Rehda: Lack of incentives for green building projects

The Real Estate and Housing Developers’ Association Malaysia (Rehda) highlighted that there is a lack of incentives to encourage developers to embark on green building development, in particular financial incentives, which do not mitigate the high upfront cost of green buildings.

Its immediate past president Datuk Seri Fateh Iskandar (pix) said developers face financial risks, including 15%-20% higher capital upfront or initial costs, for green buildings. Extra costs involved include new technology and innovative technology methods or techniques, green rating assessment fees, design fees, professional fees, procurement of new technology or materials as well as longer planning period.

“However in the long run, when you look at maintaining the building and property, you will have a considerable amount of savings,” Fateh said in in his keynote at the Sustainable Housing Futures Conference here today.

He said developers also face demand risk, where developers construct and supply products in accordance to buyers’ demands and preferences, however do not receive direct benefits from the energy-efficient investment. Instead, developers bear the extra cost of the new technologies involved. This is later passed on to house buyers in the form of higher selling price.

“If we’re serious about moving forward, incentives must be given. Then more contractors will design something more sustainable and green,” said Fateh, urging the country to emulate Singapore where incentives have been given in the past five years.

He also pointed out the undersupply of green building technology and materials, which have to be imported.

“In Singapore, when multinational tenants want to rent a green building, you have to pay 20%-30% higher premium from the normal office rental. Unfortunately in Malaysia, this does not happen. Whether we build a standard building, MSC-status building or green building, the rental is the same. We have to educate our tenants,” said Fateh.

There is also a lack of enforcement, including the lack of legislative framework for green technology and lack of building codes and regulations.

“Tweak or relegislate certain framework for green technology. We’ve many building codes and regulations, but none for green technology,” said Fateh.

He said one of Rehda’s flagship initiatives on the green front is GreenRE, a building rating tool launched in 2013 that provides certification of environmentally responsible and resource-efficient building in the residential and non-residential sectors, in addition to advice on sustainable property design and construction.

Ee Ann Nee / The Sun Daily