Green construction becoming mainstream 

Mike Eric Juru

 

 

 

For most of the last decade in other parts of the world, “green building” was a branding exercise.

 

A solar panel on the roof, a plaque in the lobby, a 5% rent premium for the right tenants.

 

 

 

In 2026 the dynamics have changed, it is now becoming a condition of finance.

 

 

 

Around the world, construction is being rewired around energy, carbon, waste and resilience. And for the first time, the capital to pay for it is not scarce. Climate finance has gone from pledge to pipeline.

 

 

 

The result is a fundamental shift. The cheapest money in property today is green money. The most expensive asset is a “brown” one.

 

 

 

Green is no longer a trend. It is the baseline

 

 

 

Three forces have turned green from optional to obligatory.

 

 

 

Regulation

 

The EU’s Energy Performance of Buildings Directive now requires all new buildings to be zero-emission by 2030. The US Inflation Reduction Act put $369bn behind efficiency and electrification. China’s “dual carbon” targets mandate 50% less energy in new public buildings.

 

 

 

In emerging markets the same logic applies. Rwanda requires EDGE certification for public buildings. South Africa uses its Section 12L for tax credits. Morocco, Egypt and Kenya have green building codes. Compliance is no longer voluntary.

 

 

 

Investors

 

The world’s largest asset owners have made net-zero commitments covering $70 trillion. They cannot meet them owning 1990s office blocks.

 

 

 

JSE, LSE and NYSE REITs now report energy and carbon separately. Major pension funds discount “brown” assets by 10-20%. Banks do the same. Standard Chartered, Nedbank and IFC will lend at 25-100 basis points less for certified buildings because operating cost is lower and default risk is reduced.

 

 

 

Economics

 

The green premium has collapsed. In 2015, efficient construction cost 15-20% more. In 2026 it is 3-7% in most markets, and zero in some, because supply chains have scaled.

 

 

 

At the same time, energy and water tariffs have risen. A building that uses 30% less energy pays for itself in 4-6 years.

 

 

 

The numbers reflect it. Over 75,000 projects are now EDGE certified, 60% of them in emerging markets. Green Star and LEED portfolios exceed 2 billion square meters globally.

 

 

 

Green is no longer a niche. It is how you build to get funding.

 

 

 

Climate finance is no longer a promise. It is on balance sheets

 

 

 

For years the complaint was: “there is no money”. That is no longer true.

 

 

 

The public money

 

The Green Climate Fund has $13bn in pledges and is disbursing. The Climate Investment Funds, Adaptation Fund and World Bank’s Climate Finance are all active. In 2022, GCF approved $100m at 0.75% for 40 years to Rwanda for green urbanization. It has committed $300m+ to South Africa’s energy transition and building retrofits.

 

 

 

The DFIs

 

IFC, FMO, AfDB, EBRD and Proparco now have mandatory climate targets. They will lend at 3-7% for certified projects, versus 12-18% commercial. They also provide technical assistance to get projects to bankability.

 

 

 

The private money

 

The green bond market passed $2.5 trillion in issuance. Banks have created “green loan” books exceeding $1 trillion. In property, this means interest rate discounts for certified assets. It also means capital markets: Acorn’s green REIT in Kenya, Vukile’s green bonds in South Africa, and a growing number of sustainability-linked loans globally.

 

 

 

The fiscal money

 

Governments are using tax, not just debt. The US IRA offers credits for efficient buildings. EU member states give rates rebates and VAT reductions for retrofits.

 

 

 

Total annual climate finance for mitigation and adaptation is now estimated at $1.3 trillion. But for construction, it is transformative.

 

 

 

Where it is working

 

 

 

The link between trend and money is clearest in three places.

 

 

 

Europe and North America: Regulation plus cheap debt. Green buildings trade at a 10% premium. Brown buildings face “stranding” risk. Banks will not refinance them.

 

 

 

South Africa: No mandate, but strong data. Section 12L created a national M&V database. With data, banks can underwrite savings. Over 1,200 certified buildings later, green is a separate asset class. Debt is 50bp cheaper.

 

 

 

Rwanda and Kenya: Policy plus concessional capital. Rwanda’s mandatory EDGE rule unlocked $100m of GCF money. Kenya’s green REIT unlocked capital markets. Both are using climate finance to cut developer costs from 16% to 7-9%.

 

 

 

The common denominator is not geography. It is that someone created a pipeline and someone measured performance. Money follows both.

 

 

 

The scrutiny

 

 

 

This is not without problems.

 

 

 

Availability vs access

 

The money exists. But you cannot just ask for it. To access GCF, DFI or green bond money you need certification, M&V, and a pipeline. That excludes small developers and most affordable housing without a subsidy.

 

 

 

Fragmentation

 

EDGE, LEED, BREEAM, Green Star. Banks and funds each have their own checklist. The industry needs one global performance standard, not 20 branding standards.

 

 

 

The housing gap

 

Most climate finance today goes to commercial and public buildings. The residential sector, where 70% of urban growth will happen, is still largely financed with expensive mortgages. Until climate money reaches the household, we are decarbonising the top of the market.

 

 

 

 

 

What happens next

 

 

 

The next five years will be about distribution, not invention.

 

 

 

First, merge climate finance with mortgages. The model is a “green mortgage”: 15-20 year loan at 8-10% for buyers of certified homes, with a 2% subsidy from climate funds. Morocco, Egypt and Kenya are piloting it. It needs to scale.

 

 

 

Second, localise supply chains. The reason the green premium fell is scale. Governments should use public procurement to guarantee demand for efficient materials, so factories are built locally.

 

 

 

Third, make data public. Energy and water use per m² should be as available as location. That is what lets banks price risk and lets tenants choose.

 

 

 

Conclusion

 

 

 

The statement “green is trending and climate finance is available” would have sounded aspirational in 2015. In 2026 it is descriptive.

 

 

 

Construction is decarbonising because regulation demands it, investors require it, and the math now works. Climate finance is available because DFIs, funds and banks have all been mandated to deploy it.

 

 

 

The risk is no longer that we lack the trend or the money. The risk is that we use them only for offices and malls, and leave housing behind.

 

 

 

The buildings we finance in this decade will set energy use and climate vulnerability for the next 50 years.

 

 

 

We finally have both the reason and the resources to build them right.

 

 

 

The task now is to make sure the cheapest, greenest money reaches the people who need homes, not just the buildings that house corporations.

 

Green construction is the solution.

 

 

 

Dr Juru is a recognised and accomplished business leader who is the current Chairman of the Green Building Council Zimbabwe and CEO of Integrated Properties. His previous National leadership roles include Chairman of Institute of Directors Zimbabwe, President of Real Estate Institute of Zimbabwe, Chairman of the Valuers Council of Zimbabwe, inaugural Chairman of REITs Association, Vice President ZNCC. He has sat on several Boards in private and public sector. He leads passionately the transformation of Zimbabwe’s built environment to sustainability.