India’s Commercial Real Estate Goes Green: Rising Demand for Sustainable Workspaces
"India's commercial real estate sector is embracing sustainability, with rising demand for green-certified workspaces. Discover how businesses and developers are prioritizing eco-friendly office spaces to meet ESG goals, reduce costs, and enhance employee well-being."
New Delhi: India’s commercial real estate (CRE) sector is undergoing a significant transformation as green-certified buildings gain momentum.
With an increasing focus on sustainability, energy efficiency, and environmental responsibility, businesses are prioritizing eco-friendly office spaces to meet evolving regulatory standards and corporate sustainability goals.
Surging Demand for Green Office Spaces
According to a report by Crisil Ratings, companies in Global Capability Centres (GCCs) and IT/IT-enabled services (ITeS) sectors, which contribute to 50-60% of net office leasing, are leading the push for sustainable commercial buildings.
These organizations are aligning their real estate choices with Environmental, Social, and Governance (ESG) metrics, ensuring that their workplaces meet stringent sustainability standards.
Developers Embrace Green Construction
To cater to this growing demand, real estate developers are making sustainability a top priority. Most Grade A office spaces under construction are designed to be green-certified, incorporating energy-efficient technologies, sustainable materials, and eco-friendly architectural practices.
A Crisil Ratings study highlights that nearly all upcoming office projects in their research sample qualify as green buildings.
Higher Construction Costs, Long-Term Savings
While green buildings require an additional 3-5% investment compared to conventional office spaces, they deliver substantial cost savings in the long run. The integration of renewable energy sources, water conservation systems, and advanced insulation materials significantly reduces energy consumption and operational costs.
Gautam Shahi, Director at Crisil Ratings, explains the financial viability of sustainable buildings:
“Though green buildings typically incur a 3-5% higher upfront construction cost compared with traditional buildings, tenants are willing to pay a slight premium as rentals in India remain globally competitive.”
He further emphasizes the economic benefits for tenants:
“Green-certified office spaces enhance the overall employee experience and generate long-term cost savings for businesses. Lower energy and water consumption can lead to up to 30-35% reductions in utility costs, making them an attractive investment for corporate tenants.”
GCCs and MNCs Drive the Green Revolution
With GCCs projected to drive a significant portion of new office leasing over the next two years, developers are racing to incorporate sustainability-focused features into their projects. Pranav Shandil, Associate Director at Crisil Ratings, underscores this growing trend:
“As this movement towards sustainable offices continues, developers with a higher proportion of green-certified buildings will see better business risk profiles. Multinational corporations are increasingly choosing environmentally responsible workspaces, even if it means paying slightly higher rentals.”
He also notes that this shift benefits both tenants and developers by enhancing their ESG scores, which are critical in today’s global investment climate.
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Investment in Green-Focused Funds & Government Incentives
Although green-focused investment funds are still in their early stages in India, they hold immense potential to accelerate the growth of eco-friendly commercial properties. These funds could facilitate easier access to financing for developers, making green projects more viable and attractive.
Additionally, state governments are offering multiple incentives to encourage sustainable commercial real estate development. Some key incentives include:
- Increased Floor Area Ratio (FAR): Allowing developers to build larger structures while maintaining eco-friendly design standards.
- Subsidies and Tax Benefits: Developers opting for green-certified construction can avail themselves of various financial benefits to offset higher initial costs.
- Fast-Track Approvals: Authorities are expediting building approvals for projects that meet green certification requirements.
The Future of Sustainable Commercial Real Estate in India
With the rising adoption of green building certifications, India’s commercial real estate sector is on a transformative journey. The increasing preference for energy-efficient office spaces by GCCs, IT firms, and multinational corporations is reshaping leasing trends and making sustainability a key differentiator in the market.
Developers who prioritize sustainability will likely gain a competitive edge, attract high-value tenants, and contribute to India’s broader environmental goals.
As more companies embrace eco-conscious workspaces, India’s real estate industry is set to play a crucial role in achieving a greener, more sustainable future.
