Legal experts say that the increasing global discussions on sustainability have caused a notable change in the approach to various aspects of daily life.
As a result, investing in “environmentally conscious property” in South Africa is seen as increasingly advantageous and provides a competitive edge to investors.
According to Lulama Lobola, a senior associate at law firm Cliffe Deffer Hofmeyer, like many other regions, South Africa is witnessing a surge in demand for sustainable and eco-friendly real estate.
“Embracing green financing becomes not just a responsible choice but a strategic one for long-term success in the dynamic and evolving real estate market,” she said.
A tool greatly incentivizing people is the increasing prevalence of green financing to promote environmentally conscious practices and enhance their bottom line.
Developers, investors, and buyers are increasingly turning to green and sustainability-linked loans.
“Green loans” are specifically designated for projects that have environmental benefits – such as constructing energy-efficient buildings or installing renewable energy systems, whilst sustainability-linked loans tie interest rates to predefined sustainability targets.
The government also makes the shift to green in the real estate sector more appetizing with various incentives such as tax breaks, grants, and fast-tracking of approvals for green projects.
Apart from the environmental advantages and government incentives, there are strong financial reasons for real estate developers and investors in South Africa to adopt green financing, Lobola said.
The increased market demand for sustainable and eco-friendly real estate in the country benefits buyers, developers and sellers.
Market studies show that properties with green certifications or sustainable features not only spend less time on the market but they seemingly attract more potential buyers and tenants.
Apart from buyers’ potential environmental reasonings, many turn to these green buildings as a way to counter the rolling blackouts and interruptions to water supply that are increasingly prevalent in the country.
“Prospective purchasers and tenants are increasingly prioritising sustainability, and green buildings are perceived as more attractive and responsible choices.
“Such properties often command higher rental and sale values, creating a financial incentive for developers and investors to integrate green practices into their projects.” said Lobola.
