Energy savers

Among the seven bids for the Guangdong Tobacco Building project, only one offered sustainable elements. The design by Skidmore, Owings & Merrill (SOM) will become China's first zero-energy skyscraper upon completion in 2009.

Known as Pearl River Tower, the 71-storey building will rely on just wind and sunlight for its power supply. It is an encouraging move in a country where few companies have shown interest in environmentally friendly buildings.

"With China's skyrocketing economy, it's a crucial turning point for the government to act on sustainability or the cost of environmental damage may be greater than any progress made since the 1970s," said Justin Kean, associate director of occupier research at Jones Lang LaSalle, a property management company.

According to government statistics, approximately 50% of pollution in China comes from buildings. But private companies have been given little motivation to consider sustainable real estate, which can multiply costs.

"I would be surprised if the Pearl River Tower was a 100% zero-energy building upon completion, because that would be 10 times the cost of a normal building that size," said Silas Chiow,director of China business development at SOM. "Even if the final project achieves 70% sustainability, proposing zero-energy designs are crucial for sustainable development."

Authorities in major cities are slowly promoting sustainable development by rejecting projects that don't meet green standards and offering financial incentives for sustainable technologies.

Gradually green

Chongming, a suburb of Shanghai and the country's third-largest island, is moving faster than most.

It is home to the city of Dongtan, which is being redeveloped over the next 20 years as China's first eco-city. The island itself will feature organic farming, restored wetlands and a light rail system. New lakes will also act as a water filtration device for the island's 650,000 people.

However, corporations have been slow to back Chongming's initiative.

"Companies have been hesitant to migrate toward commissioning or moving into higher-cost sustainable buildings mainly because they are not aware of the low-cost benefits over time," said Huang Tiejun, Chongming's vice governor.

Recently, SOM met with a private company in Nanjing that was hesitant about switching to double walls, which offer better insulation, until SOM estimated the return on investment would level out after eight years. Tenants are also unwilling to pay more to rent space in a zero-energy building, said Kean, although he admits this could change as sustainable buildings become more affordable.

About 60% of the new Pearl Tower will be occupied by Guangdong Tobacco, but James MacDonald, of property consultancy Savills, believes the building's central location will attract other tenants.

"Demand in the commercial market is driven by location, such that if an environmentally building was to be built in the city center there would demand for it," he said. "However, if an environmentally friendly building is located in a decentralized area it will find difficulty in attracting tenants."

He pointed to Shanghai's new sustainable development, Pujiang Intelligence Valley, as an example of a poorly located facility underperforming.

Another problem is time. Developers in China often work with very tight deadlines and inexperienced designers make mistakes. The team responsible for redeveloping Wuhan (roughly the size of Chicago) in Hubei Province recently proposed a non-sustainable lake in the middle of the city and failed to come up with a good public transportation plan, a key part of sustainable development.

Taking the LEED

Sustainability standards are becoming more mainstream in real estate, with green buildings in the US now required to follow the Leadership in Energy and Environmental Design (LEED) Green Building Rating System. In China, certain buildings such as the Pearl Tower, have met the LEED standard, but the government has not yet created a similar domestic rating system. This begs the question as to whether improvements can be fast enough to make to difference.

China's urbanization program will see 60% of the population living in cities within a decade. What's more, a rising standard of living means that, by 2020, people will require 10 more square meters of living space than what they have now.

The country is already home to 16 of the world's 20 most polluted cities. As housing demands continue to push urban capacity to the breaking point, sustainable models like the one in Dongtan could ease the environmental burden. But the idea has to catch on with developers.

"Developers trying to differentiate themselves may put up environmentally friendly buildings," MacDonald said. "If these building are successful it will likely spur on further growth in the market as other developers see potential demand."