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Driving A Sustainable South Africa, Together- One Green Building At A Time

  • 4 min read

In an era of increasing environmental awareness and climate change concerns, the real estate and construction industry finds itself at the forefront of sustainability efforts. Embracing green building practices has become an imperative as citizens and corporates seek to mitigate their ecological impact and contribute positively towards achieving a Net Zero tomorrow. 

In 2015, 158 green building certifications accredited by the Green Building Council of South Africa (GBCSA) were issued. As we near the close of 2023, this number has exceeded 1000 certifications. The cumulative total of green buildings certified by GBCSA, amounts to approximately 14.3 million square meters, which is equivalent to 2043 rugby fields. The impact of these buildings equals to an annual energy saving of 1430 million kilowatt-hours (equivalent to powering 99,306 households) and water conservation of 1325 million litres (comparable to fulfilling the drinking water needs of over 1.8 million people for a year). 

The growing adoption of green buildings reflects a significant shift in the industry’s mindset towards responsible resource consumption and eco-friendly development. Beyond the environmental benefits, green buildings also offer attractive financial incentives through cost efficiencies which are inherent in sustainable design and operation. Investors who are aligning their portfolios with sustainable initiatives are increasingly drawn to the lower building maintenance costs, reduced electricity and water expenditure, and improved occupancy rates. 

The drive towards a sustainable South Africa further requires a dedicated focus on increasing the delivery of affordable housing.  Whilst the real estate sector is making notable efforts in this space, they are faced with a host of macro and micro economic challenges. Among them are a constrained economy, an ongoing energy crisis, rising costs of construction and rising interest rates. Addressing the housing needs in South Africa requires investment, commitment, and a will to succeed. 

Absa is leading the force for good, by incentivising industry players who can evidence their positive environmental and social impact with innovative and beneficial funding solutions.  

One such solution is the recently concluded R4.5 billion loan with the International Finance Corporation (IFC) aimed at supporting green buildings in the country. Through this loan, the IFC has made a Performance-Based Incentive (PBI) available to eligible Absa-financed green building transactions. Funded by the Market Accelerator for Green Construction (MAGC) Program of the UK government’s Department of Energy Security and Net Zero, the PBI will help catalyse the adoption of green buildings by providing a rebate payment for eligible developers and homeowners to partly offset the incremental greening and certification costs tied to green building construction.  

The incentive is available in South Africa and across all product types (residential, retail, office and industrial) subject to certain price thresholds with the majority of the overall MAGC PBI being allocated to affordable housing transactions with an average selling price point of less than R1.4m and an average rental per month of less than R8,300. 

“IFC is committed to expanding access to green and sustainable affordable housing in South Africa to address climate change and protect the environment ” said Kalina Miller, FIG Manager for South Africa. “Our partnership with ABSA will contribute to greater climate change resilience in the country by supporting climate-smart housing solutions, particularly, in the affordable housing segment.”

“Our partnership with the IFC facilitates positive environmental and social impact in South Africa, through the delivery of environmentally responsible properties with a specific focus on increasing the delivery of quality well-located green affordable homes.” said Amelia Dieperink, Head of Affordable Housing, Commercial Property Finance (CPF) at Absa.

“GBCSA is delighted about the IFC’s loan to Absa that is linked to environmental impacts. It is exactly these types of partnerships and financial decision making that we need to drive change at scale, and really divert our national carbon trajectory” says Lisa Reynolds, CEO of the GBCSA. Additionally, these funding solutions extend to socially sustainable housing projects that cater to lower income groups. Because affordability is such an important factor for a developing country, these financial tools present a promising approach to tackle the housing challenge and advance sustainable living.

As the need for climate change action and the demand for affordable housing intensifies, proactive involvement by financial institutions and industry collaboration remains paramount to achieving a more sustainable and inclusive future.