India's commercial real estate goes green as demand for sustainable offices soars: Report

A significant portion of Grade A office space now consists of green-certified properties, driven by tenants who are increasingly prioritising environmental compliance and energy efficiency.

According to a Crisil report, global capability centres (GCCs) and IT/IT-enabled services (ITeS) companies, which account for nearly 50-60 per cent of net office leasing, are leading this transformation.

These firms are actively seeking eco-friendly office spaces to align with their environmental, social, and governance (ESG) commitments.

Developers, in response, are focusing on building sustainable commercial properties to attract tenants and maintain high occupancy levels.

The supply side of commercial real estate is also adapting to this trend. The study by Crisil Ratings indicates that almost all upcoming office spaces in their sample set are expected to be green-certified.

This shift highlights the growing recognition of sustainability in the real estate sector, the report added.

Although constructing green buildings requires higher initial investments, the long-term benefits outweigh the costs.

Developers are integrating energy-efficient systems such as LED lighting, advanced heating and cooling solutions, and water conservation technologies.

These features not only reduce operational expenses but also enhance the overall value of the property.

Studies have shown that green-certified buildings can achieve up to 30 per cent energy savings and 11 per cent water savings compared to traditional buildings.

"Green buildings provide enhanced employee experience and long-term cost savings to tenants, with lower energy consumption and water usage, due to the integration of energy-efficient technologies and sustainable materials," Crisil Ratings Director, Gautam Shahi said.

This translates to a significant reduction in utility expenses, resulting in tenants saving up to 30-35 per cent in energy costs compared with a traditional building, he added.

Investors are also beginning to play a key role in supporting green projects.

While green-focused funds are still in their early stages in India, they have the potential to accelerate the growth of sustainable real estate.

These funds can provide developers with more affordable financing options, making green projects more feasible and attractive.

Additionally, developers benefit from government incentives that encourage the construction of eco-friendly buildings.

Some states offer increased Floor Area Ratio (FAR) and other subsidies, allowing developers to make better use of available land and improve project viability.