Green-certified commercial properties proved to be the cream of the crop in the real estate market, continuing to outperform their non-certified counterparts across key performance metrics.
According to the Morgan Stanley Capital International (MSCI) SA green annual property index, prime and A-grade green offices led growth in 2024, delivering 34% higher gross income per square metre, a more efficient cost-to-income ratio of 39% compared to 46%, and a 30-basis point lower capitalisation rate than their non-certified counterparts.
While the office sector has long held the fort in green certification, 2024 marked a turning point for retail, with certified shopping centres and outlets starting to pull ahead.
According to the data, a clear performance gap is emerging, with green-certified retail properties delivering stronger returns, showing that investors are waking up to the broader value of sustainable real estate.
Green-certified retail property delivered a total return of 13.2%, 130 basis points higher than that of non-certified retail, with the outperformance driven by an 80 basis points lower capitalisation rate and an 18% higher net operating income per square metre, the report said.
Similar to green-certified offices, certified retail properties also demonstrated greater efficiency last year, recording a lower cost-to-income ratio of 41% compared to 44% for their non-certified counterparts.
Growthpoint, which holds one of SA’s largest portfolios of green-certified buildings and is a leader in sustainable commercial property, said the index highlights the investment advantages of green-certified commercial real estate.
Its head of asset management: offices, Timothy Irvine, said the consistent strong performance of green office buildings reflects growing demand from occupiers and investors for sustainable, resource-efficient properties.
Since the index launched in 2016, green-certified offices have outperformed their non-certified counterparts by a cumulative 28.2%, driven by stronger capital growth and greater operational resilience.
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