Realty firms change course as demand for greener projects grows | The Financial Express

Realty firms change course as demand for greener projects grows

With the new-age customers becoming more aware of their carbon footprint, companies across the spectrum are now changing course to stay relevant.

Realty firms change course as demand for greener projects grows
Pricing of the projects will also not be significantly different. (Representational image)

The adherence to sustainability agenda is at a nascent stage in the real estate sector. Commercial buildings which are resource guzzlers and contributors to carbon emissions are increasingly adhering to the global standards, given that the lessees — especially global multinationals — insist on it. However, in the residential space, the awareness is restricted only to a few organised players.

With the new-age customers becoming more aware of their carbon footprint, companies across the spectrum are now changing course to stay relevant. Some of the prominent developers — Lodha, Godrej Properties and Mahindra Lifespaces — have taken steps on this front on the residential side particularly and are increasingly launching projects which adhere to the international ecofriendly standards put forth by the Indian Green Building Council (IGBC).

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According to developers, the cost of construction for green buildings is around 5-7% higher compared with traditional developments, and in terms of pricing to customers too, it is not prohibitive. Additionally, they claim over the life cycle of the project, the savings in terms of energy, water and emissions will make up for more than what is paid upfront.

“A green building typically costs 2-7% more for the cost of construction which could be deemed negligible in the context of a return over its use for lower energy consumption, water use, emissions, waste generate, etc. Costs or pricing for sustainability should be viewed with a life cycle perspective, much like an efficient automobile where its capital price is assessed with its operating and efficiency costs,” Anubhav Gupta, chief ESG, sustainability and CSR officer, Godrej Properties, told FE.

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At Godrej Properties, the company has committed to a minimum of IGBC silver rating for all its developments and is now moving the target to at least one gold or platinum rated project per zone. As part of its goals, the company is ensuring 65-70% of the raw materials being obtained within a distance of 400-500 km of the project.

Carbon neutrality and net zero emissions will dominate the business at Mahindra Lifespaces going forward. All the new buildings to be built by Mahindra 2030 onwards will have net zero emissions. In April, it launched India’s first ‘Net Zero Energy’ residential project called Mahindra Eden in Bengaluru. According to the firm, the design and materials used in it are in a manner that will lower the energy consumption by 33%. Arvind Subramanian, managing director and CEO, Mahindra Lifespaces, said going forward, all the sites that the company chooses for projects will be evaluated on the basis of whether it will be sustainable development.

Subramanian also said the move towards sustainability will not be cost-prohibitive and the savings made will cover the capital cost. “There was a fear that moving to net zero energy will be prohibitive from the cost perspective, but as it turns out the cost will just be 5% higher from a construction perspective. Also, the payback period on each of these elements is 2-3 years. The energy savings we get from the hybrid wind-solar system will pay for the capital cost in two and a half years,” he said.

Pricing of the projects will also not be significantly different. He added the customer choices are also shifting. “We are seeing across categories — EVs for example and two-wheelers, where customers are saying this actually matters and I am willing to make my consumption choices based on sustainable products,” he said.

Earlier this year, Lodha announced the adoption of IGBC Green Building Ratings for its entire residential portfolio in the Mumbai Metropolitan Region and Pune, amounting to over 25 million sq ft. However, the awareness is gradually moving to more local developers as well. Hyderabad-based Aparna Constructions is designing houses to maximise natural light, energy, airflow, and resident well-being with at least 70% open spaces at each project site. Director Rakesh Reddy said: “Green buildings are always in demand for their sustainable components that lower maintenance costs,” he said.

“With increased scrutiny on ESG, commercial real estate stakeholders need to understand, improve, and leverage their performance on this front…The essential question is no longer what to do, but rather how to do it,” said Anshuman Magazine, divisional president (India, South East Asia, Middle East & Africa), CBRE.

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First published on: 09-11-2022 at 09:52 IST