HOCHTIEF Half-Year Report January - June 2008

In the Spotlight

Green building market grows and grows: German quality label for sustainability in construction

With energy prices climbing and climate change now a major policy focus, sustainability is increasingly a key issue for the construction industry. The shift in emphasis is at its strongest in the building sector. Buildings account for some 50 percent of total primary resource use. There is massive scope here for saving energy and cutting carbon emissions.

Sustainable construction has long been a key focus at HOCHTIEF. We set standards both in our German home market and internationally with innovative, sustainable buildings. Our capability portfolio spanning the entire project life cycle is tailor made for projects built to sustainable principles. From design and finance to construction and long-term operation, we provide our customers with services that also improve the environmental performance of their projects. Our subsidiaries operate in a tightly integrated network, working jointly to craft the optimum solution – right through to highly efficient energy performance contracting and resource-saving management.

In the USA especially, we had a major hand in the evolution of "green" building over recent years. We have acquired a wealth of positive experience with the US Green Building Council's nationwide LEED rating standard. No fewer than 74 buildings by Turner have been awarded LEED certification to date, including the Hearst Tower in New York City whose construction design, for instance, eliminated the need for a large quantity of steel, and the RAND Corporation headquarters in Santa Monica which features sustainable elements such as natural ventilation.

For some time, we have called for the establishment of a binding standard to provide a similarly reliable and objective rating system based on sustainability criteria for building projects in Germany. Unique among its peers in the German construction industry, HOCHTIEF is a founder-member of the German Sustainable Building Council (DGNB). HOCHTIEF also fills the post of Vice President of DGNB and is represented on DGNB specialist committees. Our joint commitment with the German Federal Ministry of Transport, Building and Urban Affairs, architects, engineers, scientists, realtors and investors has now led to the introduction of a German sustainable building certificate – Germany"s first national eco-standard for buildings. It is due to be awarded for the first time in January 2009.

Unlike certificates in use so far such as LEED, BREEAM and HQE*, this more flexible, second generation certification system also takes into account buildings' value retention and life cycle costs. This makes it the first such system to include economic alongside environmental factors. The certificate therefore rates the overall quality of a project over its entire life cycle.

Certification covers various criteria, with ratings for environmental, economic, sociocultural and social factors, technology, processes and building location. All told, the sustainability certificate takes in some 60 criteria and will be available for civil engineering projects as well as buildings. HOCHTIEF is now involved in work to make the certificate market-ready, with twelve certification criteria currently on practical trial within our Group. These twelve criteria are being applied on a trial basis to a number of sustainably constructed buildings including the Commerzbank tower in Frankfurt am Main built by HOCHTIEF in the 1990s and the WestendDuo complex, likewise in Frankfurt and completed in 2006, which is fitted among other things with a geothermal energy system.

Customers and investors already show strong interest in the new ranking. The certification is awarded in three categories – bronze, silver and gold – and is regarded as reliable, transparent testimony to exceptionally high quality and low operating costs: From experience, energy costs alone can be cut by 20 to 45 percent. Compliance with sustainable building principles boosts the rental appeal, price, resale value and returns on real estate – all factors that are determined to a significant degree by environmental criteria.

Another key reason for HOCHTIEF to promote these objective standards is our rigorous focus on project quality. The standards take us further away from sole emphasis on the initial construction price – after all, good environmental performance can only be achieved if a project benefits from expert, long-term, comprehensive planning. This also maximizes the commercial viability of a building over its entire life cycle.

Green building is a big market: On expert estimates, refurbishing just one fourth of Germany's existing building stock to the standards of the German sustainable building certificate would generate contracts worth EUR 30 billion a year.