The commercial real estate sector in India is witnessing a significant increase in the adoption of eco-friendly practices, with a green penetration rate of 61% in the fourth quarter of 2023, as reported by Colliers. This surge in green-certified Grade A office stock reflects a growing commitment among stakeholders to embrace sustainability in the built environment.
Bengaluru and Hyderabad Lead the Way in Sustainable Real Estate
Among the regional leaders in sustainable real estate, Bengaluru and Hyderabad have emerged as frontrunners, demonstrating a 71% and 61% green penetration, respectively. These cities’ leadership highlights a concerted effort to integrate eco-friendly features into their built infrastructure. This underscores the growing importance of sustainability in the commercial real estate sector and sets a positive precedent for other cities to follow.
Growing Momentum towards Sustainability
The trend towards sustainability in India’s commercial real estate sector is mainly fueled by increasing global awareness of climate change and its impacts. In response, stakeholders are voluntarily embracing sustainable practices, marking a departure from traditional norms. One notable trend is the increasing prevalence of sustainability reporting, reflecting a broader commitment to achieving net-zero targets. This shift towards transparency demonstrates the industry’s dedication to align with Environmental, Social, and Governance (ESG) principles.
Rising Demand for Green Leasing
The adoption of green leasing is expected to gain momentum as occupiers and developers seek to align with ESG principles. This growing demand for environmentally sustainable office spaces is driving developers to incorporate green features into their projects. Looking ahead, there is significant potential for green investment opportunities in India’s office market. An estimated 400-460 million square feet of existing office stock can achieve complete E-compliance through retrofitting or minimal capex upgrades in the coming years. Additionally, upcoming commercial developments are set to prioritize E-compliance from inception, indicating a promising trajectory towards sustainability. This concerted effort is projected to propel green-certified Grade A office stock to surpass 550 million square feet, representing 65-70% of the overall office stock in India by 2026.
Benefits of Green Buildings
Developers and stakeholders in the commercial real estate sector are increasingly recognizing the tangible benefits of green buildings. Initiatives for E-upgrades and retrofitting are expected to become more prevalent, offering substantial net cash flow benefits through enhanced energy efficiency and improved occupancy levels. This shift towards a more sustainable built environment in India is gaining momentum and signaling a transformative change towards greener and more environmentally responsible practices within the commercial real estate industry, as noted by experts.
As India’s commercial real estate sector moves towards a more sustainable future, it not only aligns with global efforts to combat climate change but also highlights a growing commitment to responsible development. The increase in green-certified Grade A office stock and the adoption of sustainable practices reflect a paradigm shift that emphasizes the importance of building a greener and more sustainable future for all. By prioritizing sustainability, cities like Bengaluru and Hyderabad are setting an example for others to follow, fostering a more environmentally conscious marketplace in India’s real estate sector.
