refundable investment credits (announced in Budget 2024).

The government also offers sustainability-related incentives focused on energy efficiency and industry-specific needs.

viii. Singapore’s Commitment to Carbon Reduction

The Building and Construction Authority (BCA) of Singapore has set targets, aiming to reduce carbon emissions by 60MtCO2 by 2030 and to achieve Net Zero by 2050.

Singapore is also importing clean energy sources such as solar power, green hydrogen, and ammonia to reduce its reliance on fossil fuels. Unlike fossil fuels, renewable energy costs are fixed from the outset, avoiding price fluctuations associated with coal or fossil fuel.

ix. Operational and Financial Benefits of Green Buildings

Compliant buildings enjoy significant operational savings. Studies have shown that energy-efficient buildings can lower utility and maintenance costs by up to 30% annually.

Additional financial benefits include lower insurance premiums, access to tax breaks, grants, and lower-interest loans, making green projects more feasible.

x. Leveraging Technology for Energy Efficiency

Landlords can utilise smart building technologies, such as smart lighting and HVAC (Heating, Ventilation, and Air Conditioning) systems, to enhance energy efficiency.

Artificial intelligence (AI) can also be employed to analyse data and optimise energy consumption, leading to potential energy savings of 35% for air conditioning alone by adjusting usage based on occupancy levels.

xi. Cooling as a Service: A Cost-Saving Innovation

Landlords can engage cooling-as-a-service providers, who cover the capital and operational costs of cooling systems in exchange for usage fees.

This model has led to savings of 30-50% in cooling energy and 10-30% in total cooling costs.

xi. Increasing Adoption of Energy-Saving Technologies

For technology adoption to scale, the process must be seamless, particularly in terms of user experience, while delivering visible cost savings.

Energy audits are also crucial, as they provide a roadmap for implementing further green initiatives, thereby future-proofing properties.

xii. Collaboration is Key to Success

Engaging all stakeholders, including developers, investors, policymakers, and the community, is vital to successfully implementing sustainable solutions.

Building owners should adopt an open mindset and collaborate with tenants to reduce carbon emissions. This creates a “triple win” scenario: lower emissions, improved financial performance, and greater tenant satisfaction.

xiii. Long-Term Financial Returns of Sustainability

While the initial costs of sustainability initiatives may be high, long-term returns are superior. Sustainable buildings benefit from reduced water and energy consumption, higher valuations, and the ability to command premium rental rates.

Closing Thoughts

I hope this summary has provided you with a clearer understanding of the critical role sustainability plays today.

Sustainability features and green certifications are no longer just ‘nice to have’ – they have become essential. Properties that fail to meet these standards face declining valuations, lower occupancy rates, increased carbon taxes, and greater challenges in securing funding.

A major concern for retail investors revolves around whether the capital expenditures for sustainability improvements will result in tangible cost savings.

As highlighted, it’s crucial for investors to adopt a long-term perspective. Over time, reductions in utility costs, along with the ability of green-certified buildings to command higher rental premiums, will ultimately contribute to stronger top- and bottom-line performance.

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