Decarbonising the retail property sector on the continent over time will make African markets more appealing for foreign direct investment, says Olaotse Leepile, CEO of Novare, the African investment solutions provider.
Novare has struck a deal with the World Bank Group’s development institution, the International Finance Corporation (IFC), positioning it to significantly green its retail property portfolio across the continent.
He said the partnership with IFC would help Novare reduce its property portfolio’s emissions by 30% and reduce water usage by 20% in a real estate sector that accounts for nearly 40% of global energy and industry-related carbon emissions.
“I think energy is a problem continent-wide. Offshore investors who are looking for investments that are sustainable tick the box for green buildings. This will make our portfolio a lot more attractive as it is sustainable or green, and in that way, it will attract more foreign capital.”
With the African real estate sector expected to grow at almost 7% annually over the next few years, taking strategic, proactive steps to decarbonise is vital for the sector’s sustainability
— IFC’s South Africa country manager Adamou Labara
He said the IFC used a mechanism known as EDGE (Excellence in Design for Greater Efficiencies) to certify projects and buildings in its partners’ portfolios and implement its Greening Real Estate Investment Portfolios (Grip) programme, which aims to decarbonise real estate portfolios.
“Given our EDGE champion status, which is an award that we were given by the IFC, they partnered with us to decarbonise our portfolio across the continent.
“[Greening] reduces the operating costs of the portfolio, which boosts the returns for investors. That is obviously a big part of why we are doing what we are doing. It also reduces our carbon emissions. Climate change is here to stay and it is up to us as investors to do well and do good at the same time.”
Novare has 24 years of experience in consulting on investing and pension funds. It grew from a consultant to a multi-manager of investments. It now has subsidiaries such as Novare Impact Investment Partners, which invests pension funds for social and environmental impact.
It also has a property fund of more than $200m (about R3.8bn) that has built four malls in Nigeria, three retail properties in Zambia and a mall in Mozambique. According to the IFC, green buildings in emerging markets will reach $24.7-trillion in value by 2030.
“We have two buildings in Zambia that are EDGE certified. They were the first buildings to be EDGE certified there, one of them is the headquarters of Standard Chartered and the other is a Novare mall,” Leepile said.
He said green buildings were typically 30% less emissions-intensive than conventional buildings. While Novare’s participation in the Grip programme was still in its early stages, a review by the end of this year should give a clear indication of Novare’s progress.
“By gaining EDGE certification we had to reduce emissions and water usage by 20%. We have to find better ways of dealing with HVAC (heating, ventilation, and air conditioning), which is a big energy consumer, and implement renewable energy.”
Novare in Mozambique has already started introducing energy solutions, including a solar plant for the mall it has there. He said the company was waiting for licence approval in Nigeria to put renewable energy solutions into its properties there.
He estimated that it could be a two-to-three-year process in total for Novare to meet all of the expected milestones in greening their entire property portfolio.
“We are reviewing the entire portfolio with the IFC as to what can and should be done and by when that can be done. We expect that review to be completed by the end of this year, by September, and then we will have milestones of when we expect the timelines to be clearer.”
IFC’s South Africa country manager Adamou Labara said IFC’s partnership with Novare highlights the IFC’s commitment to helping countries and economies of all global regions to green their industries and undertake a sustainable transition.
“Real estate is a carbon-intensive sector with great growth prospects on the continent. With the African real estate sector expected to grow at almost 7% annually over the next few years, taking strategic, proactive steps to decarbonise is vital for the sector’s sustainability.”
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