Demand exceeds supply for green-certified Grade A office in KL – JLL report

• Currently, the demand for green workspaces in KL is estimated to be approximately between 40% and 45% while supply only stands at 35%.

KUALA LUMPUR (Nov 14): Kuala Lumpur is trailing behind the supply for Net Zero Carbon (NZC) buildings, with only 35% of its prime office stock achieving some level of green certification, despite some attempts to incorporate green features into older buildings. 

In comparison with the Asia Pacific region, 47% of the prime office stock boasts green certification, according to JLL Malaysia’s report entitled The impending green divide: Supply deficit of sustainable workplaces in Kuala Lumpur, which was launched today.

JLL Malaysia head of research & consultancy Yulia Nikulicheva said that this could be attributed to the fact that older buildings within the historical Central Business District (CBD) of KL, built over 30 years ago and predating the enactment of the Paris 2015 climate agreement, were designed with no regards for the environment.

She added that currently, the demand for green workspaces in KL is estimated to be approximately between 40% and 45%.  

More than half expect to achieve green real estate portfolio by 2025

In October 2023, JLL conducted a survey of the largest local and multinational companies operating in KL with significant presence in the Asia Pacific region to understand the challenges they face in establishing and implementing an ESG (Environmental, Social and Governance) policy.

The findings unveil ambitious goals with 55% anticipating achieving a green real estate portfolio by 2025, another 41% intending to achieve this goal by 2030, and merely 4% planning to do so after 2030.

The survey showed that the companies’ top ESG priorities for the upcoming three years include conducting energy audits of real estate portfolios, leasing green office spaces, and raising awareness of sustainable workplace practices among employees. These priorities emphasise a commitment to understanding energy consumption, promoting sustainable office spaces, and fostering a culture of sustainability within organisations.

Malaysia well on its way to achieving sustainability

Meanwhile, InvestKL CEO Datuk Muhammad Zulkifli Azmi said that Malaysia and Greater KL are well on their way to achieving sustainability.

"Malaysia has launched various frameworks and initiatives to achieve sustainability and the newly announced targets of the country's Sustainable Development Goals (SDGs) demonstrate its proactive and progressive stance towards a sustainable future. This, in turn, aligns seamlessly with the sustainability goals of multinational corporations (MNCs) operating in our nation. 

“Greater KL is leading the way in creating sustainable spaces and moving in the right direction to meet the standards and demands of future sectors. Through collaborative efforts between the public and private sectors, we are forging a path towards sustainability, fostering a future-ready environment for all," he added.

The survey also highlighted that many corporations have established highly ambitious targets to achieve Tier 3 emission levels by 2030. Tier 3 requires not just the company itself and its real estate to achieve a NZC impact on the environment, but also includes ensuring all of its global chain suppliers adhere to the same sustainability principles. 

Huge opportunity for developers

Given KL’s substantial supply demand gap in low-carbon building, the report stated that this presents a huge opportunity for developers and investors to capitalise on the first-mover advantage by investing in NZC buildings.

With nearly 50% of Grade A office spaces in KL built before 2011, owners and investors must take proactive measures to evaluate their portfolios for upgrading, repurposing, or selling with the aim of making their assets future fit.  

JLL in collaboration with InvestKL, will be hosting the ‘Green Horizons: Crafting the Workplace of Tomorrow’ event on Nov 16 with a focus on ESG and the future of workplaces.

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