In 2015, LEED-certified Grade A office buildings exceeded 5.6 million square meters across 10 major cities in greater China, an increase of 7.4 percent from the previous year, accounting for 28 percent of the total market, according to a new report published by CBRE and USGBC.
The report, “Towards Excellence: Market Performance of Green Commercial Buildings in the Greater China Region," builds upon CBRE’s 2015 report, "New Era of China’s Green Buildings," which found that rental premiums for LEED-certified Grade A offices in key mainland China cities—including Beijing, Shanghai, Guangzhou, Shenzhen and Chengdu—enjoy a higher average rental performance ranging from 10 to 30 percent, and are better positioned to weather a downward commercial real estate market. In China’s tier two cities, such as Chengdu, Tianjin, Hangzhou and Wuhan, LEED-certified Grade A office buildings cover a floor area of nearly one million square meters, accounting for an estimated 18 percent of the total Grade A office area.
The latest report adds to the 2015 report by broadening the market expectation aperture to include the greater China markets of Hong Kong and Taipei. LEED-certified space in these cities, when combined with that of mainland China’s cities, totals 3.84 million square meters and accounts for more than 70 percent of all of greater China’s LEED-certified buildings.
The inclusion of Hong Kong and Taipei in the new report serves as a more comprehensive frame of reference for the prospective outlook of the green building market in mainland China.
Hong Kong and Taipei were markets late to pursuing green building. However, in the past few years, LEED has recorded considerable development in both cities, registering an estimated average annual growth rate of 28 percent, with occupied LEED-certified office buildings achieving, on average, a 30 percent rental premium. With China’s central bank announcing in late June that market expectations for the yuan are stable, the green building industry on the mainland is expected to thrive. Additionally, because of greater public awareness of global and national environmental issues, demand for green building is increasing throughout China’s commercial building market.