KUALA LUMPUR: Stakeholders within the Malaysian buildings and construction industry will gradually embrace green buildings given the increasing focus on sustainability from real estate investors and more stringent building energy codes from policymakers to address climate change.
CGS-CIMB Research expects the domestic buildings and construction sector to likely evolve to achieve net-zero carbon buildings by implementing mandatory building energy codes and targets for more buildings to be green-certified.
Efforts will also include the adoption of industrialised building systems (IBS) and automation and the increased usage of eco-friendly green building materials.
The research firm also noted that as the buildings and construction sector are responsible for over one-third of the world's energy consumption and the total direct and indirect energy-related carbon emissions in 2020, the sector needs to be almost net-zero carbon by 2050 to meet the Paris agreement goals, according to 2021 Global Status Report for Buildings and Construction.
This can be achieved by improving energy efficiency and reducing emissions through mandatory building energy codes and green retrofitting.
"We note green buildings are gaining traction across the globe as evidence shows that this is one of the most effective measures for tackling climate change," the firm said in a recent note.
"We expect property players with experience in designing and obtaining green certification for their buildings/projects, and high adoption of IBS and in-house IBS manufacturing facilities, to benefit from the rising demand for green-rated buildings and projects," CGS-CIMB Research noted.
The research firm likes SP Setia Bhd within this space as the company has experience obtaining green certification for buildings and in-house IBS manufacturing facilities, which is unique among developers.
"We also like Sime Darby Property Bhd, which has set clear goals and action plans under its 2030 Sustainability Goals to cover green building development aspects.
"We retain sector Neutral given affordability issues, potential interest rate hikes, and higher property overhang, which is balanced by KL Property Index's undemanding valuation, in our view.
"A key potential sector upside risk is stronger-than-expected new sales, while key downside risk is a weaker macro outlook," CGS-CIMB Research said.