The increasing demand for certified green buildings is reshaping India’s commercial real estate sector, with a significant share of Grade A office demand driven by global capability centres (GCCs) and IT/IT-enabled services (ITeS) firms. These companies, accounting for 50-60% of net office leasing, are prioritising sustainable workspaces to meet environmental compliance requirements and corporate sustainability goals. A CRISIL Ratings study indicates a similar trend in supply, with developers actively constructing green buildings to maintain high occupancy and rental value. While green buildings incur 3-5% higher upfront construction costs than traditional ones, tenants are willing to pay a premium as rentals in India remain globally competitive. Integrating energy-efficient technologies and sustainable materials reduces energy consumption and water usage, leading to long-term cost savings and enhanced employee experiences. Tenants can achieve up to 30-35% savings in energy costs compared with traditional buildings.
GCCs are expected to drive a substantial share of net leasing over the next two years, reinforcing the shift towards sustainable buildings. As multinational corporations increasingly focus on environmental, social, and governance (ESG) targets, developers with more green buildings are positioned for stronger business growth. As of 30 September 2024, 95% of assets rated by CRISIL Ratings had achieved green certification, with nearly 100% of office Real Estate Investment Trust (REIT) stock also certified. Green-focused investment funds, though in the initial stages in India, have the potential to accelerate sustainable real estate growth by providing developers with more diverse and affordable financing options. Additionally, developers benefit from incentives such as increased Floor Area Ratio (FAR) and state-specific subsidies, improving land efficiency and project viability.
Disclaimer: This information has been collected through secondary research and IBEF is not responsible for any errors in the same.