Green is good: Why more developers eye green certifications for buildings

Philippine property developers are increasingly seeking green certifications for office buildings not only because of government energy mandates but also rising demand from multinational companies.

It’s no longer uncommon to find developers touting the sustainable features of their new office buildings, which have received certifications like Leadership in Energy and Environmental Design (LEED), Building for Ecologically Responsive Design Excellence (BERDE), Excellence in Design for Greater Efficiencies (EDGE) and WELL Building Standard.

To get a green building certification, a project must meet certain environmental and sustainability standards. These usually ensure that a building meets high standards of energy efficiency, resource conservation, air quality, among others.

“We see the increase (in green certifications) because of the mandates by the government, such as the Department of Energy, to comply with the laws to Republic Act No. 11285 or known as the Energy Efficiency and Conservation Act,” Jess Niño H. De Villa, Head of Engineering, Energy and Environment of Knight Frank said.

The law requires Philippine businesses to monitor energy consumption, which is the top contributor to net-zero emissions.

“Certification helps ensure compliance with these requirements, avoiding potential fines or legal issues, making it a top reason for properties to adopt green certifications in the Philippines,” Mr. De Villa said.

Green certifications can make a big difference in attracting potential tenants.

“A green-certified building can be more attractive to potential tenants who prioritize environmental responsibility. Green certification can set a building apart, making it a preferred choice for tenants and investors who value sustainability,” he added.

As of now, 31.2% of the 8.5 million square meters (sq.m.) of existing office supply within Metro Manila have varying levels of LEED certifications, Mr. De Villa said.

He noted the NEO Property Management’s real estate portfolio in the Philippines was the first in the world to secure the International Finance Corp.’s (IFC) EDGE Zero Carbon certification. NEO’s entire portfolio is powered by Cleanergy, which delivers 100% renewable energy.

While the cost of securing green certifications can be costly, it can still be worth it for developers.

“In general, (the cost of the) certification is still quite low in terms of the savings that you can be able to gain and for the revenue,” Mr. De Villa said.

STRONG DEMAND

Demand for green certified buildings in the Philippines is also driven by multinational companies.

“It’s largely because of the Western companies and Western tenants moving to the country, requiring their buildings to be LEED certified. Their head offices in, let’s say, London and the US, have certain requirements for the office space that they need to occupy here,” Leechiu Director of Research Roy Amado L. Golez, Jr. said.

Mr. Golez said most of the newer buildings are compliant with green building standards, mainly because they don’t want to lose out on the tenants whose parent companies are based or headquartered in Western countries.

“It has become a must-have. If you don’t have it, your market might be smaller,” Mr. Golez said.

CBRE Philippines Country Head Jie C. Espinosa said global companies make green building standards a “first hurdle” when choosing office spaces.

“There are certain cases, that these occupiers consciously negotiate provisions in their contract, that down the road developers need to be proactive in providing sustainable features into their buildings,” Mr. Espinosa said.

Green leases, rental agreements where tenants and landlords set sustainability-related targets, benefit both parties by raising the value of the property and creating incentives for tenants.

Mr. De Villa said domestic companies also see green-certified office buildings as an ideal location for their operations, as they also seek to comply with evolving environmental standards.

He also noted that tenants that want to integrate sustainability in their operations are willing to pay premium rates to secure office spaces in buildings with green certifications.

ADOPTION HIGH IN METRO MANILA

Central business districts in Metro Manila have seen significant gains in green building adoption in recent years, CBRE Philippines Director of Advisory and Transactions Services Garri Amiel P. Guarnes said.

Based on CBRE data, the office segment in Fort Bonifacio has seen its green building adoption rate jump to 73% in 2024 from 63% in 2022.

For Alabang, the green building adoption rate inched up to 67% this year from 49% two years ago.

The green building adoption rate in Ortigas rose to 66% in 2024 from 42% in 2022, while in Quezon City, it went up to 45% in 2024 from 42% in 2022.

However, green building adoption in provincial locations is lower than in Metro Manila, Mr. Guarnes said.

