India Real Estate Moves Beyond Green Certifications

India’s property market is beginning to treat sustainability as a measure of long-term asset quality, with energy efficiency, climate resilience and operating performance gaining importance alongside location and construction standards. The shift is most visible in Grade A offices, but is also reaching premium housing and could reshape how older buildings compete for tenants, capital and buyers.

Around two-thirds of Grade A office stock across India’s leading markets was green-certified in 2024, according to industry data, with about 503 million sq ft carrying green credentials. Hyderabad and Bengaluru recorded particularly high penetration, at 75% and 73% respectively. About three-quarters of office leasing in 2024 was also in green-certified buildings.  The numbers point to a market where certification is becoming more common, rather than necessarily more valuable on its own. For large occupiers, the next question is increasingly whether buildings deliver measurable reductions in energy and water use, maintain reliable environmental data and can respond to tighter climate requirements. That distinction matters for Indian cities because building performance affects both corporate costs and urban resource demand. Efficient cooling, water recycling, renewable power and better waste systems can reduce pressure on electricity and municipal infrastructure. They can also influence the cost of occupying a building over many years.

The change creates a more difficult market for ageing properties. Buildings that require major upgrades to improve energy performance or resilience may face higher operating and refurbishment costs. Industry analysis has pointed to the possibility of a “brown discount” for assets that become harder to lease, finance or retrofit because their sustainability performance falls behind newer stock.  This makes retrofitting increasingly important. Instead of treating sustainability as a feature reserved for new developments, owners may need to improve existing buildings through efficient cooling systems, building-management technology, water systems, renewable-energy integration and better environmental monitoring. Leasing practices are also likely to change. Green leases can allocate responsibilities between landlords and tenants for energy, water, waste, data sharing and efficiency improvements. Such arrangements can help address a long-standing problem in commercial property: the party paying for an efficiency upgrade is not always the party receiving the immediate financial benefit.

Residential markets present a different demand pattern. Buyers are less likely to prioritise formal ESG reporting, but features such as lower utility consumption, improved ventilation, thermal comfort, water security, EV charging and smart energy management can directly affect household costs and living conditions. For investors and REITs, the issue extends to income stability and future capital expenditure. A sustainable building is not automatically a higher-value asset; its financial relevance depends on actual performance, tenant demand, location and the cost of maintaining or upgrading it. The emerging test for Indian real estate is therefore shifting from whether a building is certified to how efficiently and resiliently it operates. That could make transparent performance data and practical retrofits as important to future property markets as new construction itself. 

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India Real Estate Moves Beyond Green Certifications