Green Property Development is becoming increasingly vital in Indonesia as the country strives to meet its Environmental, Social, and Governance (ESG) goals. Currently, only 305 property projects, including high-rise buildings and residential areas, have received green certification. This number pales in comparison to Singapore, which boasts over 1,000 certified green properties.
To address this gap, the Indonesian government and industry stakeholders are actively promoting sustainable practices in real estate. Their goal is to significantly increase the number of certified projects in the coming years, fostering a more sustainable future for the property sector.
Understanding the Role of Green Property Development
The Development of green property plays a significant role in sustainability efforts and attracting environmentally conscious investors. By prioritizing green building practices, Indonesia can significantly reduce its carbon footprint and promote energy efficiency.
However, the limited number of green-certified property projects in the country can be a cause for concern. This is largely due to a lack of awareness about the importance of environmentally friendly buildings.
Ignesjz Kemalawarta from the Permanent Research Committee of the Integrated Property Development Agency explained as reported by bisnis.com, “Many people are still not aware of this. Green buildings require an additional 3% to 4% in construction costs, which developers find burdensome. However, if you build a green building, it will enjoy energy savings throughout its 40-year lifespan. The energy efficiency is around 30%.”
This highlights the need for increased education and support to encourage more developers to embrace sustainable practices.
Government Incentives for Sustainable Construction
To increase the number of green-certified buildings, the Indonesian government must provide incentives. Without these incentives, it will be challenging to expand the green building sector, especially since the initial construction costs for green buildings can be as high as 4%.
“For example, if provided as financial incentives, it could help compensate for the increased construction costs of green buildings. Then, tax incentives, such as a 30% discount on land and building tax (PBB) for three years for green-certified buildings, would be quite beneficial. We continue to push for these incentives to be implemented,” Ignesjz said. He also added that with green building certification, developers can also access green financing from banks or other financial institutions.
For instance, the Sinar Mas Land housing project received a Greenship certification from the Green Building Council Indonesia (GBCI) and secured a green mortgage with a lower interest rate compared to regular mortgages. This demonstrates how government support and certification can lead to significant financial benefits for developers while promoting sustainable construction practices.
Unlocking Investment Potential in Sustainable Real Estate
As the demand for sustainable practices increases, green property development has the potential to attract investment. Both local and international investors are beginning to recognize the benefits of green-certified buildings. AVP of Debt Capital Markets at Mandiri Securities, Pauline Soesanto, explained that property developers can access green financing from banks to meet sustainability standards and certifications.
This financing helps ensure that projects align with international benchmarks. “We comply with compliance costs, meaning all expenses required for companies to ensure they consistently meet international assessment standards,” she stated as reported by detik.com. By leveraging green financing, developers can not only enhance their projects but also attract environmentally conscious investors looking for sustainable investment opportunities.
Embracing a Sustainable Future through Green Property Development
Green property development is essential for Indonesia’s sustainable future. By increasing the number of green-certified buildings, the country can significantly reduce carbon emissions, as buildings contribute to approximately 40% of these emissions.
Green-certified buildings not only promote environmental sustainability but also offer economic benefits, such as lower energy costs and increased property values. Furthermore, they attract environmentally conscious investors, fostering a more resilient real estate market.
As the government implements incentives and raises awareness, the potential for green property development in Indonesia can be fully realized, paving the way for a healthier environment and a stronger economy.
Source: bisnis.com, detik.com
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