There is a strong business case for growing the green buildings market. Emerging evidence indicates that green buildings, or buildings that use energy and water more efficiently, are a higher-value, lower-risk asset than standard structures.
According to the research conducted by IFC, Sub-Saharan Africa presents green building investment opportunity worth up to USD 258.4 billion for commercial buildings, with educational buildings accounting for USD 73.8 billion followed by office (USD 49.6 billion) among others.
The total potential opportunity for green residential buildings is estimated at USD 509.6 billion mostly in single-family units (USD 413 billion) and USD 96.6 billion for multi-unit residentials.
While building green could range from savings of 0.5 percent to 12 percent in additional costs, green buildings can decrease operational costs by up to 37 percent, achieve higher sale premiums of up to 31 percent and faster sale times, have up to 23 percent higher occupancy rates, and have higher rental income of up to 8 percent.
Investing in green buildings allows market players to manage potential risks that stem from the global transition to low-carbon economies.
Globally, the buildings sector consumes more than half of all electricity for heating, cooling and lighting and accounts for 28 percent of energy-related greenhouse-gas emissions. It will require an estimated 50 percent more energy by 2050 than today.
Resource-inefficient buildings run the risk of losing economic value or becoming stranded assets due to increasingly stringent regulations, pressure from financial regulators to manage and disclose climate risks, changing consumer preferences, and shareholder demands.
Non-compliant buildings could become subject to legal action and fines, making them more expensive to operate and insure, and harder to lease or sell.
IFC predicts that the floor area of the global buildings sector is expected to double by 2060. Most of this construction will occur in emerging markets, particularly in middle-income countries experiencing high population growth, rapid urbanization, and income growth.
New construction offers a significant opportunity to integrate energy efficiency into building design from the outset, helping to maximize the financial benefits that come from energy savings and avoid the need for costly retrofits later.
Even though there is increasing awareness and inclination towards green buildings, green building investments still pale in comparison to the total investment in buildings.
Global investments in green buildings accounted for just $423 billion of the $5 trillion spent on building construction and renovation in 2017.