Is Indian real estate looking at a green future?
There is a noticeable shift among
present-day consumers to lead a sustainable lifestyle. Hence, developers too are increasingly
adopting eco-conscious real estate solutions
Sustainability today has now become a key consideration
while looking for homes or office spaces, with buyers preferring spaces that
focus on net-zero carbon measures, health and well-being, and
socio-environmental awareness. The “Emissions
Gap Report 2022: The Closing Window” by the UNEP suggests remedial action on
six causes of greenhouse emissions, one of which is the built environment. India’s real estate industry is expected to
contribute 13 percent to the GDP by 2025 and become a 1 trillion market by
2030, according to the IBEF. More than
half of India’s 2030 building stock is yet to be built. There is enough time and every reason to
ensure that this construction is green.
Most of India’s leading real estate developers are
incorporating sustainability measures in their projects, focusing on both,
asset performance and customer wellness.
Great attention is being paid to air, water, light, and comfort to
ensure an enriching living experience at all levels – physical, mental, and
emotional. There is a strong growing
focus on using environment–friendly materials during construction, and
renewable energy throughout the building’s lifecycle. More and more projects are employing circularity
concepts such as “reduce, reuse, and recycle.” To augment their sustainability
efforts, developers are working towards green certifications and platforms.
The report card
A report by CBRE earlier last year stated that nearly a
third of the total office spaces in India’s six major cities are green–certified. The green office stock grew
from less than 80 million sq ft in 2011 to 212 million sq ft in 2021,
increasing its share in the total office
stock from 24 percent to 31 percent.
When it comes to LEED, India ranks third worldwide in the number of LEED–certified buildings. The concept of
green buildings is catching fast in the residential segment as well.
Green certifications for healthy life
and healthy valuations
The environmental and cost benefits of green certifications
are well documented. The environmental impact of buildings built
as per LEED standards is much lower than those of conventional buildings. Green buildings reduce carbon dioxide
emissions, optimise energy and water consumption, generate less waste, score
high on energy performance metrics, and provide healthier living spaces. Moreover, properties with high sustainability
ratings are attractive to investors, lenders, and fund managers. Sustainable projects reflect the developer’s
commitment to uphold environmental, social, and governance (ESG) principles – an
important consideration nowadays while making tenancy decisions. An analysis of LEED–certified buildings
delivered between 2010 and 2020 revealed that these properties consistently yielded more rent than non–certified spaces and witnessed comparatively less vacancy. Green homes, too, yield significantly better
returns on investment in terms of the higher selling price or rental value;
rebates on property taxes; better health and well–being; and savings on
electricity, water, and maintenance.
Unsurprisingly, green–certified projects are preferred by value – and
– environment – conscious consumers and corporations.
The three Real
Estate Investment Trusts (REITs) launched so far in India too, place a lot of
emphasis on sustainability aspects.
Meanwhile, state governments and municipalities are incentivizing green projects by offering fast–track
environmental clearance; extra ground coverage; discounts in property tax;
additional Floor Area Ratio (FAR); financial assistance, and more. Environmental regulations stipulate rainwater
harvesting, organic waste converters, and solar heating and lighting in most
new projects. The stage is nicely set
for the real estate sector to help India meet its sustainability goals in the
years and decades ahead.
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