For investors, the goals of high yields and strong capital growth are increasingly being influenced by a city’s perceived greenness. There’s been a buzz in the ether for years that Hong Kong was losing competitive ground to Singapore for reasons stemming from the SAR’s middling environmental status. Multinationals looking at opening up shop in Asia-Pacific are just as likely to look at Sydney, where environmental regulations are not voluntary. Strong investment locations are ones that workers are happy to live in.
What makes a city “green” precisely? Strong recycling programmes? Commitment to public green space? Resource-saving policies? Good transit infrastructure? It can include all of the above but for most “green” means actively fighting climate change and creating and enforcing eco-positive policy. We’re still waiting on that in Hong Kong, where this year’s policy address promised to set out clear roadmaps to, “cleaner air, better fuel mix, energy conservation, emission reduction, resources recovery and nature conservation in a comprehensive and systematic manner.” Eventually.
So what locations rank among the greenest in the world, and what are their investment prospects? Rankings vary from source to source — the business friendly The Economist and Mother Nature Network will rank the same city differently, but a quick scan of multiple lists (including MNN and Siemens’ Green City Index) turn up a number of recurring characters, with Stockholm, Reykjavik, Portland, Oregon, and Amsterdam regularly in the top ten. Stalwart investment locations such as London and New York place moderately at best. But with the exception of the absence of Australian and New Zealand representation, the best five are not that surprising.
With one-third of its residents cycling to work, the Danish capital is the biking capital of the world and has a comprehensive public transport system to help with the rest. Its coastal areas are dotted with wind turbines, a manifestation of Copenhagen’s status as the world’s leading climate change warrior. With environmental policy standard practise, the city set a goal of carbon neutrality by 2025, underpinned by massive sustainable construction and renovation. That, according to DTZ’s autumn 2012 market report, gives Copenhagen the greatest growth potential among Nordic cites. Low interest rates and strong leasing demand, steady population growth and increased and normalising market liquidity and strong yields in prime areas (4.25 to 5 percent) brought investors back to the table in 2012.
The little known Brazilian city is the country’s greenest and the South American leader as well. Over 1,000 public green spaces and stringent environmental regulations that control urban development and a renowned 70 percent recycling rate are among its strong points. The southern city is already a hotbed for multinationals, with Exxon Mobil, Kraft, HSBC and Siemens among the major with presences complementing Curitiba’s booming automotive industry. Its quality of life has made it South America’s premiere investment location, now represented in steadily increasing residential property values — upwards of 65 percent in prime locations.
San Francisco traditionally runs neck and neck with Portland, but measurable results keep it in first place. The City by the Bay rates high on public transport, energy efficiency, water and air quality, waste management, sustainable building and, crucially, private sector involvement. And its city council is notorious for passing — and enforcing — tough environmental laws. It banned plastic shopping bags outright. No 50¢ loopholes here. The city’s investment value speaks for itself. San Francisco is second only to New York for investor appeal in the United States, and after a few bleak years post 2008 it’s experiencing fresh vitality. Sales volume is up, inventory is down and demand is steady and will remain so. People who live in San Francisco do so precisely to be in San Francisco.
It’s not surprising that Singapore leads Asia in greening, as the Lion City has incorporated sustainability in its policy since independence in 1965. The city boasts some of the world’s best water reclamation and recycling facilities, in addition to incentivising small, fuel-efficient cars and active work on its transit infrastructure. Demand in Singapore is high, so high that the government imposed new cooling measures in January, aimed at foreign buyers, corporations, native second home buyers and permanent residents, and at keeping prices down. Prices rose almost 2 percent in the fourth quarter of 2012, with rental yields still hovering around 3 percent.
Canada’s greenest set a target for itself to become the greenest city in the world seven short years from now. Full stop. Actively embracing clean energy tech, Vancouver has been aggressive in its carbon emissions reductions programmes and gets over 80 percent of its power from renewable sources. Vancouver is a lifestyle destination for many investors, particularly in Asia. Relatively close proximity to Asia, outstanding outdoor leisure, solid educational resources and renowned Canadian stability have made the city one of the most popular investment locations in the world. Ironically, prices in Vancouver (and BC and Ontario overall) slipped in early 2013 and will continue on that path for the rest of the year, largely on the heels of tougher mortgage policies introduced in mid-2012.