Sustainable office and retail buildings are proving to be more than just environmentally responsible, because they’re also delivering stronger financial returns. According to the latest MSCI South Africa Green Annual Property Index, Prime and A-grade offices with green certifications generated a total return of 10.1% in 2024.Â
This performance places them 120 basis points ahead of comparable non-certified buildings.
Since the index’s inception in 2016, certified green offices have consistently outpaced their non-certified counterparts, achieving a cumulative outperformance of 28.2%. This shows operational efficiency, lower risk exposure, and tenant demand are increasingly tied to environmental credentials, according to Property Wheel.Â
The superior returns from green-certified offices were largely driven by stronger fundamentals. These buildings reported 34% higher gross income per square metre, a more favorable cost-to-income ratio (39% versus 46%), and a slightly lower capitalisation rate. This combination of income resilience and cost control contributed to their long-term investment edge.
Certified retail assets followed a similar pattern, delivering a total return of 13.2%—130 basis points higher than non-certified retail properties. These retail buildings also benefited from significantly stronger net operating income, an 18% increase per square metre, and a leaner cost-to-income ratio of 31%, compared to 44% for non-certified retail.
It’s clear that buildings with green certifications are increasingly being recognized not just for their sustainability credentials, but for their role in enhancing asset value and portfolio resilience. As demand grows for environmentally responsible real estate, the financial case for green-certified investments continues to strengthen.
