Indian green building market to double by 2022

India’s green building market is estimated to double by 2022 at 10 billion sq ft, valuing around USD 35-50 billion. According to property consultant ANAROCK, "Though at a nascent stage, India has emerged as one of the leading countries in terms of green buildings’ projects. India ranks only second after the US in terms of the number of green technology projects and built-up area."

It is estimated that more than 4,300 projects with about 4.7 billion sq ft of built-up area had registered for green technology as of September 2017. This is only about 5 per cent of the total buildings in India, and hence there is huge potential for further penetration of green building technology.

Green building is the practice of using processes and technologies which are environment friendly and energy efficient throughout the building’s lifecycle from siting to design, construction, operation, maintenance, renovation and deconstruction.

The report said that the growth of green building in India would be driven by increasing awareness, environmental benefits, government’s support, subsidies and compulsions. The improving affordability is also a factor in the growth. The report also pointed out that countries with more population & limited resources that will to adopt green buildings’ practices faster.

LEED (USA), BREEAM (UK), DGNB (Germany) and CASBEF (Japan) are a few of the key global entities that define, categorise and certify green buildings across different countries. In India, IGBC and GRIHA define the green building norms.

The Economics of Green Buildings

Who pays for Green? This may be one of the questions among all concerned before deciding to go for 'green'! The economics of green buildings favors green upgrades since they can add value to a building. 

According to RREEF Research, green building is fundamentally altering real estate market dynamics – the nature of the product demanded by tenants, constructed by developers, required by governments and favored by capital providers. Many tenants are now willing to pay a premium for space in green buildings because of the lower operating costs, higher worker productivity and other benefits that comes with the superior environmental performance of green buildings.

One of the significant benefit of 'Green Buildings' is the energy saving. But, it may be assumed that this benefit is ultimately enjoyed by the owner of the building and not by the original designer and construction contractor. The experts believe that this is a perceived disconnect between cost and benefit and recent findings say differently:

- Green buildings sell at a higher price. McGraw Hill measured the price premium for the sale of Energy Star ®-labeled buildings to be 12%.3 Another study estimated the premium on LEED-certified buildings at 31%.

- Green buildings command higher rent premiums. By comparing rental agreements involving Energy Star buildings with non-Energy Star leases, researchers at Maastricht University found that efficient buildings command 3.5% higher rents.

- Green buildings are more attractive to tenants. The same study found a 6% higher occupancy rate for Energy Star certified buildings.