Superannuation fund investors investing in property should be mindful of the increased focus on sustainable features in buildings, according to Anita Mitchell, general manager, sustainability at Lend Lease.
Speaking at a Women in Super lunch on ‘Super and Sustainability’ last week, Mitchell said buildings that fail to keep up with sustainability demands will become obsolete, a key issue for investors.
“We all know that 20 per cent of the stock that will be here in 2020 exists today, so a lot of the buildings that will be around for you and your funds will actually already be in existence. But buildings with little potential to achieve the appropriate [environmental] ratings are and will continue to decline in value,” she said.
The project’s commercial sector of Barangaroo is funded in part by Lend Lease, with the remainder of finance coming from domestic and foreign superannuation and pension funds.
“We love superannuation funds because they have the same long-term investment horizon as we do,” said Mitchell.
“We’re developing an asset that will last for the next 50 to 100 years, so if we get it wrong now, we’re actually getting it wrong for about four more generations of people.”
Mitchell said the first question super funds should be asking their fund managers is, what is the rating for the building – more specifically, NABERS, which measures operation according to a scale of 0-6 stars, and Green Star, which looks at the design of a building and also measures on the same type of scale. However, with Green Star, buildings have to meet a minimum of four stars to be able to advertise its rating.
“It’s a bit like a hotel. You might go to an international city and you might not know the brand names, but you certainly know that it’s a five-star, four-star or a three-star hotel. And you will refine your selection criteria on that basis,” Mitchell said.
“Similarly, we get international investors who say, what’s your building rated? They might not even know exactly what it means, but they certainly know the rating, and it’s become a default for building quality.”