“This was due to developers being more focused towards third-party outsourcers but moving forward, these companies or the clients they serve would implement their sustainability targets,” he said.

In Davao, 24% of the office stock is green certified, followed by Cebu with 23%, Iloilo with 16% and Pampanga with 8%.

However, Cebu is leading in terms of the rate of increase in adoption, Mr. Guarnes said.

In Cebu, 44% of the recent completions between 2020 and 2024 have green certifications, while 16% are still under application.

FIVE-STAR BERDE

For Aboitiz InfraCapital, Inc., its 800-hectare LIMA Estate in Lipa-Malvar, Batangas, is one of the strongest examples of a green-certified property.

“It’s been recognized as a five-star BERDE, which means it is implementing sustainable practices that are aligned with the global standards,” Aboitiz InfraCapital, Inc. Economic Estates Vice-President for Inventory Generation Group Jolan P. Formalejo said.

BERDE is a local green building system rating that was developed by the Philippine Green Building Council.

Mr. Formalejo said the developments inside the estate, such as the Outlets at Lipa and the LIMA Tower 1 were five-star BERDE certified in 2022.

LIMA Tower 1 holds a BERDE certification for environmental sustainability, and has pre-certification from the WELL Building Standard, which assesses features promoting health and well-being.

“Hopefully, once we start to operate LIMA Tower 1, all the tenants will appreciate the operational savings that they can achieve,” Mr. Formalejo said.

He said the Smart Water Network, wherein its water facilities turn into interconnected and intelligent systems, operated by LIMA Water Corp., resulted in 30% savings in operations and uptime of 99.3%. It is also less than 5% in terms of wastage of non-renewable water.

“Soon we will be developing our Tower 2. We’ll also gear up for these certifications,” he said, adding that The West Cebu Estate and Mactan Economic Zone 2 Estate are aiming for five stars this year.

Mr. Formalejo noted these green certifications make the locators feel secure knowing their business operates inside a sustainable development along with the assurance that all these facilities and systems are future proof.

Source: Business World

Why the Philippines must catch up with Asean

In the increasingly integrated and competitive Southeast Asian region, taxation has become a key factor that influences investment decisions, job creation and national economic resilience. A comparative look at the Philippines’ tax structure vis-à-vis Singapore and extended to other Asean countries reveals several glaring disparities that place the country at a relative disadvantage, both in attracting foreign direct investments and in achieving sustained gross domestic product (GDP) and gross national income (GNI) growth.

Personal income taxes are up to 35 percent in the Philippines compared to only 22 percent in Singapore. In Thailand these are up to 35 percent but come with more exemptions and are also at 35 percent in Vietnam but tiered. Cambodia and Laos have simplified schemes, with top rates capped at 20 percent.

The Philippines imposes a 6-percent tax on real estate capital gains and 15 percent on the net gains from the sale of shares not traded on the stock exchange. In contrast, most Asean peers, including Singapore, Malaysia and Thailand, offer exemptions or zero capital gains tax for individuals and long-term investments. Sales of listed shares in the Philippines are not subject to capital gains tax but are covered by a separate stock transaction tax of 0.6 percent.

The Philippines still levies a 6-percent estate tax while countries like Singapore, Malaysia, and Thailand have abolished estate duties entirely to encourage intergenerational wealth transfer.

Dividend tax rates in the Philippines, meanwhile, are 10 percent to 20 percent, higher than Singapore’s 9 percent and Malaysia’s tax-exempt system for domestic shareholders under its single tier system.

And at 12 percent, the Philippines has one of the highest value-added tax (VAT) rates in the region compared to 9 percent in Singapore and 7 percent in Thailand.

The impact of these disparities spans several critical economic dimensions:

– Foreign direct investments (FDI). High taxes on income, dividends and capital gains reduce after tax returns, discouraging investors who have more favorable options in the Asean region.

Singapore, with its low and transparent tax regime, continues to be the top recipient of FDI in Southeast Asia. According to the Unctad World Investment Report 2024, Singapore captured over 30 percent of Asean’s total FDI inflows while the Philippines lagged behind at less than 5 percent. This not only reflects investor sentiment but also leads to fewer jobs and slower technology transfer.

