By Maryann Shaw
For more than a decade, the notion that sustainable buildings cost significantly more to develop has shaped decision-making across the property sector. Developers have long spoken about a “green premium,” and many investors assumed that environmental performance required a financial sacrifice.
But now, the 4th edition of the internationally acclaimed research study, Green Building in South Africa: A Guide to Costs and Trends, provides a definitive business case for building sustainably. Since 2014, Green Building Council South Africa (GBCSA) has partnered with the Association of South African Quantity Surveyors (ASAQS) and the Department of Construction Economics at the University of Pretoria (UP) to produce relevant research that moves the industry forward.
The report, backed by MSCI performance data and extensive project case studies, demonstrates a very different reality: building green is no longer more expensive – and in many cases, it is demonstrably more profitable.
This shift is not philosophical, but empirical. As technologies mature, sustainability-related skillsets become more mainstream and design practices improve, the additional cost of delivering a certified green building has steadily declined. At the same time, the financial performance of these buildings – from net operating income to total return – has outpaced conventional assets. For ESG-focused investors and property owners, the message is clear: sustainability is now a core value driver, not an optional upgrade.
Cost vs Value: What the research shows
The Guide to Cost and Trends study tracks real costs of quantities from nearly two hundred certified office buildings to understand the cost implications of green measures over time. Its conclusion: the premium for building green (with the inclusion of the necessary certifications), has dropped dramatically, and for many projects is now negligible.
Georgina Smit, GBCSA’s incoming CEO and current Head of Technical, outlines the trend in the report plainly: “The average green cost premium for office projects certified in the period 2022 – 2024 has positively decreased from 3.15% for the previous period 2019 – 2021, to 2.40%. The average since 2009 for the green cost premium as expressed by the median has reduced from 5.95% to 3.43%. But what is particularly pleasing is that there is now clear evidence that these green buildings are more profitable in the long run, so it is an investment that just makes business sense.”
The numbers reveal two intersecting forces: a decline in upfront additional cost and – more significantly – a measurable uplift in long-term value.
The performance premium: Sustainability that outperforms
MSCI’s South Africa Green Annual Property Index 2024 provides some of the strongest investment evidence. Certified buildings are consistently delivering higher returns, stronger rental performance and greater resilience in volatile market cycles. Green-certified office space, for example, has recorded higher total returns and lower vacancy rates than comparable uncertified assets.
This is not surprising to industry watchers. Efficient buildings use less energy and water, have lower operational costs, attract better-quality tenants, and retain them for longer. As utility instability and price escalation increase, the operational efficiency of certified buildings is becoming a business imperative.
Lisa Reynolds, GBCSA CEO, captures this business-first reasoning succinctly: “Property owners need to understand that certification isn’t the end goal. It’s how you prove that a building is actually performing in practice and on paper. It gives owners, investors, and tenants confidence that a building will deliver environmental and financial value over time.”
Certification is not a badge – it is proof of performance. And in a world where greenwashing is under increasing scrutiny, this distinction is critical for meeting ESG expectations and accessing sustainable finance.
What green building certification actually means
For those newer to the world of sustainable building, the concept of “green building certification” can sound abstract. In practice, it is a structured, third-party verification system that measures how efficiently and responsibly a building uses resources, how it affects its occupants, and how well it performs over time.
GBCSA administers globally recognised rating systems – their own Green Star Rating system, now in its second iteration, Net Zero, and EDGE for instance. The different tools serve different, often complementary purposes and are utilised based on the overarching goals of the project. They may assess elements such as energy and water efficiency, materials, indoor environmental quality, transport access, site ecology, and resilience.
A certified building has undertaken a rigorous process, which can include: sustainable design decisions being made upfront, existing operational performance being assessed, and an audit and independent verification of the construction process. Increasingly, post-occupancy performance is measured and reported.
This makes certification a robust governance framework, not a marketing label. It is also why banks and institutional investors are now favouring certified assets: the risk profile is lower, and the performance data is transparent.
The Green Star New Build V2 Tool: Setting a new benchmark
GBCSA’s next-generation Green Star New Build V2 tool marks one of the most important developments in local sustainability practice in over a decade. Developed through extensive market consultation, Green Star New Build V2 shifts the focus from box-ticking to genuine performance, integrating carbon, resilience, health, inclusivity and circularity into one unified framework.
Georgina Smit explains: “Green Star New Build V2 is designed to go beyond mere building efficiency. It provides a framework to ensure green buildings are resilient to energy insecurity, water scarcity, and rising temperatures.”
This tool speaks directly to the needs of ESG-aligned businesses: credible, comparable, and future-ready performance metrics. It also simplifies the application of green building principles across all building types, reducing barriers and making sustainable development more accessible – a crucial step as South Africa pushes towards net zero by 2050.
From perception to practice: Why the ‘Green Premium’ no longer holds
The belief that sustainable buildings cost significantly more has remained stubbornly persistent. But today, it is no longer supported by data. The reasons for the declining premium are straightforward:
- Technologies such as efficient HVAC systems, LED lighting and water-saving fixtures are now mainstream
- Sustainable design is part of standard architectural practice rather than a niche discipline
- Supply chains for green materials have matured
- The cost of inefficiency – particularly energy inefficiency – has risen sharply
Reynolds summarises this evolution well: “The evidence is clear. Green buildings perform better than their counterparts and cost the same (or less) in the long run. They are the only viable way forward as energy and water costs rise.”
As the economic case strengthens, green building is becoming the default expectation, not an aspirational extra. For investors, this reduces risk. For tenants, it reduces bills and improves health and productivity. For developers, it supports stronger asset valuation and future-proofing.
Mainstreaming sustainable practice across South Africa
GBCSA is positioning itself at the centre of this shift – not only as a certifier, but as a driver of national policy alignment, skills development and industry education. The organisation’s Academy trained more than 500 professionals in 2025 alone, building the capacity needed for a just and effective transition to climate-aligned construction and property management.
Smit’s vision for the next chapter is unequivocal: “We have five years until the 2030 net zero deadline, and GBCSA’s next chapter will focus on making accessible tools available to businesses to ensure that their business strategies can integrate with climate goals.”
This commitment – accessible, measurable, and scalable sustainability – is exactly what South Africa’s built environment needs as infrastructure pressures intensify and ESG accountability becomes non-negotiable.
The future: Green is not just better — It’s inevitable
The conclusion for ESG-conscious role players in property and construction is unambiguous: South Africa’s most comprehensive research shows that green buildings deliver stronger returns, offer greater resilience, attract sustainable finance, and no longer demand higher capital costs. The “green premium” is dissolving. The brown discount – one of the financial consequences of owning or developing buildings that fail to meet modern expectations – is rising rapidly.
Certification, supported by tools like Green Star New Build V2, is becoming the new standard for quality, risk management and financial performance.
Sustainable development is no longer a specialised niche. It is the future of investment-grade real estate. And increasingly, it is simply the way buildings should be made.
Maryann Shaw
