Allianz eyes net zero for Asian logistics assets

Allianz Real Estate has said part of its logistics portfolio could become net zero – generating as much energy as it uses – through the use of solar panels, as new research shows a sizeable rental premium available to investors in Asia from green buildings. 

Suat Ghee Ong, Allianz Real Estate’s head of asset management in Asia based in Singapore, told AsianInvestor that the fund’s research had revealed that installing solar panels on the roofs of dry warehouses – which typically store consumer goods and packaged food goods – could meet 100 per cent of energy demand for each building.

“Logistics assets have lower energy demand and have a significant amount of roof space that can be used to install renewable energy systems such as solar panels,” she said.

Currently Allianz has installed solar panels on the roofs of six of its 13 logistics assets in APAC, all of which are in either China or Australia.

Under the agreement Allianz struck with the operator of the solar panels in these cases, energy generated is sold back to the grid. But Ong said that Allianz was evaluating the possibility of shifting these buildings over to using the energy they generate.

Ong said the firm is also working to expand the solar panel programme to the remaining seven buildings. In these cases, she said, measures such as strengthening the roofs’ load-bearing capacity are required.

Allianz’s logistic portfolio was worth €8.9 billion ($9.44 billion) as of June 2022, comprising 29% of its APAC AUM.

Ong said that the company had received significant support from tenants. 

“Many of our tenants are blue-chip and are heavily focused on ESG and decarbonization targets of their own,” she said.

“Seventy per cent of carbon emissions stem from tenants and therefore it is vital to engage with all stakeholders: joint venture partners, fund/property managers, borrowers, tenants etc,” she added.

GREEN PREMIUM

The disclosure from Allianz comes as new research points to yield premiums available for green buildings in Asia.

In a report published last month, global real services firm JLL revealed that green buildings were achieving up to 28% higher rents than equivalent non-green buildings. 

The report surveyed 3,089 Grade A1 office buildings in 14 cities across Asia that employ a range of green certification standards, the most prevalent being the non-profit US Green Building Council’s Leadership in Energy and Environmental Design. 

Hong Kong had the highest rental premiums conferred by green certification at 28%, as well as the second-lowest coverage of green certificated buildings at 29% of total grade A office stock. The lowest coverage was Osaka in Japan, with 14%.

In Singapore, where 90% of Grade A office stock is green certified – the highest of all the cities surveyed by JLL – certification provides a rental premium of 4% to 9%. In Seoul, where 37% of stock is green certified, the rental premium is between 7% and 22%. 

“The current supply of green certified assets is insufficient to meet the ambitious net zero targets set by occupiers. This supply-demand gap is leading to rental premiums for green certified buildings,” said the report. 

GREEN LEASES

Allianz’ efforts to improve the environmental footprint of its property portfolio also include a focus on green leases, or agreements between landlord and tenant setting out environmental objectives for a building. 

“We have also incorporated green clauses in new leases and renewals where we can, to ensure we can understand tenants’ footprint and to work with them on best practices pertaining to ESG,” said Ong, adding that information related to tenant usage in logistics assets was generally available to Allianz. “We have started to review these data points and benchmark results against other assets in the portfolio to identify areas of concerns and implement relevant actions.”  

In November, Ong, who manages the entity’s decarbonisation project in Asia, told AsianInvestor that green leases across Asia covered 22% of its total leased area at the end of June.

READ MORE: Allianz, APG in drive to cut Asia property emissions