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Cablegate: Green Building in the Pearl River Delta - a Fad or The

VZCZCXRO8333
RR RUEHAST RUEHCN RUEHGH RUEHHM RUEHLN RUEHMA RUEHPB RUEHPOD RUEHTM
RUEHVC
DE RUEHGZ #0453/01 2110831
ZNR UUUUU ZZH
R 290831Z JUL 08
FM AMCONSUL GUANGZHOU
TO RUEHC/SECSTATE WASHDC 7454
INFO RUEHOO/CHINA POSTS COLLECTIVE
RUCPDOC/DEPT OF COMMERCE WASHDC
RUEATRS/DEPT OF TREASURY WASH DC
RUEHZN/ENVIRONMENT SCIENCE AND TECHNOLOGY COLLECTIVE
RUEAEPA/HQ EPA WASHDC
RHMCSUU/DEPT OF ENERGY WASHINGTON DC

UNCLAS SECTION 01 OF 02 GUANGZHOU 000453

SENSITIVE
SIPDIS

STATE FOR EAP/CM
STATE PASS USTR CHINA OFFICE

E.O. 12958: N/A
TAGS: SENV ECON PGOV CH
SUBJECT: Green Building in the Pearl River Delta - a Fad or the
Future?

REF: A) GUANGZHOU 228; B) GUANGZHOU 121

(U) This document is sensitive but unclassified. Please protect
accordingly. Not for release outside U.S. government channels. Not
for internet publication.

1. (SBU) Summary: In an effort to woo high-end clients in the
highly-competitive South China property market, developers here have
started building green. Property developers are spending more to
invest in U.S. Green Building Council's Leadership in Energy and
Environmental Design (LEED) Green Building Rating System and are
taking steps to promote the concept of a "green lifestyle." Local
governments have generally been supportive of such projects, and
some developers expect a new Chinese voluntary rating system to
further bolster the trend toward building green. End summary.

Competition Driving the Growth of Green Developments
--------------------------------------------- -------

2. (SBU) The long-term benefits of building green are becoming more
apparent to South China property developers and owners as they come
to realize that they may be able to get higher prices for green
buildings. According to Alvin Lau, Managing Director for CB Richard
Ellis in Guangzhou & Southern China, the property development market
in south China is increasingly competitive. Some property developers
are attracting clients by ensuring that construction is "green and
sustainable." Lau stated that technologically advanced,
environmentally friendly, energy efficient buildings were key to
attracting high-end clients and bringing in higher revenues for
property developers. Similarly, Hou Ze Lin, Senior Architect for
the Guangzhou Design Institute's green skyscraper, the Pearl River
Tower, said that space in the new tower would be marketed
specifically toward high-end multinational firms and large domestic
enterprises.

3. (SBU) LEED-rated development projects are underway in Guangzhou's
Panyu District, Shenzhen, Dongguan, and Zhuhai. (Here in Guangzhou,
the new consulate is being built to LEED standards.) Shenzhen
Fountain Corporation is building a high-end LEED-certified
residential tower in Zhuhai and a 3600+ unit LEED-certified
development in Changsha, as well. Both projects are expected to be
completed by 2010. The company has given an additional RMB 400,000
(about US$60,000) to its architects to ensure both projects achieve
LEED certification. Andrew Zheng, CEO of Shenzen Fountain,
explained that while the company is striving to produce more
LEED-certified projects, the high technology involved with green
buildings has raised costs "tremendously." Fraser Place, China's
first LEED-Silver building in Shekou, Shenzhen, includes an array of
energy efficiency and water conservation technologies that were
installed when the building was completed in 2005. Its developer,
China Merchants, was reluctant to release the figures on the
building's overall cost, but indicated that its next project in
Shenzhen will opt out of installing so many solar panels and
imported technologies. A 3-bedroom apartment in the Fraser
development goes for about 60,000 RMB (US$8,800) monthly. China's
first LEED-Platinum (the highest rating by USGBC) building is also
set for completion in Shenzhen and will be the new headquarters for
Vanke, China's largest property development firm.

