News: Green real estate assets availability in India up 37% in last five years: Report-07-03-2022
The past five years specially saw a pronounced push towards green buildings witnessing a 37% increase in the supply of certified buildings, with the addition of about 78 million. sq. ft. of certified stock, when compared with previous five years (2012-2016).
NEW DELHI: Over the past decade, green real estate assets – across top six cities i.e. National Capital Region (NCR), Mumbai, Pune, Hyderabad, Bengaluru and Chennai, grew tremendously, with their share in the total office stock increasing from 24% in 2011 to 31% in 2021, according to a recent report by CBRE. Certified green office stock grew by 177% in the past five years to 212 million sq. ft. in Q3 2021 from under 80 million sq. ft. in 2011.
The past five years specially saw a pronounced push towards green buildings witnessing a 37% increase in the supply of certified buildings, with the addition of about 78 million. sq. ft. of certified stock, when compared with previous five years (2012-2016).
This indicates that the Indian real estate sector is becoming more aware of its responsibility towards ESG (environmental, social, governance) compliant principles and moving rapidly towards imbibing sustainability in its assets.
According to the World Economic Forum, buildings account for nearly 40% of global greenhouse gas emissions and 40% of raw material use. Therefore, assessing and imbibing ESG into real estate and construction is paramount for countries to be able to achieve their sustainability goals.
"Businesses are now increasingly finding it imperative to develop forward-looking strategies that take these factors into account, causing ESG to evolve from a peripheral balance sheet issue to a key component of investment decision-making," said Anshuman Magazine, chairman & CEO - India, South-East Asia, Middle East & Africa.
The report highlights that NCR and Bengaluru are ahead of the curve and together account for about 54% of the total certified office stock of India. While NCR and Hyderabad lead the fray in terms of the share of certified buildings in their respective total stock, with a 44% share each; followed by Chennai at 37%. Meanwhile, Mumbai (16%) and Pune (15%) have a significant potential to improve their share on this parameter.
Cities such as Bengaluru, Mumbai and NCR have a higher proportion of certified stock in their non-SEZ projects whereas Chennai and Pune showed higher share of certified stock in their SEZ projects.
Mumbai leads the market in terms of rental premium in green non-SEZ projects, commanding a 33% rental premium over the non-certified stock; followed by Chennai (31%). Hyderabad and Pune were the laggards, with 11% and 5% premium, respectively, the report added.
Institutional asset owners are ahead of the curve as even though they own only 22% of the total office stock in India, almost 45% of it is green certified. As of Q3 2021, over 35% of the total REIT assets were green certified, which is anticipated to increase significantly owing to the evolving policy and regulatory ecosystem, according to the report.
