The National Built Environment Rating System (NABERS) has released its Sustainable Portfolio Index (SPI), an annual showcase of the environmental performance of property portfolios in Australia.
The NABERS SPI provides a transparent whole of portfolio view of current performance on office CO2 emissions, water usage, waste and indoor environment quality. The SPI also ranks retail properties by their performance on energy and water. Participation is voluntary and this year, 64 office and retail properties took part, compared to the 53 who entered in 2022.
The list is a rare repository of information, NABERS director Carlos Flores said. “A lot of the sustainability information used in the calculation of various metrics around the globe is not public. A lot of the data never becomes public, it is always held in private hands. In SPI, all the data is public which means that broader stakeholders beyond merely banks can access it.”
In 2023, Lendlease’s Barangaroo International Towers was highest ranked for energy and water, with 6-star NABERS rankings across all buildings in the portfolio. Brookfield Property Partners was highest ranked for indoor environment, and Cbus Property achieved the highest waste rating among office portfolios.
In retail, Charter Hall-owned CPRF had the equal highest water ranking for its shopping portfolio alongside Active Super’s Local Government Property Fund, while CPRF had the highest energy ranking followed by Cbus Property.
The SPI Office Energy Index includes ratings on 418 assets with a combined 8.56 million square metres of rated area, representing 27 per cent of office properties nationally. The SPI Office Water Index has data on 385 assets with a combined 8.22 million square metres of rated area, or 26 per cent of the nation’s office footprint. Charter Hall is the largest discloser of information, and this year committed to list rankings for 12 of its portfolios.
Flores said more superannuation funds – who are some of the most significant landlords in the country – were choosing to disclose their properties’ environmental performance through the SPI, and some, such as Active Super and Cbus property, were performing well.
He also noted that some properties were performing better after several years in operation because they had been fine tuning their water and energy use, and their indoor air quality.
The SPI is not just about showcasing the industry’s top performers. It aims to provide a spectrum where property portfolios are currently performing, according to Flores. “NABERS is not designed to rate just the best, its designed to rate everyone. We see everyone from 0 to 6 stars in the system. 3 stars is the average energy consumption for a typical building. 6 stars means you must have 75% less energy consumption than the average building. Some buildings need to work for a few years to get to 6 stars.”
The overwhelming majority of the participants in the SPI are from the private sector, and participation is growing every year. Property NSW was the only government agency to disclose the rankings of its office properties in the SPI. “Other government departments do have targets through NABERS or other metrics but they are hardly ever disclosed,” Flores said, adding that he would like to see more governments entering the SPI in future.
“Increasing transparency on the journey to net zero emissions is very important.”
NABERS is fine-tuning its ranking to represent an increased uptake of renewable energy among property owners. This year, NABERS will introduce the Renewable Energy Indicator (REI) which recognises and rewards the uptake of clean energy sources. The REI, which includes GreenPower, will also include renewable energy in a clearer and more transparent way.
Financial institutions are increasingly seeking investments with strong sustainability credentials. The NABERS Sustainable Finance Criteria provides guidance for industry about how to use NABERS ratings to identify and verify building portfolios that are high performing. In addition, research shows that higher rated properties are subject to lower capitalisation rate and higher valuations. Higher rated office properties command an extra 40% in terms of valuation according to Real Estate Investment Analytics.
In total, 70 per cent of Australian offices have received a NABERS rating, representing 21 million square metres of floor space. The SPI represents a quarter of Australia’s office market and demonstrates how Australian Buildings are leading the charge towards net zero.
