Investment opportunity in green buildings to hit $2 B by 2020

Driven by population growth, rapid urbanization

MANILA, Philippines — Driven largely by fast population growth and rapid urbanization, investment opportunities in green or low-carbon buildings in the Philippines are expected to hit $2 billion by 2020, according to the  International Finance Corp. (IFC), a member of the World Bank Group.

“With its fast population growth and urbanization, the Philippines urgently needs a more sustainable building solution to address the country’s growing infrastructure needs and climate change challenges. The way to deliver on this is to create a vibrant market for green buildings that attract private sector investment,” IFC country manager for the Philippines Yuan Xu said. “Green buildings should be the new normal for property companies.”

IFC is the largest global development institution focused on the private sector in emerging markets. This year, it has delivered a record $19.3 billion in long-term financing to private sector projects in developing countries.

IFC legal advisor and green building initiative country lead Maria Teresa Lacerna said the groundwork for the construction of green buildings in the Philippines is being laid down through technical assistance and financial interventions by the IFC.

“IFC is creating markets for green buildings through regulatory and financial interventions that would address demand for private investments in green buildings,” Lacerna said. “IFC’s interest in the Philippines is driven by growing population, urbanization, high cost of electricity and climate vulnerability.”

The IFC sees a $3.4 trillion investment opportunity in green office and home buildings in emerging markets by 2025. 

IFC data showed that in 2010, buildings accounted for 36 percent of the country’s total power consumption and contributed to the emission of 33.28 million metric tons of carbon dioxide.

Businesses struggling with the high cost of power and other utilities are  becoming more open to the use of buildings that incorporate designs that would result in low carbon footprint and promote an efficient use of energy, water and other resources.

“Green buildings are becoming a familiar concept. Architects and engineers are learning how to do green designs and construction. The academe has started integrating green building in lessons. Banking institutions are now open to financing green buildings. Businesses are migrating to green buildings. Construction suppliers are reinventing their value chain. People are now making green buildings their homes or offices of choice,” Lacerna said.  

With the proper combination of policy support, tax benefits and awareness of its benefits, IFC expects green buildings to account for  a quarter of the domestic building market by 2025.

Under its Green Building Market Transformation Program, IFC is collaborating with the government, private businesses and professional organizations to shape a market for green buildings in the country through the improvement of the policy environment. This effort spurred the development of green building ordinances at the local government level and the Philippine Building Code which is implemented nationwide.

Last year, IFC launched its EDGE green building certification system in partnership with the Philippine Green Building Initiative (PGBI). The system is supported by a free software that can guide property developers in creating houses and buildings that curb energy and water consumption by as much as 20 percent.

IFC regional green building specialist Autif Sayyed said the Philippines should address the environmental impact of its building boom to protect its resources. The private sector should also look into the long-term viability of buildings as it is often more expensive to retrofit to adapt to changes in climate and changing usage of resources.