Property sector urged to be more energy efficient

The Philippine property sector should start implementing energy efficiency programs in its assets to reap savings and raise valuations in the next decade especially following the passage of Republic Act 11285 or the Energy Efficiency and Conservation (EE&C) Act.

The Philippine Energy Efficiency Alliance (PE2) – a nonstock, non-profit organization of energy efficiency market stakeholders that organized the virtual event – said the property sector should take advantage of rising vacancy resulting from the COVID-19 pandemic to retrofit assets and comply with the two-year old law.

“There might be a silver lining out of this – if you have under-utilized commercial and industrial properties… large vacancy of older commercial space, it might be the best time to implement energy efficiency improvements, you can be more intrusive right now and more disruptive right now in the way you are implementing energy efficiency. Now you can replace centralized systems or building wide technologies because of the increased downtime and under-utilization of the commercial building assets,” PE2 president Alexander Ablaza said in a webinar organized by the European Chamber of Commerce of the Philippines (ECCP) last week.

US-based Cushman & Wakefield reported that Metro Manila’s office space vacancy rate rose to a new high since the global finance crisis due to the shift to work-from-home setup and the exit of offshore gaming companies.

“I believe we are very close to that tipping point in that green curve, green appraisals valuations will just shoot up, especially once the impact of EE&C Act is felt in the property sector,” Ablaza said.

“If you are a property owner and remain to be non-green, you will actually lose value by keeping the non-green property space until you retrofit them. But that’s going to be passe, EE&C Act will also apply to existing building stock… the market will take care of itself and the EE&C Act will just accelerate everything in the next 10 years,” he said.

The PE2 official expects at least five years to fully enforce the EE&C Act and for the property sector to realize the green premium.

“Give it half a decade further of market maturity on further enforcement of EE&C Act, then you could see…we will start to see premiums for selling prices and rental rates for commercial assets. We’re still at the tipping point, but its upward from this point onwards,” Ablaza said.

In the same event, DOE-Energy Utilization and Management Bureau (EUMB) director Patrick Aquino urged more companies to start undertaking EE&C measures to realize energy savings early on even as the agency delays the imposition of penalties on noncompliant businesses in the first year.

“The reason why we’ve been very liberal in terms of the administration, on how we are not on purpose imposing penalties, is we are mindful of the effects of COVID-19. It has really been challenging not only for us, but also for the businesses. That’s why we’ve been very relaxed… in making sure that people comply, making them familiar with the law,” he said.