The real estate sector, the second-largest employer in India and a significant contributor to carbon emissions, is witnessing a substantial shift towards sustainability. In line with the government’s push to achieve net zero emissions by 2070, a new report by Vestian Research reveals that over 65% of Grade A office space in India’s top seven cities is now green-certified. This reflects a growing commitment to sustainable construction and environmental responsibility in the industry.
According to Vestian Research, 805 out of 1,362 Grade A buildings across these cities have achieved green certifications. This marks a significant step towards eco-friendly infrastructure as the Indian office market continues to attract global occupiers. Developers are increasingly prioritising international certifications, with LEED (Leadership in Energy and Environmental Design) emerging as the most prevalent, holding a 74% share as of Q2 2024. Notably, 49% of buildings are certified Gold under LEED, and 51% under IGBC (Indian Green Building Council). The report provides a detailed city-wise analysis, highlighting that the southern cities of Bengaluru, Chennai, and Hyderabad contribute 58% of the total green stock in India. Bengaluru leads with 172 million sq ft of green-certified space, while Chennai boasts the highest percentage of green stock, at 83%. Despite having the smallest stock of Grade A office buildings, Kolkata shows a commendable 62% green certification rate. In contrast, Pune has the lowest percentage of green-certified office buildings at 56%.
Grade A office buildings with a built-up area of less than 5 lakh sq ft constitute 47% of the total green-certified buildings. However, buildings with more than 10 lakh sq ft, despite being fewer in number, show a remarkable 90% green certification rate. This underscores the strong focus on sustainability among larger projects, whereas smaller and medium-scale developers and occupiers show less preference for green certification. The report also highlights the financial benefits of green-certified buildings, which command a 12% to 14% premium on average over non-green buildings. This premium rewards developers for their initial investment in sustainable development, as occupiers are willing to pay more for eco-friendly spaces. Bengaluru leads with a rental premium of 23-25%, followed by Chennai and Hyderabad at 12-14% and 13-15%, respectively. Mumbai and Pune developers charge an 8-12% premium for green-certified buildings.
