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MSCI South Africa Green Annual Property Index 2022

The MSCI South Africa Green Annual Property Index for 2022 continued to support the investment case for energy and resource efficient real estate. Released annually since 2016, in conjunction with the Green Building Council of South Africa (GBCSA) and sponsored by Growthpoint Properties (JSE: GRT),the index provides an independent, globally consistent view on the investment performance of green-certified and non-certified offices.

The index showed that green certified Prime & A-grade offices produced an improved total return in 2022 and outperformed non-certified office assets of a similar quality by 50bps during the year.

Paul Kollenberg, Growthpoint Head of Asset Management: Offices, comments, “The MSCI index once again shows that green buildings are good investments. But, more than that, it reflects lower power and water costs in these properties. At a time when tenants are looking at “total cost of occupation”, and utility prices keep escalating, it makes sense to rent space in a green efficient building. Added to that, the cost of providing backup power to these properties will be reduced, because consumption is lower.”

At the end of 2022, the index sample comprised 303 prime and A grade office properties valued at R58.2 billion of which 164 were green-certified buildings. These were compared to 112 non-certified offices of a similar quality.

“These results confirm that there are long term benefits associated with pursuing green building certification. With some tough market conditions at play, green certified buildings are demonstrating their resilience and value” says Georgina Smit, GBCSA Head of Technical.

Green offices outperformed by 20.9% since 2016

For the year ended December 2022, the green-certified office sample delivered a total return of 6.1%, 50bps above the non-certified sample’s return of 5.6%. Since the index’s inception in 2016, the sample of green-certified offices outperformed the non-certified sample by a cumulative 20.9%.

Over this seven-year period, green certified offices had a 2.1% lower vacancy rate and 1.0% higher net operating income (NOI) growth. This robust NOI growth underpinned green offices’ income return which was in-line with that of non-certified offices despite a 25% higher capital value per square metre. A 30% higher NOI per square meter compared to non-certified office buildings reinforced the premium blue-chip occupiers are placing on green office accommodation.

Green office cashflows deemed lower risk

Green certified offices boasted significantly lower per square meter usage of electricity (-4.5%) and water (-14.3%) when compared to non-certified offices. With administered costs rising at rates more than inflation, these costs can have a significant impact on performance over the lifecycle of a property. In 2022, the green-certified office sample’s gross cost to income ratio was 39.7%, substantially lower than the 43.0% of the non-certified subset. As a result, green offices had a 20bp lower capitalisation rate and a higher forward income growth implying that its future cashflows were deemed both lower risk and likely to grow at a faster rate.

Green certified offices better across all measures

Released in April 2023, the MSCI South Africa Green Annual Property Index demonstrated the positive relationship between green-certified buildings and investment returns but also of its impact on property fundamentals that could underpin future performance.

“The highlight of these results lies in the reduced cost to income ratios. It shows that through certification, owners can manage costs better because they have future proofed their assets. In the current market where rentals are difficult to increase, managing costs are more important than ever, especially water and electricity, so efficiency is paramount” says Eileen Andrew from MSCI.

Lisa Reynolds, CEO of GBCSA, stated that “In the last few years, the conversation has shifted. Green certified buildings always made business sense due to the financial savings in the utility bills. Currently we add the concepts of risk into the conversations – the risks due to the impact climate change, the risks due to the lack of resource security and, most importantly, the risk of stranded assets. Certified green buildings play a huge role in mitigating these risks. I believe that this is confirmed by the MSCI results.”

As a leader in environmentally conscious commercial property development, Growthpoint owns and manages the largest portfolio of green-certified buildings in Africa. Its green buildings contribute to greater climate change resilience and reduce its carbon footprint as it continues to strive for excellent environmental, social and governance (ESG) performance. Growthpoint’s sustainability strategy is to certify its entire portfolio of buildings as carbon neutral by 2050.

Growthpoint’s Head of Sustainability and Utilities, Grahame Cruickshanks says, “In addition to the financial, operational and risk-mitigating advantages demonstrated by the MSCI index, green buildings are essential for organisations – both landlords and tenants – to meet their ESG commitments. Growthpoint invests in green buildings because it is the right thing to do for environmental sustainability and South Africa’s green economy growth.”

Access the latest results here:  MSCI South Africa Green Index for December 2022

Individual Membership

Designed for professionals acting in their individual capacity, including single consultant-businesses.

Organisational Membership

Ideal for companies, government departments, and organisations.

  • Total Employees: 1 - 5 Employees - R 4080.00
  • Total Employees: 6 - 20 Employees - R 12570.00
  • Total Employees: 21 - 50 Employees - R 24690.00
  • Total Employees: 51 Plus Employees - R 43840.00

Lisa Reynolds

Chief Executive Officer & Executive Director

Lisa Reynolds is the CEO of the Green Building Council South Africa.

Lisa was the driver for the drafting of Energy Efficiency Standards and Regulations for Buildings and has been involved in Energy Efficiency since 2003. She serves on many committees in the SABS and within the energy management professionals’ space. She was President of the SAEEC from 2016 to 2019 and was the previous President of the ESCo (Energy Services Companies) Association. Lisa was instrumental in the formation of SAFEE (Southern African Females in Energy Efficiency) within SAEEC.

She has assisted the South African Government with its Green Building Framework policies, Energy Efficiency Tax Incentives and Energy Efficiency Strategies

Her passion for the “Green space” started with the birth of the Green Building Council in 2007. Lisa served on the Board and the Technical Committee of the GBCSA, as well as on several Technical Working Groups for Rating Tools and Criteria. Lisa. became CEO in June 2020.

Lisa has a BSc, an MBA and a CEM. Lisa’s awards include the 2007 ETA Award for Women, 2008 Individual Energy (SAEE), 2012 SABS Standards Writer Award; the 2014 Women in Energy (SAWIEN); and the 2016 Ian Lane Hall of Fame award.

Lisa is committed to growing the Green Economy within a Green Recovery.

Organisational categories

As an organisational member, you will fall into one of the below categories, and be charged according to specific size indicators. Please reach out to us for any further clarity on which category is best for your organisation

Property Developers

Annual Turnover

Investors, Owners, Property Managers

Total Asset Value

Major Corporate Tenants & Retail

Annual Gross Rentals

Building Contractors

Annual Turnover

Building Product Manufacturers & Distributors

Annual Turnover

Professional Services: Architects, Designers, Engineers, Quantity Surveyors, PM’s, Consultants, Legal

Number of employees

Research, Higher Education, NGO’S & Regulators

NGO or Research/Higher Education/ Regulators

Related Interests: Utilities, Financial, Insurance, etc.

Annual Turnover

Government

Local/ municipal/ provincial/ state 
Contact GBCSA to confirm your category