Washington D.C., December 3,
2019 – A new report by IFC, a member of the World Bank Group, highlights
how investors can tap into enormous potential in green buildings. The report,
Buildings: A finance and policy blueprint for emerging markets,
notes that by 2030, in emerging markets alone, green buildings will
offer a $24.7 trillion investment opportunity, which will spur economic
growth and accelerate sustainable development. Across Asia and the Pacific,
which will house half the world’s urban population by 2030, there are
particularly promising areas for investment, with an estimated $17.8 trillion
worth of investment opportunities, primarily in residential buildings.
“The floor area of the buildings
that dot our skylines is expected to double by 2060,” notes Alzbeta Klein,
Director of Climate Business at IFC. “The majority of this construction
boom will occur in emerging markets, particularly in middle-income countries
experiencing high population growth, rapid urbanization, and income growth.
Green construction is one of the largest investment opportunities of the
next decade that can spur low-carbon economic growth and create skilled
jobs for decades to come.”
The report highlights the clear
financial benefits investors, banks, developers and owners, including governments,
can expect when entering the green building market. Green buildings command
substantially higher sale premiums – up to 31 percent more – and sell
more quickly than traditional buildings. Furthermore, green buildings maintain
higher occupancy rates – up to 23 percent higher – than conventional
buildings and offer higher rental income. By consuming less water and electricity,
operational costs are up to 37 percent lower than traditional buildings.
When green features are incorporated early in the building design, the
cost of green construction can range from savings of half a percent to
12 percent in additional costs.
Additionally, the report notes
that green buildings can be a strong driver of economic growth, generating
upwards of nine million skilled jobs in both the renewables and construction
sectors by 2030. Currently, green buildings account for just 8 percent
of the construction and renovation sector, indicating a vast potential
The report offers a uniquely
private sector perspective on the investment potential in emerging markets
and how to realize this potential, according to IFC. It draws on IFC’s
almost decade-long experience investing $5.5 billion in green buildings,
as well as lessons learned helping governments to design and implement
building codes to catalyze green building markets. In addition, IFC has
designed its own certification system designed for emerging markets, EDGE
(Excellence in Design for Greater Efficiencies), which is available in
more than 150 emerging markets. IFC’s Green Buildings program is implemented
in partnership with the governments of Austria, Canada, Denmark, Finland,
Hungary, Japan, Switzerland, and the UK, as well as with ESMAP, the EU,
By 2030, other regions besides
Asia and the Pacific will offer significant opportunities as well:
· In Latin America,
green housing construction will create an estimated $4.1 trillion investment
opportunity in green buildings.
· New green buildings
in Eastern Europe and Central Asia will attract almost $881 billion in
investment opportunities, likely much smaller than investments required
to retrofit old buildings.
· In the Middle
East and North Africa, cities will account for most of the over $1.1 trillion
regional investment opportunity in green buildings as demand increases
for resilient housing to combat water and heat stress.
· In Sub-Saharan
Africa, cities will double in population by 2050, providing a $768 billion
investment opportunity to green future construction until 2030.
IFC’s report highlights best
practices by and for investors, banks, governments, developers, and owners,
and provides an investment blueprint for scaling up green buildings across
emerging markets. Shifting lending and investments towards green buildings
will allow investors to take advantage of this significant investment opportunity.
It will also help build stronger real estate investment portfolios resilient
to financial, regulatory, and reputational risks associated with the transition
to low-carbon economies. Governments stand to benefit financially from
the transition to green construction, and the shift will also help them
meet their social and environmental objectives. Globally, 28 percent
of greenhouse gas emissions come from energy use in buildings, making them
an important part of helping governments to achieve their climate change
IFC—a sister organization of the World Bank and member of the World Bank
Group—is the largest global development institution focused on the private
sector in emerging markets. We work with more than 2,000 businesses worldwide,
using our capital, expertise, and influence to create markets and opportunities
where they are needed most. In fiscal year 2019, we delivered more than
$19 billion in long-term financing for developing countries, leveraging
the power of the private sector to end extreme poverty and boost shared
prosperity. For more information, visit www.ifc.org.