Some Customers Need to be Educated
----------------------------------

4. (SBU) Property developers all seem to agree that green buildings
can enhance their revenues but only if clients are sufficiently
educated about the advantages. While many clients are eager to buy
into a "green lifestyle" as advertised by several new LEED-rated
property developments, they are sometimes shocked by the high
sticker price. China Merchants Property Development is hiring
additional staff to inform potential walk-in customers for China's
first LEED-rated neighborhood in Panyu (a Guangzhou suburb) about
the value and benefits of green buildings. Gladys Guan, a company
representative at the Panyu site known as Jin Shan, or The Hills,
said that LEED-rated properties are limited to the top-end of the
real estate market and will likely stay there for at least the next
3-5 years, pointing out that many of the clients the project has
attracted so far have spent time overseas and already know the value
and cost of a LEED-rated project.

Green Projects Often Welcomed by Local Government
--------------------------------------------- ----

5. (SBU) Many local governments in South China have been supportive

GUANGZHOU 00000453 002 OF 002


of green building projects but to varying degrees, often depending
on relationships with the developer. In Panyu, the local government
has been very supportive of Jin Shan. According to the developer,
the Panyu government allowed more land to be sold to the project
largely due to its "green" features. Panyu government officials
traveled to the United Kingdom with the developer to learn about the
"BedZed" carbon-neutral project in London, after which Jin Shan will
be modeled. The Guangzhou Design Institute benefited from its close
relationship with the Guangzhou government, winning a joint-contract
with San Francisco-based Skidmore, Owings and Merrill LLP (the new
U.S. Consulate's architect) to construct a green skyscraper similar
to those in Beijing.

6. (SBU) Shenzhen has also embraced the concept of green building
and is working alongside the Natural Resources Defense Council
towards establishing a green building rating standard as well as a
green building design standard. The rating system will be modeled
after the LEED system. The design standard will be the first of its
kind in China, and will encourage developers to maximize the amount
of green features included in new buildings. The Natural Resources
Defense Council is also working with the Shenzhen government to
develop green community planning and design guidelines as well as
two green building demonstration projects.

Energy Efficiency Remains Top Priority for Government
--------------------------------------------- --------

7. (SBU) At a recent Ministry of Energy sponsored conference on
energy efficient buildings held in Shanghai, the government
announced its intentions to develop a voluntary energy rating system
for buildings and a new mandatory requirement that all new
commercial office buildings must meet more stringent government
office building energy efficiency standards. Lin of the Guangzhou
Design Institute said that he doesn't view the mandatory
requirements as particularly challenging. Instead, he is waiting
for the government to launch the voluntary rating system next year,
which he expects to include specific environmental performance
standards for new building construction. Several developers told us
that they were planning on applying for financial incentives, which
they believe will be included with the new rating system, in order
to help fund future green building projects. Lin also commented
that anticipation of the new standards already seems to be driving
local architecture firms to focus more on energy efficiency in their
designs.

8. (SBU) Professor Xiao Yiqiang, Director of the Green Building
Design Institute at South China University of Technology, pointed
out that the Guangdong provincial government has been proactive in
organizing conferences to promote the development of energy
efficiency in buildings. Guangdong, he said, is well positioned to
develop green technologies for buildings in subtropical climates.
Xiao's research focuses on maximizing energy efficiency in buildings
and his lab has won several government grants for modifying
technologies used in ventilation and insulation. He is also a
recent recipient of a Rockefeller Brothers grant that will be used
to ensure sustainable building design practices are used in the
re-development of one of Guangzhou's historic neighborhoods. Xiao
explained that the government will focus on promoting
"low-technologies" - sun shading to drive away heat and positioning
ventilation in order to reduce heat radiation - in Guangzhou.

GOLDBERG

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