ISW 2026: What Malaysia can learn from Hong Kong’s green-building push

KUALA LUMPUR (Sept 11): Malaysia could model Hong Kong’s approach in accelerating the transition towards a greener built environment, where sustainability measures are more likely to take hold when governments align regulation with commercial incentives so that doing the right thing makes business sense too.

In a dialogue with EdgeProp managing director Alvin Ong at the sixth International Green Build Conference (IGBC) today, BEAM Society Ltd (Hong Kong) head of business and system development Tim Lo shared insights into how Hong Kong has used regulation, incentives and certification to encourage greener development.

The Building Environmental Assessment Method (BEAM) is Hong Kong’s leading green building certification and assessment tool, used to measure and reduce the environmental impact of local buildings.

Lo said that when Hong Kong introduced its BEAM Plus assessment scheme in 2012, developers could obtain the full 10% gross floor area (GFA) concession based largely on design-stage compliance.

This, he said, created a potential loophole where developers could obtain the GFA concession based on compliance at the design stage and benefit without necessarily returning for final certification.

However, Lo added, that wasn’t always the case, especially for larger developers.

“In actuality, the strange fact is that even when the government has that sort of regulation in place, the larger developers will come back for the final assessment.

“It's because in the last 10 years or so, you can see in this environmental sustainability field, there have been a lot of ESG (environmental, social, and governance) initiatives going on.

“Whether it’s because they have to do ESG disclosure to the Hong Kong Stock Exchange if they're listed property companies or they have to do green finance.”

In green finance, Lo said, companies had to make post issuance disclosure.

“So you get the money to do the green building, but eventually you have to disclose your performance back to investors.”

The more significant change came when Hong Kong revamped the GFA concession mechanism, shifting greater emphasis towards the occupation-permit stage. Lo said this effectively closed the loophole because developers needed to meet the relevant requirements before they could obtain an occupation permit.

“If you want to get an occupational permit, meaning you can actually sell your flat for somebody to buy it, you have to get the preferred certificate.

“So, we need to start thinking about doing that final assessment,” he said.

Lo also added that the system was not designed simply to punish developers. Where a project fails to achieve its targeted rating, Hong Kong allows certain alternative measures to compensate for the shortfall.

For example, he cited measures including enhanced design, building information modelling (BIM) and extensive greenery as possible alternatives.

“So basically we have what we call different sets of models to ensure that the developer can do well,” Lo said.

For Malaysia, the broader lesson may therefore be less about copying Hong Kong’s exact certification framework and more about designing incentives and regulations that work with the realities of the property market.

The challenge becomes particularly important for existing buildings.

Ong noted that hundreds of ageing buildings in Hong Kong reach the 50-year mark each year, while redevelopment cannot keep pace. He said it raises the question of when demolition and rebuilding ceases to be a viable strategy and retrofitting becomes necessary.

Lo said redevelopment can make economic sense in some parts of Hong Kong because developers may be able to assemble sites and build at greater height, creating significantly more property value than a retrofit.

But for newer estates and existing buildings that remain viable, Hong Kong has also developed mechanisms to encourage ongoing maintenance and energy-efficiency improvements.

“From an urban planning perspective there was a high limit back then.

“Now they have increased the limit because the airport is now in Chep Lap Kok which is on a reclaimed island.

“So for the URA (urban redevelopment authority), the question about demolition and renewal of course lies in what the potential property value can be.

“For the URA, if they could build higher or eventually they get all the buildings, what they call a compulsory sale where they get all the buildings together, then they can do a bigger development.

“It actually has more market value and is much better than doing a retrofit.”

However, there is a scheme under which utility companies provide matching grants for building retrofits.

Lo said this can also make commercial sense for utilities because reducing energy demand, particularly peak demand, can reduce the need for investment in additional generation capacity.

“If there's a demand side, they do a sort of reduction, then what happens is for the utility company they will have less peak,” he said.

The discussion also highlighted the importance of making green-building policy relevant beyond premium office towers and new developments.

Lo pointed to Hong Kong’s approach to public housing, transitional social housing and subdivided units, where different standards and certification mechanisms are used to address issues such as energy efficiency, ventilation and liveability.

“So you can see it's step by step certification at different levels to ensure this is done,” he said.

Another area where Malaysia could face a similar need for differentiated standards is data centres, given the sector’s rapidly growing electricity demand.

Lo said BEAM Society treats data centres differently from conventional buildings because of their distinct energy requirements, including their electrical systems and equipment.

The implication is that green-building standards cannot necessarily be one-size-fits-all. As Malaysia's built environment changes, standards may need to evolve around the actual energy and operational characteristics of different asset classes.

For Malaysia, Hong Kong’s experience ultimately points towards a broader policy question: how can sustainability be made commercially rational rather than treated simply as an additional cost?

Ong, in his opening observation perhaps captures the challenge best: the technology exists, but the incentives need to catch up.

“Whenever we talk about net zero cities, we tend to think a lot about the technology behind it, be it better solar or even cleaner concrete, smarter buildings.

“And the implicit assumption behind that is basically to say that decarbonisation is an engineering problem and with just the right technology, we can solve it.

“Except you and I know that it is not. The real bottleneck is and always has been a question of incentives.”

The two-day conference, held at the Malaysia International Trade and Exhibition Centre (Mitec) here, wrapped up today under the theme “Path to Sustainable Cities for All: The Urban Transition Towards Net Zero”.

The IGBC is part of the International Sustainability Week (ISW) 2026, which comprises two components: IGBC 2026 and GreenScape 2026, the exhibition component showcasing green innovations, technologies, services, solutions and financing models that support sustainable project delivery.

Themed “From Certification to Transformation: Building a Net Zero Future Together”, ISW 2026 is organised by Qube Integrated Malaysia Sdn Bhd and co-organised by GreenRE Sdn Bhd, with EdgeProp as media partner.

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