Hong Kong office tenants and landlords are expected to catch up with the global trend of signing “green” leases amid the rising importance of sustainability in the real estate industry, despite a dearth of such deals so far in the city, according to professional services firm Deloitte.

A green lease is an agreement between a landlord and a tenant to improve the environmental performance of a property, for example, by cutting energy or water use and reducing waste.

Buildings account for about 90 per cent of electricity consumption in Hong Kong

, and around two-thirds of the city’s greenhouse gas emissions come from electricity generation, according to Chief Executive Carrie Lam Cheng Yuet-ngor’s 2021 policy address.

While the concept of green leases is not new, its adoption will take time .

In 2014, the Hong Kong Green Building Council released its “Green Tenancy Driver for Office Buildings” report, which included green leases as a way of encouraging tenant-landlord collaboration to create a sustainable working environment.

That same year, the Hong Kong Science and Technology Parks Corporation released green lease clauses encouraging companies to reduce energy use, including pay-for-use air-conditioning consumption.

Key challenges to the adoption of green leases in Hong Kong include a lease term which may be shorter than the payback period, as well as difficulties of not having a holistic view on the total value on both sides, said Cary Chan, executive director of the building council.

The adoption of green leases could help both landlords and tenants establish their sustainability commitments, as well as ensuring that both parties hit their net-zero carbon targets, said Mark Cameron, JLL’s head of energy and sustainability in the Asia-Pacific. 


Cameron recommended green leases covering agreements to operate efficiently, financial incentive alignments such as cost-recovery provisions, or penalties if certain environmental goals were not met, as well as transparency of resource use.