As the world grapples with rising temperatures, extreme weather events, and the urgent need to reduce carbon emissions, real estate has emerged as a critical player in the fight against climate change. Currently, a mere 10% of India’s total buildings are certified green. In a scenario where the real estate and construction sector accounts for 36% of the world’s total energy consumption and is responsible for nearly 40% of greenhouse gas emissions, this is a wake-up call to an industry that is a vital part of the solution.

In contrast to typical Indian buildings, those certified by the Indian Green Building Council (IGBC) lead to water and energy savings of approximately 20-30% and 40-50%, respectively. As every drop of water and every unit of energy saved is a step closer to a sustainable future, green buildings stand as a ray of hope in the battle against climate change.

Sustainable development in the real estate sector covers a range of practices aimed at reducing the environmental impact of construction and operation. This includes energy-efficient building designs, the use of renewable materials, and the adoption of green technologies for heating, cooling, and waste management.

Measures and initiatives like sewage treatment plants, rainwater harvesting, high-reflective index, solar photovoltaic technology, double glazing units and regenerative elevators with ReGen are critical in building a sustainable project. These parameters collectively signify a transformative journey in real estate development in India, benefiting both the environment and society at large.

Also Read: Festive Season Fervour: Why buying a new car makes more sense now

Why Financiers Prefer Sustainable Property Development?

The shift towards sustainable real estate development in India is being driven by a mix of factors. Most importantly, financing institutions, including banks and non-banking financial companies (NBFCs), are increasingly favouring such projects for several reasons:

Risk Mitigation

Sustainable real estate projects have an inherent advantage in risk management. By design, they are often more resilient to environmental shocks. This reduces the risk profile for financiers, making such projects an increasingly attractive investment option. In a world where climate change is bringing unpredictable challenges, these investments align perfectly with the need for a more secure portfolio.

Regulatory Compliance

Stricter environmental regulations are rapidly coming into play across the globe, and India is no exception. Sustainable projects are more likely to align with both current and anticipated future legal requirements. This alignment significantly reduces the risk of regulatory penalties and project delays. Both developers and financiers recognize that compliance isn’t just about avoiding fines; it’s about future-proofing investments.

Market Demand

Consumer preferences are evolving, and there’s a strong demand for eco-friendly and energy-efficient properties. These buildings are not just responsible; they are also highly marketable. The appeal translates into better rental yields and resale values, giving investors a competitive edge in metro cities like Delhi, Mumbai, Bengaluru and promising markets like Rajasthan, Goa etc. This shift in market sentiment underscores the foresight of financiers who embrace sustainability as a driving force behind real estate investments.

Long-Term Cost Savings

Green buildings are renowned for their cost-efficiency over the long run. The initial investment in sustainable features often pays off handsomely through lower operational costs. Reduced energy consumption, efficient waste management, and minimal maintenance expenses collectively contribute to higher returns on investment over the life of the property. Forward-thinking financiers understand that sustainability is not just about ethics; it’s about sound financial sense.

Way Forward

The tides are undeniably shifting in the Indian real estate market, with stakeholders increasingly favouring sustainable property development. The Indian Green Building market is expected to achieve a valuation of approximately $30-40 billion by the year 2030.

This growth aligns with global trends towards environmental consciousness and responsible investing. For India, it presents an opportunity to not only create more environmentally friendly and resilient cities but also to attract stakeholders that prioritize sustainability.

(By Amrita Gupta, Director, Manglam Group, and Founder & President, CREDAI Rajasthan Women’s Wing. Views are personal)