India’s real estate sector is experiencing a significant paradigm shift, with sustainability emerging as a core tenet shaping the development and leasing of properties across major urban centres.
A recent comprehensive report jointly published by CREDAI (Confederation of Real Estate Developers’ Associations of India) and Colliers highlights the rapid proliferation of green-certified buildings, indicating a strong commitment towards environmentally responsible practices within the industry. The report reveals that an impressive 66% of Grade A office spaces in the top six Indian cities now hold green certifications, a figure projected to rise further as stakeholders increasingly prioritise ecological considerations. This transition is propelled by evolving tenant preferences for energy-efficient spaces, the tangible benefits of lower operational expenditures, and the growing imperative of regulatory adherence. The CREDAI-Colliers report, aptly titled “Sustainability in Real Estate: Towards a Greener Skyline,” underscores a profound acceleration in the adoption of green building standards across various asset classes. This surge reflects a confluence of factors, including heightened environmental awareness among developers and occupiers, increasing regulatory pressure to adopt sustainable practices, and a growing influx of climate-aligned investments seeking environmentally sound projects.
According to the findings, the total stock of green-certified Grade A office space in India’s six leading cities has reached approximately 503 million square feet as of 2024. Projections indicate that this green footprint is expected to expand to nearly 700 million square feet within the next two to three years, demonstrating the sector’s strong trajectory towards sustainability. Concurrently, an estimated 80-85% of upcoming office leasing activity is anticipated to be concentrated in green-certified buildings, highlighting a clear market preference for spaces that offer both environmental and economic advantages. Shekhar G Patel, President of CREDAI, emphasised the pivotal role of the real estate sector in India’s journey towards a sustainable and low-carbon future. He noted that with a significant proportion of new developments now embracing green certifications, sustainability has become an indispensable element of real estate strategy across all asset types. Patel asserted that the collective efforts of the industry today will define the urban landscape of tomorrow, where ecological responsibility and economic progress are mutually reinforcing.
The adoption of green building practices in India has witnessed a remarkable near-doubling over the past five years. Data from the Indian Green Building Council (IGBC) reveals that the total certified green building footprint in the country reached an impressive 13 billion square feet by 2024. This encompasses a diverse range of projects, including over 2 million certified residential units, 6,500 commercial ventures, and 750 industrial facilities, showcasing the widespread integration of sustainability principles across the built environment. The trend is particularly pronounced within the office sector, where green-certified buildings are not only achieving superior occupancy and rental rates but are rapidly becoming the industry benchmark. In 2024, these sustainable office spaces recorded average occupancy levels ranging between 80-90%, significantly higher than their non-certified counterparts, which averaged between 65-85%. Furthermore, green-certified office buildings commanded a notable rental premium, with Mumbai leading at up to 24%, followed by Chennai at 16%, and Hyderabad at 14%, indicating the tangible economic value of sustainable construction.
Badal Yagnik, Chief Executive Officer of Colliers India, highlighted the robust annual growth of 20% in leasing activity within green-certified buildings in 2024. He projected a continued upward trend, with the proportion of leasing in such buildings expected to rise from the current ~75% to approximately 80-85% in the coming years, underscoring the sustained shift towards sustainable real estate development within the country’s office market. Among India’s major cities, Bengaluru currently leads in terms of sheer volume of green-certified office stock, boasting 158.2 million square feet, representing 73% of its Grade A inventory. Delhi NCR follows with 93.8 million square feet, and Hyderabad with 86.7 million square feet. Interestingly, Hyderabad exhibits the highest penetration rate of green-certified buildings within its Grade A stock at 75%, indicating a deep integration of sustainability principles in its prime office spaces.
Beyond new constructions, the retrofitting of existing, older office infrastructure is emerging as a significant opportunity to further enhance sustainability within the sector. An estimated 355–385 million square feet of office space older than 10 years presents a potential upgrade market, representing an investment opportunity exceeding INR 425 billion. Additionally, newer buildings (less than 10 years old), encompassing 80–110 million square feet, could be upgraded with relatively lower capital expenditure, potentially unlocking value with significant returns over the asset’s lifespan. Vimal Nadar, Senior Director & Head of Research at Colliers India, pointed out that the adoption of green building practices is no longer confined to core real estate segments. It is rapidly expanding into diverse asset classes such as data centres, hospitality, healthcare, and retail. Notably, data centres, being highly energy-intensive, are increasingly being designed with renewable energy integration and enhanced power and water efficiencies to mitigate their environmental impact, aligning with India’s broader net-zero ambitions.
As India progresses on its path towards a net-zero future, the report advocates for stronger policy frameworks, streamlined environmental clearance processes, the provision of tax incentives for green projects, and the implementation of robust ESG (Environmental, Social, and Governance) compliance measures. The increasing proportion of green assets within Real Estate Investment Trusts (REITs) also signals a growing interest among investors in sustainable developments, further solidifying the trend. With a convergence of interests among developers, occupiers, and investors towards climate goals, and supportive policy frameworks gaining traction, India’s real estate sector is strategically positioned to make sustainability a mainstream and value-generating principle for the foreseeable future, contributing significantly to a greener and more resilient urban landscape.
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