Green certification delivers financial benefits for commercial buildings, with new growing evidence of returns to residential developers. The commercial sector enjoys decreased operational costs by 37 per cent, higher sale premiums of up to 31 per cent, and increased occupancy rates up to 23 per cent (IFC, 2019). While home buyers are not able to bear higher prices, green developers can speed up their sales cycles, with a direct effect on their bottom line through reduced cost of financing. Governments can also catalyze faster sales by increasing the purchasing power of home buyers while incentivizing green construction. In 2019, the Central Bank of Indonesia started offering a 5 per cent lower loan-to-value ratio for green home purchases (Bank of Indonesia, 2019).
Green certification also provides benefits to residents. Indonesia’s Citra Maja Raya received the IFC’s EDGE-certification by implementing optimum window sizing, external shading, insulation of roof and external walls, natural ventilation, and energy- and water- efficient systems. These measures resulted in a cost increase to the developer of 4.7%, with a payback period of only 1.8 years (IFC, 2019). Utility savings were sizable at around 30%, with residents reporting a drop in their monthly utility bills from $55 to $14.
Sources:
Bank of Indonesia (2019) Macroprudential policy instrument: loan to value/financing to value. Link: https://www.bi.go.id/en/fungsi-utama/stabilitas-sistem-keuangan/instrumen-makroprudensial/default.aspx