Green Buildings & India's potential for Green Structure

Today, buildings account for almost 50% of the world’s energy, one-sixth of fresh water and one-third of greenhouse emissions. The energy drain is due to the dependence on conventional energy sources for power, coupled with lack of efficient energy utilization.

There is however a positive change being witnessed across societies. Green Building, which makes use of such design and construction features that offer intelligent choices in the use of water, power and recycled material, is the new paradigm in real estate. In the Indian context, as the number of environmentally-committed consumers and companies is growing fast, the real estate sector is also witnessing a sweeping change. What is pushing this trend further is the increasing awareness and concern about the impact of buildings on human health, environment and the economy. Even if half of the existing consumption is saved by efficient building architecture-design and use of green technologies, the resultant benefit on both the operating costs of businesses and the environment will be enormous.

A certified green office complex can assure a 25-50% saving on energy consumption costs, up to 40% reduction in water usage, produces 70% less solid waste and emits 35% less greenhouse gases. A green complex will also recycle water, switch off all electrical appliances when not in use, recycle waste, save and also generate energy, resulting in further bottom line savings. Studies around the world show a pattern of green buildings being able to more easily attract tenants and to command higher rents and sale prices. As green homes are evaluated for a 10-20% premium on rental costs than conventionally built homes, they are also able to hold their price over the long run. A study conducted on life cycle costing on GRIHA rated green buildings in India concluded that “Green buildings are a boon to investors, yielding high returns as compared to investments in conventional buildings or other investments, in a shorter duration’’. The results suggest that an otherwise identical commercial building with an Energy-Star certification will rent for about 3% more per sq. ft.; the difference in effective rent is estimated to be about 6%. The increment to the selling price may be as much as 16%.

The “greening” initiatives of India’s building and construction industry received a boost recently when the country was ranked #3 among a list of the top 10 countries in the world by the US Green Building Council (USGBC) for LEED outside of the US. From a modest beginning of 20,000 sq. ft. in 2001, the country now boasts of 1 billion sq. ft. of green building area. India’s total built-up space of 25 billion sq. ft. is expected to increase to 80 billion sq. ft. by 2030. The share of green buildings in this construction boom could be as high as 20%. The Govt.’s ambitious plan of developing 100 smart cities will also provide the much-needed impetus to scale up the green index.

At the same time, demand for high quality, energy efficient, commercial office and retail spaces by multinationals, IT-ITES sector, health care and services industry, will spur the growth of green projects across India. Improving energy efficiency standards like the Energy Conservation Building Code, stricter government regulations and environmental policies will also create the necessary momentum and ground for the green building movement to prosper. Other incentives such as providing additional floor space, granting transferable development rights, fast tracking approvals and interest subvention can go a long way to promote green buildings.

To meet the anticipated demand for ‘’Green’’ projects, a comprehensive training framework needs to be put in place to nurture a core group of green building professionals with the well laid down target of producing green certified structures. There is also the challenge of ensuring the flow of adequate investments into green building practices and projects. A push on the policy front with tax incentives could bolster the trend, as it has in countries like the UK, the US, Japan, France, South Korea and China. For instance, framing policies that lower the tax component on all aspects of green building construction (design, material, solar or wind and other renewable energy sources plants, rain-water harvesting plants etc.) will surely give an impetus to development of more green projects and green investments in the real estate industry.

About P. Sahel

As Vice Chairman of Lotus Greens, Sahel is responsible for giving directions on overall business strategy and key investments decisions of the firm. Being one of the founding members of Lotus Greens, Sahel has been instrumental in formulating various company policies, setting up systems and processes, and building a strong team of professionals. Prior to Lotus Greens, Sahel worked for more than 16 years in some of India’s largest and most respected real estate companies like Jones Lang LaSalle for 13 years as the Managing Director of the Markets & Solution Development and DLF prior to that. The views expressed are personal

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