Green-compliant office buildings boom in India

Green-certified office stock in India has increased over 36% since 2019 to about 342 million square feet across the top six cities in India led by the growing focus of developers and occupiers on sustainability, according to a joint report by real estate consultant CBRE and the Confederation of Indian Industry (CII).

Bengaluru tops all Indian cities with the highest green-compliant office buildings, accounting for around 30% of the total pan-India stock. It is followed by Delhi-NCR with 21% and Mumbai with 17% of the total certified office stock in India as of June 2023. Green office stock in Hyderabad accounts for 15%, Chennai 9%, and Pune 8% of the total pan-India stock.

Bangalore, Delhi-NCR, and Mumbai are among the top 3 cities spearheading green-compliant office spaces with a cumulative share of around 68% of the total, green-certified office stock in India as of June 2023, the report says.

Certified green office stock also increased substantially, growing at a Compound Annual Growth Rate (CAGR) of around 7.1% in the last five years, the real estate consultant says.

Enhanced focus on global and domestic Environmental, Social and Governance (ESG) regulations are driving this wave towards modern, premium and sustainable spaces in the medium to long term, it says. Sustainable building features and operations are increasingly becoming developer and occupiers' most sought-after building attributes, it adds.

"The Indian real estate sector has demonstrated remarkable resilience in Jan-Jun '23, despite a global economic slowdown, primarily fuelled by robust domestic demand. In line with most major economies globally, the rate hike cycle in India seems to have come to a halt, with the RBI maintaining the status quo in the past two reviews," says Anshuman Magazine, chairman and CEO, India, South-East Asia, Middle East & Africa, CBRE.

"As the economy gains momentum and the real estate sector thrives, there is a growing emphasis on ESG and its compliance. We anticipate accelerated demand in modern, tech-enabled, and green-compliant spaces in the upcoming quarter. Additionally, we also expect alternative segments such as GCC's, data centres and flexible workspaces to play a pivotal role in bolstering real estate growth," says Magazine.

Top office occupiers across the country have committed to achieving net zero by 2050. To meet this goal, as well as other sustainability metrics such as energy efficiency, water and waste management, occupiers are expected to continue the flight towards better quality assets, increasing their preference towards green-certified buildings, says the CBRE report.

Over the past seven years, green-certified stock in India has almost doubled to about 342 million sq. ft at 9% CAGR, buoyed by the demand for green-compliant properties, it says.

Global and domestic occupiers are prioritising sustainability and have committed to targets with far-reaching impact, the report says. Global and national mandates including the Corporate Sustainability Reporting Directive (CSRD), Enhancement and Standardisation of Climate-related Disclosures, and India's Business Responsibility and Sustainability Reports (BRSR), push occupiers to continue leasing in next-generation, green-certified office spaces.