Focus on sustainability to unlock property growth

In New Zealand, the property sector contributes to 20% of the country's carbon pollution. With the emergence of climate-related reporting standards in recent years, the sector faces increasing pressure to become a catalyst for climate action and emissions reduction.

Regulatory demands and evolving consumer behaviour now require owners and operators to provide crucial information and develop climate action plans that meet the expectations of corporate buyers and investors. Recognising this reality, we've made sustainability a top priority.

For the past three decades, we've prioritised longevity and sustainability as key elements of our relationship-based, collaborative approach to property management. Environmental, Social, and Governance (ESG) practices form the core of PMG's values, fostering enduring relationships with tenants, supplier partners and investors to ensure high-quality properties and sustainable investment returns.

“We’re seeing sustainability as an increasing focus for occupiers when making property decisions and our sustainability initiatives have set us apart from competing properties.

As a trusted and established commercial property fund manager with 48 properties and 185 tenants nationwide, we acknowledge PMG's unique opportunity to be a leader in this space, and we value bringing our tenants and suppliers along for the journey to drive positive climate action, promote carbon and financial literacy and facilitate long-term change,” says Jamie Reid, PMG's GM of Property.

Doubling Down on Change for Good

"While maintaining a financially sustainable business is our priority for the benefit of stakeholders, we are seeing sustainability as an increasing focus for occupiers when making property decisions and our sustainability initiatives have set us apart from competing properties," adds Jamie.

PMG has intensified its sustainability efforts to align with tenants' and investors' growing emphasis on sustainability. We acknowledge the pivotal role the property sector plays in transitioning New Zealand toward a low-carbon economy.

"Over the last three years, we've implemented numerous environmental initiatives, leading to significant reductions in waste and energy consumption. We achieved Toitū Net CarbonZero certification and published our first Sustainability Report, a huge milestone for an unlisted property funds manager in New Zealand," explains Simi Mukherjee, PMG's Head of Facilities Management.

Most properties in PMG's portfolio were constructed before 2007. Retrofitting older buildings with technology and measures to reduce their environmental impact poses challenges due to existing infrastructure limitations and technological constraints.

"Our commitment to sustainability has required substantial financial investment to enhance our mostly older buildings. However, the benefits have been remarkable. We've not only reduced operating costs for our tenants but also increased the overall value of our properties, thereby maximising returns for our investors," says Simi.

Some of PMG's notable ESG achievements include:

• Recycling 197.5 tonnes of waste in FY23, empowering tenants through recycling education and support.

• Implementing a comprehensive system to monitor and optimize energy consumption in PMG buildings for 12 months.

• Achieving 4+ Star NABERSNZ ratings for four buildings, including the PMG Head Office.

• Partnering with solar provider Sunergise New Zealand to offer turnkey solar power solutions to tenants at no cost.

• Installing EV chargers at 152 Fanshawe Street and transforming the end-of-trip area into elegant and modern facilities.

• Supporting 15,000 Year 10 students in financial literacy through the PMG Charitable Trust

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Value Case for Sustainability

Sustainable buildings inherently prove more economical over their lifetime.

Research by Colliers International demonstrates that Green Star-rated buildings not only outperform the overall office sector but also align with the preferences of tenants who prioritise the benefits of environmentally friendly structures.

According to the research, sustainable buildings are projected to repay a probable 20-year rental premium by a factor of approximately three through operating cost savings alone. For owner-occupiers, developers, and investors, a residual land value analysis indicates that sustainable office buildings possess land values nearly 40% higher than conventional buildings.

"We currently maintain a remarkable 99% occupancy rate across all our buildings. The value that green buildings provide has become increasingly crucial to our tenants and investors. And the overwhelmingly positive feedback we have received highlights the improved environments and increased ROI resulting from these sustainability initiatives," affirms Jamie.

Learn more about PMG's commitment to a low-carbon future for the property sector and how sustainability unlocks sustainable returns for investors on our Sustainability page.

Disclaimer: The information in this blog is of a general nature and was current on 21 June 2023. It is not intended to be regulated financial advice for the purpose of the Financial Markets Conduct Act 2013, and does not take your individual circumstances and financial situation into account. PMG does not provide financial advice. Please seek advice from a licenced financial advice provider before making any investment decisions.