Construction Industry News
The real estate sector is a major source of global CO2 emissions, accounting for almost 40 percent of total emissions.
By 2040, approximately two-thirds of the existing building stock is expected to continue contributing to CO2 emissions, defying the Paris Agreement goal of limiting temperature rise to 1.5 degrees.
In light of the above, KPMG in India and Colliers present a report titled 'Sustainable Real Estate: An Opportunity to Benefit', which addresses the rise of sustainable building certifications, the growing influence of informed investors and consumers, and the upcoming expansion global construction industry that highlights the undeniable importance of sustainable practices in today's real estate sector.
There is no doubt that the real estate industry is at a crossroads where adopting sustainable practices is not just an option but a necessity. As a result, they are now integrating sustainable solutions into their operations, at different stages of the project life cycle, and many sustainable buildings are gaining momentum from both the developer and user perspectives.
*By 2023, the office real estate market witnessed a significant shift towards sustainability, recording an 83 percent growth in green office stock compared to 2016.
*In India, 61 percent of the office market was green by 2023, reflecting a growing trend.
*In addition, 94 percent of real estate companies surveyed recognized the potential of green buildings to boost valuation. This increase in interest corresponds to the growing demand for energy-efficient buildings, given the expected doubling of built area worldwide in the next three decades.
*On the supply side, developers are making conscious efforts to create sustainable commercial real estate by following current green building rating systems such as LEED (Leadership in Energy and Environmental Design), Green Rating for Integrated Habitat Assessment ( GRIHA) and WELL building certification.
*India's sustainability goals, which include achieving net zero greenhouse gas emissions by 2070 and sourcing 50 percent of its energy from renewable sources by 2030, underscore the country's commitment to a greener future.
*Currently, green head office penetration is significant in India's metropolitan and Tier 1 cities including Bengaluru, Delhi-NCR, Hyderabad, Mumbai, Chennai and Pune, accounting for 421 million sq ft of office space .
*Approximately 16 to 26 percent of existing older buildings in the six largest cities have room for upgrades to improve building performance.
“India contributes around 7.3 per cent of global emissions, with the real estate sector being one of the largest contributors. Therefore, the importance of sustainability in the sector cannot be underestimated. CO2 emissions could reach 4.48 gigatons by 2030, up from 2.88 gigatons in 2021, but a 22 percent reduction in current emissions could keep them lower in 2030, at 3.48 gigatons. Energy-efficient technologies, such as automated HVAC systems, solar panels, and green roofs, can result in 70 percent less waste and 10 percent savings in operating costs annually. In particular, approximately 56 percent of stakeholders shared the great importance of sustainable buildings, as they can have a 5 to 10 percent higher valuation and high occupancy rates and allow them to be better positioned to succeed in a rapidly changing market. “It is time for the real estate sector to take a leading role in promoting sustainability through buildings that are energy and resource efficient and that generate positive changes for the environment and society as a whole.” says Neeraj Bansal, Partner, Co-Head and Chief Operating Officer – Global India, KPMG in India.
Furthermore, the report highlights that in the top 10 micro office markets in India including Bengaluru ORR, Whitefield and SBD; Hyderabad SBD; Chennai OMR Zone 1, Pune-Kharadi; Delhi NCR-Noida Expressway; and Navi Mumbai account for the largest share of the country's green building stock at 62 percent.
These major micromarkets are largely part of suburban and peripheral areas consisting of newer developments. At the same time, the vacancy rate in green buildings in most of these micromarkets is lower
