Green Building in ASEAN: The Opportunities for Hong Kong

The buildings and construction sector accounts for about one-third of global energy use and greenhouse gas (GHG) emission. Driven by the incentive to reduce energy costs and by concerns about climate change-related disasters, some Southeast Asian countries have adopted green building practices in recent years, creating opportunities for Hong Kong companies. Green building related products and services include not only the building energy saving technologies, but also consultancy and architectural services.

What is Green Building?

Green buildings are buildings which are environmentally friendly and designed to save energy and resources, not just in their physical structure but through the lifecycle of a building – from master planning to design, construction, operation, maintenance, renovation and demolition. When constructing green properties or retrofitting an existing building to become green, many issues come into play. Today, there are numerous green building benchmark systems in the world. While their requirements vary with local characteristics, the general criteria of a green building can be summarised as six aspects as follows:

The green building approach can be applied to all types of buildings, including residential, commercial, retail and public facilities like schools and hospitals, as long as it includes the features listed above. In addition, the green building industry is not restricted to the construction sector, it also involves a wide spectrum of stakeholders from the private and public sectors.

Drivers of Green Buildings in ASEAN

Apart from the environmental benefits, the cost saving in utilities is a key driver for green trends among commercial tenants and households. Numerous studies have shown that green buildings can reduce energy and water consumption by from 30% to 50%[1] compared to conventional buildings. In ASEAN, green building designs that incorporate local climate characteristics can result in up to 48% energy savings[2]. For instance, the energy costs incurred in a green certified office building in Malaysia is only about 46% of a conventional building, recouping the cost of retrofitting the building within 8 years[3]. 

Government policy towards sustainable development also plays a key role in promoting green building practice. The 10 ASEAN countries, the signatories of the Paris Agreement[4], are committed to reducing different levels of GHG emission by 2030[5]. Accounting for the biggest share of GHG emissions, the building industry is an area of focus for governments seeking to achieve these targets.

For example, Malaysia provides investment tax allowances of 100% of capital expenditure for companies that acquire assets or undertake projects related to green buildings. Meanwhile, Singapore has made the submission of energy use data for commercial buildings mandatory.  These measures have driven the adoption of green building practice among both public and private sectors over the past decade.

The concept of Environmental, Social and Governance (ESG) is now widely acknowledged across the corporates in ASEAN. Several stock exchanges in ASEAN, including those in Malaysia, Singapore, the Philippines and Thailand, have established sustainability reporting requirements for listed companies. As green buildings can enhance environmental performance and corporate image, multinationals are increasingly opting for eco-friendly commercial properties when choosing their office or retail locations. 

Tapping the Green Building Opportunities

Amid the fast-expanding urban population, some highly urbanised cities, like Kuala Lumpur, Bangkok and Manila, have seen an increasing number of high-rise residential and office buildings in recent years. Sharing the high-density characteristics, Hong Kong’s high-rise building model could be a reference for the building designs in these cities. With the rising demand for green buildings in the region, ASEAN cities present an opportunity for Hong Kong companies providing eco-friendly solutions for the construction and building sector.

According to industry opinion, Hong Kong is outstanding in terms of integration and application of technologies and know-how. With their young population and healthy economic growth, the emerging markets in ASEAN are ideal grounds for new technology deployment. While some consultancy and engineering services providers have established a foothold in the region, Hong Kong SMEs and start-ups may also find an edge in introducing their green solutions and overseas technologies.

[1] Luay N. Dwaikat & Kherun N. Ali (2016). Measuring the Actual Energy Cost Performance of Green Buildings: A Test of the Earned Value Management Approach. Energies, MDPI, Open Access Journal.

[2] UN Environment (2018). Sustainable Urban Infrastructure Transitions in the ASEAN Region: a Resource Perspective. United Nations Environment Programme

[3] Soon, C et al. (2017). A Case Study of Green Building in Malaysia: Cost Saving Analysis. Pertanika Journal of Science and Technology.

[4] The Paris Agreement is an international agreement to combat climate change and to accelerate and intensify the actions and investments needed for a sustainable low carbon future. It has been signed by more than 190 countries and entered into force in November 2016.

[5] The national GHG reduction targets are specified in the intended Nationally Determined Contribution (INDC) of the Paris agreement. For ASEAN countries, the NDCs range from 8% to 70%. For details on each INDC, please refer to the INDC portal.