Synopsis
India's commercial real estate sector is increasingly prioritizing sustainability, with a notable rise in demand for certified green buildings, driven largely by GCCs and IT-enabled service firms. Developers are responding by focusing on eco-friendly properties, which offer long-term benefits despite higher initial investments.Key Takeaways
- India's commercial real estate is shifting towards sustainability.
- Demand for green-certified buildings is increasing.
- GCCs and ITeS companies lead the trend.
- Long-term benefits of green buildings outweigh initial costs.
- Investors are increasingly supporting green real estate initiatives.
Mumbai, Feb 25 (NationPress) India’s commercial real estate landscape is undergoing a significant transformation towards sustainability as the appetite for certified green buildings continues to rise, according to a recent report released on Tuesday.
A notable fraction of Grade A office spaces now comprises green-certified properties, fueled by tenants who are increasingly emphasizing environmental compliance and energy efficiency.
The Crisil report identifies that global capability centres (GCCs) and IT/IT-enabled services (ITeS) companies, which represent nearly 50-60 percent of net office leasing, are at the forefront of this shift.
These companies are actively pursuing eco-friendly office environments to align with their environmental, social, and governance (ESG) commitments.
In response, developers are concentrating on constructing sustainable commercial properties to attract tenants and ensure high occupancy rates.
The supply side of the commercial real estate market is also evolving in tandem with this trend. The Crisil Ratings study indicates that virtually all upcoming office spaces in their sample are projected to be green-certified.
This transition underscores the increasing recognition of sustainability within the real estate industry, as noted in the report.
While the initial investment in green buildings is typically higher, the long-term advantages far exceed the costs.
Developers are incorporating energy-efficient systems such as LED lighting, advanced heating and cooling solutions, and technologies for water conservation.
These elements not only lower operational costs but also elevate the overall property value.
Research indicates that green-certified buildings can realize up to 30 percent energy savings and 11 percent water savings compared to conventional structures.
According to Crisil Ratings Director Gautam Shahi, "Green buildings enhance employee experience and yield long-term cost savings for tenants, with reduced energy consumption and water usage achieved through the implementation of energy-efficient technologies and sustainable materials."
This results in significant cuts in utility expenses, enabling tenants to save up to 30-35 percent on energy costs compared to traditional buildings, he added.
Investors are also becoming increasingly instrumental in supporting green initiatives.
Although green-focused funds are still nascent in India, they hold the potential to expedite the advancement of sustainable real estate.
Such funds can offer developers more affordable financing options, enhancing the viability and appeal of green projects.
Furthermore, developers benefit from government incentives that promote the construction of eco-friendly buildings.
Several states provide increased Floor Area Ratio (FAR) and other subsidies, enabling developers to optimize land use and improve project feasibility.
