• INTERVIEW WITH ARTHALAND

    ‘Green building trend driving premium costs lower’

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    GROWING interest in the “green building” trend among developers and suppliers is driving the construction premium costs for environmentally friendly projects lower, an official of listed property developer ArthaLand Corporation said.

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    In an interview last week, Arthaland Assistant Vice President for Technical Service Edgar Sabidong told reporters that the cost of building its ArthaLand Century Pacific Tower in Bonifacio Global City, which is currently ongoing, is “within the controllable, manageable position.”

    “The cost planners and consultants said before that it was about a 17 percent [cost]premium, 15 to 17 [percent]. Now it has come down to a little less than five or less than ten. So a significant reduction,” Sabidong said.

    The ArthaLand Century Pacific Tower is a 30-story office building containing a total of 34,000 square meters of gross floor area located at the intersection of 5th Avenue, 30th Street, and 4th Avenue in BGC.

    The office tower is LEED (Leadership in Energy and Environmental Design) Gold pre-certified by the US Green Building Council. ArthaLand also aims for the project to be BERDE (Building for Ecologically Responsive Design Excellence)-certified by the Philippine Green Building Council.

    Sabidong did not disclose the actual cost of development of the green building, but based on previous reports when it launched the project then known as the ArthaLand Tower in 2014, ArthaLand said it is investing P3.5 billion for the development of the office tower.

    Jumping on the bandwagon
    Sabidong suggested that the reduced cost premium for building a green development is caused by the awareness of the growing trend among suppliers and developers.

    “On the part of the suppliers, in terms of the materials, it’s getting more innovative and it’s also getting more available, because of the awareness and also because they don’t want to be left out,” Sabidong said.

    “If you compare before, like three four years ago and now, it was sort of limited before. The suppliers have started to realize to go green now,” Sabidong said.

    Sabidong explained that ArthaLand also takes into account the source of the construction supply, as sourcing materials from distant locations would add to a larger carbon footprint.

    “We try to discourage [distant sourcing], because we don’t want to encourage a bigger carbon footprint for the supplier,” he said.

    He noted that the firm prefers to get materials “the closest [supplier]we can buy it from.”

    Aside from the suppliers’ side, Sabidong noted the competition on the contractors’ side to build green projects as a factor in reducing the premium added to the development of a green building.

    “So they [contractors]also try to lower their costs if they want to be involved in a green building project, which is not coming to them most of the time. They also want to take part so therefore, to be competitive they have to offer friendlier pricing as compared to an ordinary development,” Sabidong said.

    In an earlier interview, KMC Savills Inc. Vice President for Marketing and Landlord Services Yves Luethi said that the development of green buildings is driven by the competition to attract tenants, especially with the growing awareness of green buildings by companies.

    “Of course it is more competitive. Landlords have to differentiate themselves as [having]higher quality buildings,” Luethi said.

    Luethi said that the main interest for developers in green buildings is the cost-cutting features they can offer tenants.

    “Operational monthly cost savings for tenants can be up to 78 percent compared with an old Grade B building, and 20 percent compared with a conventional Grade A building,” Luethi said.

    He acknowledged that development costs for a green building may slightly be higher than a regular building, but would be compensated by higher property values in the future.

    “Yes, it costs more, but developers have to look at the long-term value of the property,” Luethi said.

    At present, construction of the ArthaLand Century Pacific Tower is 53 percent complete, according to Sabidong. Turnover of the office units is slated to begin in May 2017.

    ArthaLand Corporation is led by the Po family through CPG Holdings Inc. (CPGHI), the parent firm of Century Pacific Food Inc, which is the largest canned food company in the country. CPGHI has a 40.289 stake in ArthaLand, making it the largest shareholder. AO Capital Holdings 1, Inc. is another major shareholder of ArthaLand with a 26.019 stake in the property firm.

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