65% of grade A office space in India have green-certification

Green Building Certification evaluates the sustainability of buildings, enhancing quality and aligning with UN goals. Over 65% of Grade A office space in India’s top cities is green-certified. Certified buildings command higher premiums, particularly in tech hubs like Bengaluru, Chennai, and Hyderabad.

Image Source: Pixabay

Green Building Certification evaluates and ranks buildings based on sustainability and environmental impact. This process aims to improve building quality, design, and alignment with the United Nations Sustainable Development Goals.

Assessing real estate companies’ performance using environmental, social, and governance (ESG) factors is crucial, as the sector is India’s second-largest employer and responsible for 39% of carbon emissions. The government’s commitment to achieving net-zero emissions by 2070 will significantly shape the real estate market.

According to Vestian Research, over 65% of Grade A office space in India’s top seven cities is green-certified. Out of 1,362 Grade A buildings, 805 (59%) have green certifications, reflecting India’s dedication to sustainable construction.

India’s office market, attracting global occupiers, is seeing developers prioritize international certifications. Leadership in Energy and Environmental Design (LEED) certification holds a 74% share as of Q2 2024. Additionally, 49% of buildings are LEED Gold-certified, and 51% are accredited gold under IGBC.

City-wise analysis shows southern cities (Bengaluru, Chennai, and Hyderabad) account for 58% of India’s green stock. Bengaluru leads with 172 million sq ft of green stock among the top seven cities, while Chennai has the highest percentage (83%) of green stock relative to its total Grade A stock.

Despite having the lowest stock of Grade A office buildings in India, Kolkata boasts 62% of its area as green-certified. Conversely, Pune has the lowest percentage (56%) of green-certified office buildings despite the presence of many multinational corporations.

Grade A office buildings with a built-up area of less than 5 lakh sq ft represent 47% of green-certified buildings. Buildings over 10 lakh sq ft account for 19%, with 90% being green-certified, indicating a strong focus on sustainability. Green certification is rare in buildings under 1 lakh sq ft, reflecting lower sustainability practices among small and medium-scale developers.

Green-certified buildings command a 12% to 14% premium over non-green buildings. Bengaluru leads with a premium of 23-25%, followed by Chennai and Hyderabad at 12-14% and 13-15%, respectively. Mumbai and Pune see an 8-12% premium in rentals for green-certified buildings compared to non-certified areas, underscoring the economic benefits of sustainable development.