– Employment and enterprise development. Investment decisions directly impact job creation. The more capital flows into productive sectors like manufacturing, technology, and services, the more employment opportunities become available. A burdensome tax regime slows business expansion and startup activity, especially for capital intensive ventures. In contrast, Indonesia’s tiered corporate tax reliefs and Malaysia’s SME-focused incentives have stimulated strong employment growth and entrepreneurship, while the Philippines struggles with underemployment and informality.

– GDP and GNI growth. The Philippine tax structure, while aimed at revenue generation, may actually be hampering GDP growth by discouraging consumption, savings and reinvestment. High VAT and income taxes lower disposable income, suppressing domestic demand. Moreover, capital flight and reduced reinvestment due to dividend and capital gains taxation limit national income generation. Singapore’s GDP per capita remains over five times higher than that of the Philippines, a gap exacerbated by taxation and business environment differences.

– Revenue efficiency vs. equity. While the government needs revenues to fund social services and infrastructure, high and inefficient taxes often result in evasion, loopholes and administrative burdens. For instance, the 12-percent VAT is poorly enforced at the informal sector level and corporate tax incentives under the Create Act are still not enough to offset the weight of other taxes. Asean neighbors have demonstrated that broadening the base and reducing rates can actually improve collections by enhancing compliance and formalization.

The call to remove or reduce taxes on savings and investments has become more urgent with the passage of Republic Act 12214 or the Passive Income and Financial Intermediary Taxation Act. This law eliminated the longstanding tax exemption on interest income from long-term time deposits held for at least five years.

Under the revised rules, all interest earnings, regardless of maturity period, are now subject to a 20-percent final tax. Although the rate remains the same, the removal of the exemption is a substantive change that affects conservative savers, including retirees, overseas Filipino workers and middle income earners who prefer secure bank placements over speculative investments.

RA 12214 also maintains the 10-percent dividend tax on domestic shareholders and 20 percent for nonresidents, while flattening taxes across other passive instruments.

However, unlike neighboring Asean economies that encourage long term financial inclusion through favorable tax treatment of interest and dividends, the Philippines has now removed such incentives. This shift risks discouraging capital formation, and may ultimately result in lower long term savings, investment growth, and tax compliance.

To remain competitive in the Asean region, the Philippines must consider the following reforms:

– Cap personal income tax at 25 percent to align with regional averages and attract professionals and investors alike.

– Remove or reduce taxes on savings and investments such as interest and dividends to stimulate long-term financial inclusion and capital formation, especially in light of the adverse impacts of RA 12214.

– Abolish estate and donor’s tax to allow smoother intergenerational transfer of assets and reduce flight of family wealth abroad.

– Simplify VAT and consider lowering the rate with stricter enforcement and digitization to improve compliance.

– Unify social contributions across the Social Security System, PhilHealth and Pag IBIG to reduce redundancy, improve efficiency and lower the payroll burden on employers.

– Introduce a regional tax competitiveness index to benchmark policies annually and ensure the country is not being left behind.

Taxation is more than just a domestic fiscal tool. It is a powerful signal to the global market. The Philippines must rethink its tax policy as not merely for compliance or collection but also as a strategic lever for growth, competitiveness and social mobility. The experiences of Singapore and other Asean neighbors show that simpler, fairer and more efficient taxation can unlock inclusive development. The challenge is not to raise more taxes, but to tax smarter.

Source: Manila Times

Building a flood-proof city

The 2009 Typhoon Ondoy (Ketsana) was one of the compelling reasons why I started envisioning building Clark Green City (now New Clark City). It was merely a tropical storm without much wind or gustiness. But its effects were catastrophic, as it drowned Metro Manila with a month’s volume of rainfall in just 24 hours. It was one of the worst, if not the worst, floodings of Metro Manila, with more than 460 people dead, many of whom were residents of Provident Village in Marikina, and causing economic losses of more than P23 billion, including the destruction of more than P10 billion worth of infrastructure and agriculture. In the aftermath of Ondoy, it was discovered that Provident Village should never have been developed as a residential community, as it was a natural hazard area, a flood basin of the Marikina River.

