From green ambition to economic value – What Africa’s green buildings mean for investors

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Africa Summit 2026

Mike E. Juru

AFRICA is entering an extraor­dinary period of urban develop­ment, with enormous amounts of capital required for housing, offices, industry, healthcare, education and infra­structure. The critical question for inves­tors is therefore no longer whether green buildings are environmentally desirable, but whether they create economic value. If today’s capital is invested in inefficient buildings with high operating costs and weak climate resilience, investors may ultimately inherit assets that become in­creasingly expensive to operate, finance and retrofit.

Green buildings must therefore be­come an investment proposition, not merely an environmental aspiration. For Africa, where urbanisation is accelerat­ing and much of the future building stock has yet to be constructed, this is both an economic necessity and a significant op­portunity.

The International Finance Corpora­tion estimates that green buildings rep­resent a US$24,7 trillion investment op­portunity in emerging markets by 2030. Its research has also found that greener buildings can generate lower operating costs, stronger tenant attraction and, in some markets, higher rents and sale val­ues. The significance is obvious: sustain­ability can influence the financial perfor­mance of an asset rather than simply its environmental credentials.

For property investors, the logic is fundamental. Real estate value ultimate­ly depends on the quality and durabil­ity of future cash flows. A building that generates rental income but consumes excessive electricity and water, requires costly maintenance and is vulnerable to climate or infrastructure disruption may produce a substantially weaker return than an otherwise comparable efficient building. Green design can therefore affect operating expenditure, net operat­ing income, occupancy, tenant retention, capital expenditure and ultimately valu­ation.

Evidence from emerging markets strengthens the proposition. IFC reports that green measures can, depending on the project, require relatively modest incremental capital expenditure while delivering significant utility savings. Its research cites green buildings with 10- 17 percent lower operating costs and asset values more than 9 percent higher than comparable conventional buildings. These figures should not be interpret­ed as guaranteed premiums, but they demonstrate an increasingly important principle: building efficiency can have measurable economic value.

Africa has even stronger reasons to act. The International Energy Agency projects that the continent’s population could grow by 63 percent by 2040, while economic wealth more than doubles, generating enormous additional demand for buildings and energy services. Yet the IEA estimates that stronger efficien­cy and decarbonisation measures could reduce building energy demand by 40 percent by 2040 compared with a less ambitious pathway. Africa therefore fac­es a choice: replicate inefficient building models or use its unprecedented con­struction cycle to create more produc­tive, resilient assets.

Experience elsewhere shows what is possible. IFC’s EDGE standard, devel­oped specifically for emerging markets, provides a measurable framework re­quiring projected savings of at least 20 percent in energy, water and embodied energy in materials against a conven­tional baseline. This matters to finance because measurable performance makes sustainability increasingly assessable by lenders and investors.

South Africa offers an instructive African example. In 2021, Nedbank is­sued a R1,09 billion green residential development bond, with IFC investing R500 million as anchor investor. By 2025, IFC and Nedbank had expand­ed their partnership through a further US$200 million facility supporting cer­tified green buildings across residential, commercial, industrial and retail prop­erty, including affordable housing. The earlier programme had supported 1,790 EDGE-certified housing units, including 1,305 affordable homes.

This is significant because it demon­strates the migration of green building from environmental policy into capi­tal-market architecture. Green bonds, green loans, blended finance and devel­opment finance can increasingly connect building performance with the cost and availability of capital. For Africa’s banks, pension funds, insurers, REITs and other institutional investors, this creates a new investment landscape.

Fiscal policy can accelerate that tran­sition. Governments should look beyond regulation and consider carefully target­ed incentives such as tax allowances, accelerated depreciation, guarantees, concessional finance and green public procurement. The objective should not be to subsidise sustainability indefinitely, but to correct market barriers and make economically viable green projects more readily bankable.

This is crucial because Africa cannot finance its green transition from public budgets alone. Private capital must do much of the heavy lifting. The role of policy is consequently to create suffi­cient certainty for investors to price risk, developers to structure viable projects and financial institutions to develop ap­propriate green-finance products.

There is also an emerging risk that investors should take seriously: the brown discount. As energy efficiency, climate resilience and environmental performance become more important to occupiers, regulators and financiers, inefficient buildings could face rising retrofit costs, weaker tenant demand and increasing regulatory pressure. The investment question is therefore not sim­ply whether an asset produces an accept­able return today, but whether its income and valuation remain defensible over the next decade or two.

The opportunity extends beyond new construction. Africa’s existing build­ing stock presents a substantial retrofit market in which capital can transform inefficient properties into more compet­itive and resilient assets. The Summit’s broader programme rightly recognises that the transition must address both new development and the existing built envi­ronment.

None of this means every green building will automatically outperform, nor that Africa should import expensive sustainability specifications irrespective of local economics. Green investment must remain commercially disciplined. The relevant test is whether additional capital produces sufficient savings, resil­ience, income protection and long-term asset value. Green should mean finan­cially intelligent as well as environmen­tally responsible.

Africa is going to deploy vast amounts of capital into buildings. The strategic question is whether that capital will create assets capable of generating durable returns or embed inefficiencies that future investors will have to finance and correct.

Green buildings therefore belong not only in environmental policy, but in investment committees, credit commit­tees, pension portfolios, REIT strategies and national fiscal policy. The evidence from international markets and Africa’s own emerging experience increasing­ly shows that resource efficiency can become financial efficiency, resilience can become investment protection and sustainability can become an attribute of asset value.

The question facing African investors is consequently no longer whether they can afford to finance green buildings. It is whether they can afford to keep fi­nancing buildings that will become in­creasingly expensive to operate, adapt and defend.

l Dr Juru is an accomplished business leader who is the current chairman of the Green Building Council Zimba­bwe, Valuers Council of Zimbabwe and CEO of Integrated Properties. Previous national leadership roles include chair­man of Institute of Directors Zimbabwe, president of Real Estate Institute of Zim­babwe, inaugural chairman of REITs Association, vice president ZNCC. He has sat on several boards in the private and public sector. He passionately leads the transformation of Zimbabwe’s built environment to sustainability.