Sustainability – a Growth Driver for Real Estate Development in India

Sustainability in real estate is no longer just a ‘good to have’. ESG (Environment, Social & Governance) concerns are driving change in the way we live and work. Certifications and sustainable building practices are quite prevalent in the commercial development sector. With the new generation of homebuyers looking for it in properties, there is bound to be a faster shift to sustainable real estate development. 

Sustainability is gradually becoming a key part of India’s real estate DNA. A majority of developers are leaning towards integrating ESG into every stage of the property lifecycle, from due diligence to acquisitions and leasing to asset management. The future of real estate rides on adopting an ongoing and proactive approach to sustainability and climate risk mitigation strategies.

Benefits for real estate players to adopt ESG

• The future of sustainability looks bright as certified green projects are fetching higher rentals and sales prices than non-certified projects. ESG-compliant buildings make for more attractive investment propositions regarding asset values and rents.
• Ease of doing business as the focus on sustainability in real estate makes going through stringent regulatory processes, getting approvals and licenses smoother.
• Contributing to a reduction in carbon emissions can indirectly help sustainable buildings lower long-term operational costs. Integrating ESG at the initial stage is more cost-effective than retrofitting buildings as per ESG norms.
• ESG compliance improves financial growth and public reputation. A McKinsey survey in 2020 stated that ESG increases shareholder value by strengthening the company’s competitive position in the market.

The global real estate sustainability benchmark has risen with the recent pandemic, degrading air quality index and extreme climatic conditions. Developers invested in offering thoughtfully designed projects with lower carbon footprints will be the preferred choice among homebuyers.

Sustainable real estate development challenges

With the growing urban population, real estate must consider its social, economic and environmental impact on communities and ecosystems. Regarding the future of real estate in India, taking the sustainable development route comes with challenges.

Sustainable real estate development ought to be prioritized in the decision-making stages itself. However, due to a lack of proper awareness, many homebuyers and developers are still clueless about its benefits. 

Moreover, sustainable development calls for a high initial cost of construction due to the expensive materials and advanced technology it requires. A way to overcome this challenge is by incentivizing sustainable development practices and investing in creating readily available and affordable sustainable materials. 

A well-enforced and comprehensive set of regulations ensuring sustainability in real estate is the need of the hour.

Sustainable real estate development opportunities

There is an increasing demand for sustainable buildings, with both homebuyers and tenants actively seeking liveable urban environments with minimal strain on irreplaceable natural resources.

When developers invest in sustainable development, they are likely to reap both long-term and short-term profits. The benefits can be in the form of significant energy cost savings and attracting more customers. The industry can also largely benefit from the availability of funding opportunities such as tax incentives, grants or subsidies for sustainability in real estate. 

Another key opportunity will be bringing about innovation in sustainable real estate development such as researching eco-sensitive building materials or leveraging cloud-based technologies for architectural innovation.

Conclusion

Sustainability is now a mainstay and occupiers and investors unequivocally agree that real estate plays a crucial role in achieving net-zero carbon goals. Sustainable buildings with Indian Green Building Council (IGBC) or LEED certifications are also bound to be frontrunners as investment destinations. 

Many top developers like Brigade Group are integrating various sustainability initiatives into their project design, such as energy and water conservation, rainwater harvesting, renewable energy utilization, provision of car charging points, etc. As one of the few sectors that can contribute towards environment conservation in the short and long run, the real estate sector can spearhead the sustainable revolution.

Discover the exceptional offerings from Brigade Group, including Brigade Calista for a vibrant downtown living experience and excellent connectivity, and Brigade Valencia, offering a relaxed yet spontaneous living experience.

Reference link:

1. https://www.mckinsey.com/capabilities/sustainability/our-insights/the-esg-premium-new-perspectives-on-value-and-performance

Research Links:

1. https://www.pwc.de/en/sustainability/sustainability-in-the-real-estate-industry.html
2. https://www.jll.co.in/en/trends-and-insights/research/sustainable-real-estate-indias-response-to-a-greener-future
3. https://realty.economictimes.indiatimes.com/etanalytics/reports/commercial/indian-real-estate-s-esg-landscape-and-its-progress-to-a-sustainable-future/853
4. https://timesofindia.indiatimes.com/blogs/voices/sustainability-more-than-a-trend-but-a-necessity-in-real-estate/
5. https://www.griclub.org/news/real-estate/the-future-of-sustainability-in-real-estate-in-india_1215
6. https://www.linkedin.com/pulse/sustainable-real-estate-development-india-challenges-avneesh-sood#:~:text=Sustainable%20real%20estate%20development%20in%20India%20presents%20several,sustainable%20building%20materials%2C%20and%20inadequate%20policies%20and%20regulations
7. https://economictimes.indiatimes.com/small-biz/sme-sector/esg-in-real-assets-how-environmental-consideration-is-playing-a-part-in-all-forms-of-decision-making/articleshow/98686903.cms
8. https://www.businessworld.in/article/The-Challenges-And-Dilemma-Of-Sustainable-Development-India-s-Response/03-06-2017-119426/
9. What is sustainable Real Estate Development? - TechBullion
10. https://www.forbes.com/sites/davidcarlin/2022/04/05/40-of-emissions-come-from-real-estate-heres-how-the-sector-can-decarbonize/?sh=1634c96063b7