Around the world, the green building marketplace is accelerating, according to a new study being released by McGraw-Hill Construction in partnership with United Technologies. The study indicates a shift in the global construction market, now viewing green as a business opportunity rather than a niche market.
Overwhelmingly, firms report that their top reasons for undertaking green work are client demand (35%) and market demand (33%)—two key business drivers of strategic planning. The next top reasons were also oriented toward the corporate bottom line—lower operating costs (30%) and branding advantage (30%). In contrast, the top reason in 2008 motivating the green building market was doing the right thing (42%) and market transformation (35%), followed by client and market demand.
“This research confirms that green building advances environmental stewardship while providing value to the market,” said Geraud Darnis, president and CEO, United Technologies Climate, Controls & Security. “It also confirms that we now see more pull than push for green buildings.”
In the next three years, the sectors with the largest opportunity for green building around the world include new construction and renovation projects. Sixty three percent of firms have green work planned in new commercial projects and 45% in new institutional projects by 2015, and 50% have plans for green renovation work. In the United Kingdom and Singapore, green renovation projects were planned by the greatest number of firms at 65% and 69% respectively. In Brazil and UAE, new projects pose the largest opportunity. In Brazil, 83% of firms are planning to work on new green commercial projects over the next three years, and in the UAE, 73% have new green institutional projects planned.
“It is notable that over the next three years, firms working in countries around the world have green work planned across all building types, incorporating both new construction and renovation,” said Harvey M. Bernstein, vice president, Industry Insights and Alliances for McGraw-Hill Construction. “The existing building market is a ripe opportunity for green building, and we are seeing that play out in the market. It is clear that green is becoming an important part of the future landscape of the global construction marketplace, and firms will need to be prepared for that transition.”
Green buildings are also expected to garner business benefits for building owners. For new green building projects, firms report median operating cost savings of 8% over one year and 15% over five years, as well as increased building values of 7% (according to design and construction firms) and higher asset valuation of 5% (according to building owners).
For green retrofits, operating savings are higher than for new buildings with operating costs reported to decrease by 9% over one year and 13% over five years. Asset valuation is also expected to increase, though at more moderate levels than for new green buildings—design and construction professionals expect 5% increased building value from green retrofits, and owners expect higher asset valuation of 4%. For green projects, payback on efforts is expected within eight years for new projects and seven years for retrofit/renovation work.
Other significant findings include:
- Human factor benefits are driving green building more today compared to three years ago: 55% cite greater health and well-being as the top social reason for green (tied with encouraging sustainable business practice), up from only 29% in 2008.
- Energy use reduction tops the environmental reasons for green building: 72% say it is the important environmental reason to engage in green building.
- Water use reduction is more important today: 25% of study respondents cite reduced water consumption as the top reason, up from only 4% in 2008. It is particularly important in the UAE (64% cite it as a top reason), Brazil (39%), and the U.S. (32%), ranking as the second most important environmental factor in these countries.
- Improved indoor air quality is also more important today: 17% cite it as a top reason to engage in green building, up from only 3% in 2008.
- For firms not currently doing any green project work, the primary driver that they think will motivate future green activity is the desire to do the right thing. This is in sharp contrast to those involved, suggesting this market is not as familiar with the business case for green building.
“We’ve been on the ground watching the markets shift to green around the world. Today, there are green building councils in 92 countries around the world—more than double what it was when we first looked at the green building market globally in 2008,” said Jane Henley, president of the World Green Building Council. “The business case is helping move the markets, and this study underscores the importance of measuring and reporting those benefits.”
The study also revealed that approximately 48% of the work by U.S. respondents was green—with that share expected to increase to 58% by 2015. These results are consistent with McGraw-Hill Construction’s 2013 Dodge Green Construction Outlook that sized the green building share of new construction starts in the U.S. to be 44% by value, and up to 55% by 2015.
The findings are drawn from a McGraw-Hill Construction survey of firms across 62 countries around the world. Firms included architects, engineers, contractors, consultants, and building owners. The full report containing these and other study results will be published as part of McGraw-Hill Construction’s SmartMarket Report series, with global release anticipated in the first quarter of 2013.