Green building adoption is no longer confined to core real estate segments alone. It is rapidly expanding into multiple asset classes like data centers, retail, hospitality, and healthcare. This shift towards sustainability is driven by the increasing focus on reducing carbon emissions and the growing awareness of the importance of environmental conservation.
Investment Opportunities
- 10-year-old office buildings can be upgraded to achieve energy efficiency and sustainability benefits. This can enhance the overall efficiency and sustainability quotient of the building.
- Relatively newer buildings (<=10 years) of about 80-110 million sq ft Grade A office space hold potential for environmental upgrade with minimal capex requirement. This presents an INR 22-23 billion investment opportunity that can potentially result in 3-4X net cashflow benefit for developers over the remaining asset life.
A Global Perspective
Data centers are amongst the most energy-intensive real estate asset class and contribute significantly to carbon emissions. However, leading operators are increasingly embracing sustainability led by renewable energy usage and enhancements in power & water efficiencies. Across hospitality, retail and healthcare too, there is a strong push for energy-efficient systems, green buildings and sustainable construction materials.
“Green building adoption is no longer confined to core real estate segments alone. It is rapidly expanding into multiple asset classes like data centres, retail, hospitality, and healthcare.”
A Multi-Pronged Approach
Further acceleration of green building adoption in Indian real estate will require a multi-pronged approach involving streamlining of environmental clearances, tax incentives for renewable energy usage, and stringent ESG compliance. This will help create a supportive policy and regulatory framework for green building adoption.
A Changing Narrative
- The growing proportion of green-certified assets in REIT listings signal green building affinity amongst end users, developers and investors alike.
- This changing narrative backed by supportive policy and regulatory frameworks can significantly steer capital towards a sustainable built environment in the country.
The Net-Zero Transition
In fact, the net-zero transition is realizable only through heightened adoption of green buildings across asset classes, supportive government initiatives, real estate stakeholder participation and streamlining of green certifications. This requires a coordinated effort from all stakeholders involved in the real estate sector.
About Colliers
Colliers (NASDAQ, TSX: CIGI) is a leading global diversified professional services company, specializing in commercial real estate services, engineering consultancy and investment management. With operations in 70 countries, our 22,000 enterprising professionals provide exceptional service and expert advice to clients. For nearly 30 years, our experienced leadership – with substantial inside ownership – has consistently delivered approximately 20% compound annual investment returns for shareholders. With annual revenues exceeding $4.5 billion and $99 billion of assets under management, Colliers maximizes the potential of property, infrastructure and real assets to accelerate the success of our clients, investors and people. Learn more at corporate.colliers.com, Twitter @Colliers or LinkedIn.
About CREDAI
The Confederation of Real Estate Developers’ Associations of India (CREDAI) is the apex body of private Real Estate developers in India, established in 1999, with a vision of transforming the landscape of the Indian Real Estate industry and a mandate to pursue the cause of Housing and Habitat.
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