Sustainability Vision in India's Residential Real Estate Market

The housing sector in India is growing rapidly and significantly contributing towards the growth of the economy. As the Indian economy prepares for the upwards trajectory there is an urgent need to acknowledge climate change related threats and adopt green concepts and techniques in this sector, which can aid growth in a sustainable manner. Sustainable practices in the residential sector can help address critical issues such as water conservation, fossil fuel usage reduction in commuting, energy efficiency, and proper disposal of consumer waste. By 2030, the country is expected to have 68 cities with a population of more than one million, 13 cities with more than 4 million people and 6 megacities with populations of 10 million or more, with Mumbai and Delhi among the biggest cities worldwide. (Source: Ministry of Urban development). As the new residential supply in the market increases to cope with the population growth, there must be a strong emphasis on consciously delivering green buildings where resource allocation is planned efficiently. For instance, the residential sector is estimated to consume 24% of the electrical energy which if not monitored can cause higher carbon intensity.?

India’s sustainability targets (As per the Government of India):?

? To achieve net zero greenhouse gas emissions by 2070.?

? Reduction in carbon dioxide emissions by one billion tonnes by 2030.?

? To lower its economy’s carbon intensity by 45 per cent by 2030, relative to 2005 levels.?

? To obtain 50 percent of total energy needs from renewable energy sources by 2030.

Benefits of adapting green building model:

1. Investors are shifting focus to sustainable assets: large real estate funds and private equity companies have defined decarbonation fund targets as a part of their portfolio which makes green building finance viable.?

2. Occupiers increasingly value wellbeing and health: residents are willing to pay higher premiums for real estate spaces with larger green areas, natural lighting, ventilation, cool roofs, and efficient waste haul systems.?

3. Indian Green Building Council (IGBC) Initiatives: IGBC has launched a special ranking system to accredit green buildings promoting developers to look at optimised designs, energy and water conservation measures and green insulation to implement green buildings.

Below are accreditations to adopt sustainable practices:

1. Green Rating for Integrated Habitat Assessment (GRIHA): this system assesses building performance to optimise energy efficiency.

2. Leadership in Energy and Environmental Design (LEED): it evaluates building performance to develop healthy and high-performance green buildings. From 100 certified projects in 2004 to more than 100,000 projects participating today, the LEED certification is the fastest growing sustainability certification. Below is the LEED certification process as defined in its latest release:

3. WELL certification: focuses on occupant’s health and wellness using people-first approach. The WELL certified buildings require recertification every 3 years. It is a points based system wherein Project teams can pursue no more than 12 points per concept and no more than 100 points total across the ten concepts as highlighted below:

Benefits of adapting green building model:

1. Investors are shifting focus to sustainable assets: large real estate funds and private equity companies have defined decarbonation fund targets as a part of their portfolio which makes green building finance viable.?

2. Occupiers increasingly value wellbeing and health: residents are willing to pay higher premiums for real estate spaces with larger green areas, natural lighting, ventilation, cool roofs, and efficient waste haul systems.?

3. Indian Green Building Council (IGBC) Initiatives: IGBC has launched a special ranking system to accredit green buildings promoting developers to look at optimised designs, energy and water conservation measures and green insulation to implement green buildings.

Conclusion:

It is true that adapting green building practices can cause an added cost of 5 to 15 per cent as compared to a conventional building development cost with a payback period of 3-5 years. However, it is to be kept in mind that factors such as design time, building materials, maintenance, operations of a conventional building can result in higher costs in the long run. As per a recent report by Colliers, Bengaluru accounts for the highest share of green buildings followed by Delhi NCR meanwhile, cities like Mumbai and Delhi NCR hold greatest opportunities to make green building upgrades. It is expected for green certifications to be priorities for occupiers, developers, and investors in making real estate decisions for credibility, enhanced value and brand reputation.