Real Estate And The Environment

[quiksilva]

As Government's around the world face growing pressure to be kinder to the environment, developers are being forced to adopt green buildings standards. However, in more developed markets this pressure is also coming from the market. People and corporations are demanding 'green buildings'.

For the record, green buildings will typically use local materials wherever possible and will be designed in such a manner that they actually save money on utility expenses (no really).

We are starting to see signs of this trend emerging in Thailand too, but its very, very early days. We are seeing this at the moment in the next wave of new commercial buildings coming up.

So I'm curious, is this a real phenomenon we are seeing here, and overseas? Are people are actually prepared to pay more to 'save' the planet?

Developers say rules will cut profits

Green law will offset power use with trees

KANANA KATHARANGSIPORN

Proposed changes to environmental impact assessments (EIAs) relating to green space and air conditioning have raised concerns among condominium developers who fear lower profit margins. Teerachon Manomaiphibul, chief operating officer of the listed developer Property Perfect Plc, said the new proposed EIA measures require projects with more than 79 units to have one tree per tonne of British Thermal Unit (BTU) capacity of air-conditioning systems. He said the measure would increase costs by 10-20% due to limited space for unit development.

''Every new project faces this problem,'' he said. ''Many need to revise plans by reducing units to have enough space to plant trees. This will increase prices per square metre or developers will need to have lower margins.''

Since the new EIA measures were proposed last year, Property Perfect had to delay by three months the launch of a condominium on Ratchadaphisek Road. The company had to reduce the number of units from 1,750 to 900.

Meanwhile, to maintain a gross profit margin of 35%, the average price per square metre would have to be increased to 65,000 baht from 55,000 baht, said Mr Teerachon. The project would be launched by the second quarter of 2008.

''It's a trade-off for condominium buyers. If they buy a project that received EIA approval before new measures, they will pay lower prices.,'' he added.

Among other condominiums that faced delays were Noble Development's Noble Nano, with about 500 units on Pattanakarn Road.

Although the project opened for bookings in August of last year, the company needed to refund deposits to its customers and would re-launch the project during the second half of 2008.

Noble president Thongchai Busrapan said the EIA board suggested that any project with more than 100 units should receive EIA approval before selling units to customers to prevent a possible problem such as an adjustment in the plan.

New condominiums today have more limited space as some are located in prime areas with high land prices.

''The board should consider applying international standards that allow developers to plant the trees elsewhere like in the park or allow them to contribute money to environment-related organisations,'' Mr Thongchai said.

Mayta Chanchamcharat, chief executive officer of Plus Property Co, a subsidiary of Sansiri Plc, said condo developers this year might face lower margins due to expensive EIA measures.

Mr Mayta said the project's sellable area would fall but that developers might not be able to increase prices due to stiff competition. Thus, developers might absorb the cost by reducing gross margins.

Kittipol Pramoj Na Ayudhya, vice-president and secretary-general of the Thai Real Estate Association, said the new EIA measures would delay construction and unit transfers. This could cause buyers to delay their purchases.

Phatra Securities said the impact of the measures is already being felt since condominiums launched after last July do not yet have EIA approval.

Condominium developers need to buy additional land to meet the requirements. This has allegedly increased by 4-5% for high-rise projects in prime areas and 1%-3% for mid-rise projects in the suburbs or C+ areas.

There should not be any impact on property companies' earnings in 2008 given that projects scheduled for 2008 are approved and under construction. Developers may face losses of 2-6% in 2009 if they need to buy additional land.

I look forward to your responses.

[buddhafly]

Particularly in regards to corporate/industrial i certainly would.

One viewing of al gore's movie had me convinced.

A businesses' purpose is quite simply to make money, but i don't see why that can't be done with regard for the planet we need to live on.

[donx]

I didn't vote because I only want to vote for the residential use portion but this poll won't let me do that. I don't want to vote on the commercial use or industrial use portions because I don't purchase these types of property.

[pete_r]

Yes for residential buildings, because it would make me feel good anyway.

