How the energy disclosure is to impact on the Aussie property market
Australia will start requiring landlords to disclose energy efficiency ratings for their office buildings when leasing or selling from the start of November. Nearly a third of the Australian office market is currently rated for energy efficiency by the government and the new legislation will likely have an impact on valuations and create a push for upgrading efficiency. Here are some questions and answers on how the new regulation works, how foreign investors and REITs will be affected, and what implications the new rules could have on the property market.
How do the new rules work ?
Sellers or lessors of office space of 2,000 sq metre (21,530 sq ft) or more will have to disclose an up-to-date energy efficiency rating. Starting from Nov. 1, owners will need an energy rating from the National Australian Built Environment Rating System (NABERS) when leasing or selling. When putting properties on the market, advertisments should include the ratings. The NABERS rating measures energy performance on a scale of 1 to 5 stars with the median market performance currently at 2.5 stars.
Does the election outcome create further opportunity for greening your office building, retail centre or hotel ?
The short answer is yes it does, with direct financial support for improvements in emission reductions for commercial buildings.
Election promises impacting the commercial property industry were:
- Green Building Fund extension (now office, retail and hotels that can be NABERS Energy rated) with $30Million dollars available for funding for new application rounds from now until July 2011.
- Tax allowance bonus for Green building improvements, for office buildings, Retail Centres (over 10,000sqm) and Hotels. Conditions will apply, but if you meet them then this is a 14.5% reduction in project costs for improving energy efficiency.
With the details yet to be defined by the responsible departments we assume that the green building fund mark 2 will be delivered fairly quickly and with their previous rounds offering around $15million per round then another two rounds should be undertaken. Perhaps one for January and one for April 2011, which allows for time to set up and then for all funding agreements to be finalised before the tax allowance bonus commences in the following financial year.
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