Deforestation of the uplands and the massive quarrying activities in the Sierra Madre caused the raging flashfloods, which caused the Marikina River and its tributaries to burst beyond the banks and into the highly dense communities beside them. The flimsy shanties of poor urban communities along the riverbanks were swept away by the floodwaters and slammed the structures against the bridges. Because people thought that Ondoy was not a strong typhoon, the government was caught unprepared by the massive floods that it caused. It was also discovered that government weather monitoring could have been more informed of the volume of rainfall if it had been provided with a Doppler radar.

Because of this, the late President Aquino III made it one of his priorities upon being elected in 2010 to acquire Doppler radars that would provide accurate weather data to our weather monitoring officials. However, in 2013, another unfamiliar climate change phenomenon would hit the country. Despite the preparedness of government agencies in disaster relief operations, they were no match to Super Typhoon Yolanda (Haiyan), the first category 5 super typhoon to make landfall in the country. This time, it was not the volume of rainfall but the intensity of wind gustiness that created devastating storm surges that swept away the entire Tacloban City and other towns along its destructive path.

Last Saturday, Quezon City experienced rainfall even much worse than Ondoy’s. In a short span of one hour, rainfall reaching 121 mm — compared to Ondoy’s peak of 90 mm — drenched the entire city. UP Diliman, which had never experienced flooding before, experienced the worst floods in its history. Fortunately, this downpour was localized. Hence, the damage was mitigated, and the administration of Mayor Belmonte was equipped with the technology and resources to immediately respond to the needs of QC constituents. Had the torrential downpour covered the entire Metro Manila again, the damage would have been unthinkable. Sadly, this is the new normal for climate change. We should expect more of these disasters to come our way.

The Aquino administration learned its lessons from Ondoy and Yolanda. It created the Climate Change Commission, empowered the Office of Civil Defense capabilities, invested in more advanced weather monitoring technologies, including Project NOAH, and the acquisition of more Doppler radars. Under the able leadership of the then public works secretary Babes Singson, the Department of Public Works and Highways (DPWH) drew up a flood control masterplan for the entire Metro Manila to address the impending floods.

Aware of the vulnerability of Metro Manila to climate change disasters and the possible Big One earthquake, I led the master planning and laying of the foundations of a new backup capital in Clark, which we launched on April 11, 2016, and which is now known as the New Clark City. One of the major features of this new metropolis is the preservation of natural waterways, such as rivers, creeks and streams. We required that these natural waterways never be blocked, nor their flows hindered.

Adopting the similar engineering technology that we built in Bonifacio Global City, we incorporated a 100-hectare manmade lake that would serve as the water detention pond where run-off water that causes floods will be detained prior to releasing it to the nearby streams. The rivers will have 100-meter open and green easements that will serve as green parks, esplanades, jogging paths and picnic areas. We envisioned rivers with natural anti-erosion infrastructures such as trees and other natural green softscapes. We wanted the rivers to be as clean to allow our children to experience swimming in them because the water in these rivers is coming from the natural springs of Mt. Pinatubo.

Our flood problems are not only caused by nature. Because nature, left alone, will simply seek its natural path. However, floods are caused by man’s stupidity and greed as well. We cannot stop nature on its track, but we can manage its course in a limited way. That is the role of science and engineering. Water is the source of every living thing on Earth. Yet it is also one of the most destructive, such that God would have to use the great flood to almost wipe out humanity.

With the raging controversy on the plunderous greed of public works officials and their cabal of contractors, we witness firsthand that science and engineering technologies can address the flooding problems that we have. What we could not stop, though, in so many years and so many ways, is the unquenchable avarice of a very few who made plunder of government funds an intergenerational family enterprise.

It’s about time that this flood of shameful plunder be met by the burning fire of people’s rage and retribution.

Source: Manila Times