Yes for commercial and industrial as well, but on the condition that the utility expenses can be (significantly) reduced over the lifetime of the building, so that the initial extra-investment is at least reduced, if not recouped.

[cmsally]

If these buildings saved, especially on electricity, I'm sure there would be a market.

Many people including myself would love to install a solar system to run things.

It is very difficult to find info on what is available, what cost, serviceable?, relaible? in the way of solar energy.

Also would be willing to pay more for good insulation, windows that kept the heat out etc, environmentally friendly drainage etc

Until there is some kind of central info. system on these products their efficiency , costs etc, people are going to be skeptical and unwilling to pay for them.

They don't want to be paying for gimmicks that don't produce what they claim to.

[Naam]

I didn't vote because I only want to vote for the residential use portion but this poll won't let me do that. I don't want to vote on the commercial use or industrial use portions because I don't purchase these types of property.

same!

[ray08]

Dont know if anyone likes paying more for something if they can avoid , but the scenario about Green Developments , which by the way i am in favour , especially " Grey Water " for toilets and gardens is that if the government has new building codes stating Greener measures everyone would be in the same boat , and in fact not paying more but the same as everyone else on New projects which is the flavour here in Thailand

[PhilHarries]

Like Naam and donx I didn't vote for same reason but I would be prepared to pay more for a domestic property constructed of locally available materials and to a standard that reduced overall energy consumption. However, the locally produced materials would have to be produced with the environment in mind and be from a sustainable source. Additionally I use the phrase "to a standard that reduces overall energy consumption" in that it is all well and good to have energy efficient and conserving materials but if vast amounts of energy were used in their production where is the benefit?

In terms of industry I can comment regarding the oil & gas business. In my last contract we were doing a workover of the oil & gas fields in the Irish sea, Liverpool bay, and we were treating the produced water such that it was cleaner than the sea it was being pumped into. Current contract to build refinery #1 in Viet Nam, we have an effluent treatment plant that reduces pollutants to the lowest levels achievable worldwide. In fact several bidders for the ETP pulled out claiming the limits were not achievable. So industry, in response to public pressure and tightening regulations is responding but it is a real shame that in Thailand all rules are negotiable.

In reality much of the subject of environmetal protection is in our own hands. Do we need the a/c set so low or could we turn it off and use fans instead? Do we need so many lights on at night? For those odd little purchases why not walk to the local shop instead of drive to Tesco-Lotus, which of course is why we should support the local shops.

But the bottom line in Thailand is that while the expats may be perpared to pay that little extra the majority of the locals want everything for nothing. Additionally, in terms of the a/c mentioned above, consider two shopping malls. One maintained at 16C and the other at 21C which one will the Thais prefer?

[quiksilva]

Perhaps a mod can edit the original poll topic to include a "not applicable" option in each of the 3 questions so as to allow more people to vote. (sorry about that)

Interesting feedback so far.

By the way I was at a corporate function the other night where the speaker was a respected Thai professor of Chulalongkorn University, who has developed housing which actually has a negative carbon footprint in Thailand, which generates enough energy that he can sell it back to the grid.

There is definitely a move towards it here, although it is in its infancy I expect that this trend will become increasingly important to Thais. Consider how many have adapted their cars (at 15,000 Baht a pop) to run on Natural Gas, this of course is not being motivated by being green, but by the virtue of it being more economical to run, which at the end of the day is what being green is all about.

[buddhafly]

i believe in freedoms, but i also think that we are at a critical point where a lot of these preventative measures might need to become laws, enforced laws, in order for them to actually make a difference.

[thaigene2]

I didn't vote because I think it's a loaded question..

The answer should be MAYBE if the price was right. Otherwise, you're saying HEY we've got a GREEN project here...STEP RIGHT UP -

It's not that simple. If it had solar panels and I didn;t need to connect to the grid? maybe. If it has a grass roof? No thanks. If it's in the middle of the bloody island next to the Wind Mill? No thanks..etc

Do I want SOME earth-friendlier ways? Sure..But don't treat me as a simpleton(rhetoric - don;t mean you in partiucular - just the GREEN debate..)

Edited January 24, 2008 by thaigene2