What Developers Need to Consider in Managing Green Buildings? - Part 1

The real estate market is witnessing a substantial shift towards green buildings.  According to Savills experts, by 2025, 10% of office buildings are expected to meet green standards. This trend indicates a growing demand from tenants for healthy and sustainable workspaces. Operating office buildings need to meet standards on air quality and energy optimisation to retain current tenants and enhance their competitive edge with new buildings. 

As the industry aims for carbon neutrality, converting buildings to green standards provides a significant competitive advantage and demonstrates developers' commitment, effort, and responsibility towards the government and society. Therefore, developers must have a detailed renovation, upgrading, and operation plan to ensure service quality and meet green certification expectations. 

Read more: How is Real Estate going “Green”   

DEVELOPERS MUST ADJUST MANAGEMENT SYSTEM AND OPERATIONAL METHODS TO GREEN STANDARDS RATHER THAN MAINTAIN TRADITIONAL METHODS

Many office buildings in the Vietnamese market were developed and put into operation 20 years ago. Therefore, their management systems and operational methods do not meet the green standards tenants seek. These buildings often use outdated and inefficient equipment, leading to high energy consumption and negative environmental impacts. 

As the demand for energy efficiency becomes more urgent, incorporating technology into property management systems is essential to reduce energy consumption, enhance operational efficiency, and ensure user safety and comfort. Buildings managed with intelligent management technology can collect and analyse operational data, including HVAC performance, energy consumption, and tenant density, to improve operations, support control, and optimise carbon emissions.

Each green certification, such as EDGE, LEED, Green Mark, Lotus, etc., has different requirements. Developers need to refine their detailed operational processes, including periodic maintenance, air quality control, waste management, and energy saving. Monitoring and evaluation tasks must also be conducted regularly to ensure the project complies with energy control, living and working environment regulations, such as: 

• Public hand wash taps must have a flow rate below the standard (2 litres/minute), have aeration, and automatically shut off. 
• Toilets must have dual flush modes or a single efficient and water-saving flush; they must specify the flush volume.
• Landscaping areas should use drought-resistant plants and an efficient irrigation system, with rainwater recycling for irrigation. 

Therefore, developers need to organise training sessions to equip staff with the knowledge and skills to implement green operational processes effectively.  

Viet Nam does not have mandatory regulations for green buildings; green building development is carried out in a voluntary and encouraged form. Additionally, there are no mandatory regulations for labelling, assessing, or certifying green building materials and energy-saving products. Many developers tend to hire third-party agents for consultancy or direct management to keep up with market trends, green certifications, and the developers’ financial situation. This agent will advise developers on selecting the appropriate green certification for the project's scale and characteristics and guide the project to comply fully with the evaluation system requirements.

DEVLOPERS NEED TO DEVELOP BUDGET ESTIMATES, ALLOCATE COSTS, AND PRIORITISE RENOVATION ITEMS ACCORDING TO PROJECT CHARACTERISTICS AND FINANCIAL SITUATION

To achieve green building certification, a project must focus on many criteria, with materials and construction quality being fundamental. This is also why the initial investment cost in green offices will be higher than that of traditional offices. However, according to the Viet Nam Green Building Council and IFC, the price for green solutions only increases by less than 5%. Still, green buildings save about 20% on electricity and 40% on clean water compared to traditional buildings. 

A certified green building saves long-term operational costs and attracts multinational companies and long-term clients, increasing occupancy rates and rental prices and shortening the payback period. 

Depending on objectives, developers will develop renovation plans that meet green certification criteria and suit the project's current condition (building age, scale, structure, technical systems, etc.). However, developers need to stay informed about market trends and the project's financial situation to allocate costs and priorities for renovation items, minimising impacts on business operations and tenant experiences. For example, for new buildings, developers should consider integrating green technologies from the design stage, such as using eco-friendly materials, rainwater harvesting systems, or solar energy systems. In contrast, renovations should be incremental for existing buildings, focusing first on upgrading lighting systems, HVAC, insulation, or implementing energy-saving solutions. 

Read more:  

Common budgeting challenges in operational management - Part 1 

Common budgeting challenges in operational management – Part 2 

Currently, Viet Nam does not have comprehensive policies and standards for green real estate operations, leading to challenges in developing and managing green buildings. With the sustainable operating orientation of Savills Property Management Department, we offer a range of consultancy and management packages throughout the project lifecycle, helping developers implement solutions that optimise energy and operational costs. 

Learn more about our Consultancy and Management Services.