There is much debate in the market – from science fraternities to professional services firms and environmentalists – on the benefits that green and sustainable building principles promote. TUHF, a member of the Green Building Council of South Africa (GBCSA), has long been committed to investing in South Africa’s inner cities and has adopted the green agenda from inception. Through its membership, engagements with international and multilateral funding agencies, TUHF has direct exposure to the latest developments in green and sustainable building practices.
As commercial property developers adopt green building as best practice more frequently, residential developers are beginning to do the same. Property entrepreneurs in the inner-city are no exception.
A powerful driver has been a rampant increase in utility costs in the country. Sqiniseko Mbatha, Financial Analyst at TUHF says, “Between 2006 and 2016, electricity prices have increased by more than 300%. This has pushed our clients, and the market in general, to look at mitigating the risks of these spiralling costs.”
Although previously building green was considered “too expensive”, the reality today is that the technology has become more readily available and this is driving costs down with the return-on-investment benefits of incorporating green technology becoming clearer. For example, tenants are increasingly considering the cost of utilities when making their overall rental cost decisions and this gives them a more comprehensive affordability comparison.
“More and more property entrepreneurs have explored ways in which to contribute to sustainability by creating green assets using things such as heat pumps, solar options, and LED lighting. Our financing has benefited from this with the creation of more resilient building assets. This has become the impetus behind the need to come up with a more formalised green practice,” Mbatha continues.
In 2018, TUHF received technical assistance from one of its funders to develop a concept of what a green inner-city building would look like. TUHF then started developing a methodology for what this building strategy would encompass and act as best practice for all green initiatives going forward. In collaboration with several institutions, TUHF standardised this green build approach and formalised it with the introduction of the Luhlaza (meaning ‘green’) Initiative.
Massive impact, one unit at a time
While buildings might look the same, the focus is on extending the economic life of a building through green initiatives. Properties that have these elements in place are more resilient and hold their value for longer. This in turn bodes more long-term value for investors and developers.
“We are looking at people who want to shore up their business with long-term resilience,” Mbatha says. “Today, adding green elements to a building has become financially feasible. For example, five-years ago LED lighting was considered too expensive and now it is virtually part of standard development practice. The market is quickly getting to a point where being green is no longer an option but instead integral to creating a quality asset and to retaining tenants.”
The pandemic adds momentum
“From the pandemic experience, there are two focus tracks that we see influencing the adoption of green and sustainable buildings,” says Samson Moraba, Chairperson of the Board at TUHF. “Firstly, that buildings generally (whether an office or apartment building) have a significant role to play in combatting COVID-19 because this is where people come together. This means that buildings can be used as part of the prevention and containment measures to combat the spread of the virus.”
“Secondly, the condition of buildings becomes an important consideration. This is where the issue of green buildings becomes prevalent as these buildings offer enhanced measures to control and prevent the spread of the virus. This includes things like promoting natural light and ventilation in the building design, the quality of building materials and indoor spatial planning for physical-social distancing,” he continues.
With both financial and human health factors driving greening residential property, TUHF is working hard to back Luhlaza up with finance and demonstrate how their buildings are contributing towards establishing green environments that are feasible over a long-term. It has been difficult to gain traction in the residential environment because of the unique energy make-up of each building. Ultimately, TUHF’s focus is to ensure that the end-user benefits the most from green initiatives.
“At TUHF we remain passionate about our Massive Small vision – to create impact through scale. This vision is central to the ethos of the Luhlaza Initiative, which aims to connect investors who want to invest in a green product and property entrepreneurs who want to create green assets that will not only contribute to their portfolios but also positively impact the environment and society,” Moraba concludes.