Green-certified buildings gain traction in India
The demand for green-certified buildings, which are environmentally responsible and resource-efficient, is on the rise in India. During the April-June quarter of 2024, 12.9 million square feet (msf) of office space was leased in green-certified buildings across the top six cities in India. This represents a 24% increase compared to the same quarter in 2023 and accounts for 82% of all total office leasing during the quarter.
Several green certifications are available in the Indian market, including Leadership in Energy and Environmental Design (LEED) and Green Rating for Integrated Habitat Assessment (GRIHA). These certifications validate buildings as "green" by assessing various parameters, including energy consumption, waste generation, and alignment of design with health and wellness aspects.
Real estate developers are increasingly aligning their offerings with global sustainability standards, offering various tangible benefits to their tenants, including lower operational costs, improved indoor air quality, and enhanced employee productivity.
The highest leasing of green-certified office buildings since January 2023 was witnessed in Bengaluru at 16.5 msf, followed by Delhi NCR at 11.8 msf and Chennai at 11.2 msf. The technology sector accounted for the highest share, about 27%, in the cumulative space taken up in green-certified buildings since January 2023.
The increased interest of occupiers in green buildings is also due to the Securities and Exchange Board of India's mandatory sustainability reporting norm. The top 1000 listed companies in India (by market cap) must disclose their Environmental, Social, and Governance-related information as a mandatory process.
With the rise in demand for green-certified buildings, their supply is also witnessing an uptick. As of June 2024, about 67% of the Grade A office buildings in India were green-certified. Since January 2023, green buildings have accounted for 78% of all office space supply in the country.
The consultancy predicted that in the next two to three years, the majority of the over 150 msf Grade A office developments in various stages of construction across the six major cities are likely to be green-certified. This would increase the total Grade A green stock to over 600 msf in India.
Developers are also retrofitting aging office stock and incorporating sustainable elements in overall building design and construction. About 300-350 msf of commercial building stock older than 10 years hold the potential to get refurbished in the next few years and add to the green-certified office stock of the country.