In a significant shift towards sustainability, India’s commercial real estate (CRE) sector is seeing a growing demand for green-certified buildings. This transformation is primarily driven by Global Capability Centres (GCCs) and IT/IT-enabled services (ITeS) companies, which make up over half of net office leasing, as these entities emphasize environmentally friendly workplaces to align with compliance and sustainability objectives, according to Crisil Ratings.
Developers are stepping up to this challenge, with a trend towards larger, Grade A green-certified office spaces. Crisil Ratings’ study reveals that virtually every new office space in their analyzed sample is expected to earn green certification. Although these green buildings incur a construction cost 3-5% higher than traditional structures, they promise superior long-term cost efficiency.
Gautam Shahi, Director at Crisil Ratings, noted, “Even though green buildings require a slightly higher initial investment, tenants are willing to pay more, as rental costs in India remain competitive globally.” He further explained that green buildings deliver better employee experiences and cost savings due to reduced energy and water consumption, equipped with energy-efficient technologies. These savings can cut utility expenses up to 30-35% compared to traditional buildings.
Global Capability Centres are expected to continue playing a pivotal role in net leasing over the next couple of years, pushing developers to incorporate sustainability into their offerings to entice multinational clients. “As this green shift progresses,” said Pranav Shandil, Associate Director at Crisil Ratings, “developers with more green buildings will achieve improved business risk profiles, drawing multinational tenants despite marginally higher rental prices. This move towards sustainability aids both tenants and developers in enhancing their ESG metrics.”
India’s green-focused investment funds are still nascent but carry the potential to propel eco-friendly commercial spaces development faster. These funds could ease access to finance for developers, making green projects more feasible. Additionally, states offer incentives like increased Floor Area Ratio (FAR) and subsidies to further promote sustainable construction. (ANI)
(With inputs from agencies.)