When Building 'Green' Means Losing Some Green

An examination of an eco-friendly 90-apartment development in Herzliya found that "green" construction adds NIS 20,000 to the price.

"I don't want to be the one to tell you," said one apartment purchaser on an Internet forum, "but as someone who has already bought an apartment in the Kfar Sava Hayeroka neighborhood ("Green Kfar Sava"), and I believe I represent the opinion of 90% of the purchasers, it doesn't matter if there is special garbage collection or solar-powered lighting. The reason people buy in the neighborhood when it comes down to it is location, prestige and a good price. You won't find 'greens' among us."

The buyer's comments reflect a reality in Israel. Location and price are the determining factors in buying an apartment, while eco-friendly construction has been relegated to the bottom of the compost heap.

"A contractor would prefer to build a large, spacious lobby or a pool in the building, so the benefit from an upgrade will be visible and the customer will pay accordingly," said Yisrael Kurtz, an urban economic consultant specializing in eco-friendly construction who is also one of the managers of Geo-Green, a subsidiary of the Geocartography Knowledge Group polling and research firm. "In eco-friendly construction, the contractor doesn't know what he will get out of it and if he can charge more, which is a major hurdle for builders in Israel and abroad."

Kurtz, who in the past was an economist with the Finance Ministry's budget division and with the Solel Boneh construction firm, will be lecturing tomorrow at the annual conference of the Israel Management Center.

The conference participants include Housing and Construction Minister Ariel Atias (Shas) as well as planners and developers. The agenda will include a discussion of ways to deal with the economic downturn and encourage growth in the real estate sector.

It will also examine implementation of eco-friendly construction methods at the 230,000 square meter IDF training base being built south of Be'er Sheva and the lack of popularity of eco-friendly building in Israel.

"In the case of the training base in the Negev, investors also benefit from their investment," Kurtz said. "The project is being conducted on a BOT (build, operate, transfer) basis, and the contractor building the project will also get the revenue that is produced so that the economic consideration is clear," Kurtz said, but added that "in residential construction the profit to the developer is less clear. With eco-friendly construction, at this time the developer just invests and doesn't necessarily receive a fair return, while the consumer benefits from a substantial reduction in expenses long term."

An examination of an eco-friendly 90-apartment development in Herzliya found that on average "green" construction adds NIS 20,000 to the price of an apartment.

Data from abroad point to a 35% savings in energy in eco-friendly apartments, whereas in green office buildings it can reach 40%. The savings per household is estimated at NIS 6,000 a year thanks to water recycling, advanced heating and cooling as well as other elements such as improved insulation.

Survey findings from the summer of last year in the United States show that "green" houses sell about 30% faster than conventional projects and for 20% more money. In Israel, however, the situation is different.

"Currently there is uncertainty and ignorance among contractors and consumers on the subject," Kurtz said. "Therefore it is impossible to conclusively determine the value of a 'green' apartment in Israel. At the Kfar Sava Yeroka project, for example, the apartments are selling for 10% more than second-hand units in the center of the city, but it's possible the higher prices are not the result of 'green' construction but because of high demand for the location and for the project as a result of the lack of new projects in the city."

"Most of the public is not up on the subject," Kurtz stated, "[but] the moment positive value is ascribed to eco-friendly construction, and the contractor sees compensation for his investment, he will be motivated to act in this direction."

Many real estate companies such as Ashdar, Shikun & Binui, Hanan Mor, Azorim, Y.H. Dimri and the Ofer Brothers group have proclaimed that they are building to eco-friendly standards, but what are these standards and which guidelines are the contractors ultimately adopting?

In order to qualify for a "green" seal of approval from the Standards Institution of Israel, the contractor must build in accordance with specific energy consumption standards; take the climatic location and shade of the building into account; increase the use of underground spaces; attend to the conditions on the building site, including rehabilitation of the landscape and the plant growth on site; provide for the separation of at least two types of garbage; use eco-friendly methods during construction (recycling construction debris and preventing the creation of hazardous conditions); and use architectural design methods to ensure natural building ventilation and conservation of water as well as noise control (through the use of acoustic insulation).

"The standards set by the Standards Institution are just the first step and they are expected to be upgraded so they are consistent with the accepted stricter international standards," Kurtz said. "So they would require use of construction materials, for example, that have eco-friendly certification and energy consumption would be more efficient. From the contractor's standpoint, it is possible that stricter standards would make construction costs somewhat higher, but the consumer could benefit from greater savings, which could be a marketing tool."

In the interim, real "green" building is still in its infancy, and one of the groups inhibiting its development is the contractors. Many companies use the word "green" in the names of their projects without even a hint of eco-friendly construction on the ground. Others see to it that their logo is the color green and includes the figure of a tree.

For most Israeli contractors, the "green" in their projects is limited to the trees in the computer simulations of the projects, even if the building is in the middle of a city.