Sustainability is more than just a buzzword in the real estate industry, which has been a key driver of economic growth, contributing significantly to India’s GDP. At the same time, given its operations, the industry faces several severe challenges, not least climate change.
A McKinsey report states that about 26 percent of greenhouse gases and 37 percent of combustion-related emissions come from the construction and operation of the built environment.
As we come to terms with the permanent impact of climate change while being active players in real estate, we must acknowledge that India has a unique opportunity to be a leading developing economy with revolutionary sustainability practices that can help reduce carbon footprints as well as tap into its own renewable energy sources.
It is encouraging to note that people are increasingly becoming more aware of the kind of homes they want to invest in, and a sustainable or green home is definitely on their minds.
And with the government’s ambitious plan to make India achieve net zero emissions by 2070, the real estate industry has its work cut out, especially with India’s immense potential in installed renewable energy (small hydropower, wind, biomass, waste-to-energy, solar) capacity. A 2021 report by the International Energy Agency impresses upon India’s potential for clean energy and, in particular, the country’s ability to harness solar power to benefit households and businesses.
Real estate players have begun making sustainability a necessary practice, including designing maximum open and green spaces, ensuring residential units invite abundant natural light, dedicated waste and wastewater management, sewage treatment, water conservation, and concerted efforts to reduce carbon emissions. This shift towards sustainability is driven not only by environmental concerns but also by the recognition of its potential to deliver robust returns in the long run.
Sustainability is a growing imperative
India’s real estate demand has seen an exponential rise, and it can be a challenge to meet this in a long-term and sustainable manner. Environmental degradation is a sobering reality that every industry is dealing with, and so sustainable real estate should seek to address this challenge by incorporating eco-friendly practices and technologies into the development, operation, and maintenance of properties.
This includes energy-efficient designs, waste reduction, the use of renewable energy sources, and green building certifications from LEED, IGBC, GRIHA, etc.
Further, when buildings are designed with sustainability in mind, developers aim to minimise waste generation during the construction phase by optimising material use and construction processes. Such practices might even lead to reduced generation of waste, which is then dumped in a manner that does as minimal harm to the environment as possible.
When real estate developers invest in environmental engineering, they can also ensure that their environmental services, such as Water Treatment Plant, Sewage Treatment Plant, Organic Waste Converter, Rainwater Harvesting Treatment, swimming pools, waterbodies, and fountains, are designed in-house.
This will not only ensure better control over the quality of each of these services, but also on-time delivery. Further, capitalising on India’s huge solar power can be extremely advantageous, as it can not only help in reducing carbon footprints but also help meet the demand load of different buildings, whether residential or commercial.
Lower operating costs
One of the immediate benefits of sustainable real estate investment is the reduction in operating costs. Over time, sustainable properties tend to generate significant operational savings.
Features like energy-efficient lighting, heating and cooling systems, water-efficient plumbing systems, efficient waste, and waste water management systems can reduce utility costs substantially. Additionally, sustainable buildings often have longer lifespans and lower maintenance costs.
Sustainable buildings are designed to be more energy-efficient, utilising technologies such as solar panels, LED lighting, and advanced insulation. This includes HVAC systems, which are an essential part of building design.
Efficient design will consider the end utilisation of the building (whether residential or commercial), the expected load, the available earthing arrangement, the provision of air conditioning systems (this means that should an occupant require the installation of an air conditioner in the concerned unit, the provision for said installation is made), the type of electrical supply the building requires (such as single-phase for a normal split unit and three-phase for Variable Refrigerant Flow (VRF)), and ease of maintenance. All of this can be sustainable.
Basements with more breathing space can be made possible with large entry and exit points and by installing windows in appropriate spaces. Well-designed basements can avoid exhaust fans that consume a significant amount of energy, thereby reducing costs.
This is because there are sufficient openings in the basement, which makes ventilation easy. For closed spaces, such as lobbies and staircases, mechanical ventilation can be provided, whereby external or ambient air is supplied through a shaft into said lobby or staircase to make the space breathable.
Value appreciation over time
Sustainable real estate typically involves a higher initial investment due to the incorporation of green technologies and eco-friendly designs. For instance, onsite precast facilities may involve higher capital, but eventually, the value of such a building will only appreciate.
Sustainable properties may even be more resilient to market fluctuations and regulatory changes. As environmental regulations become more stringent, properties that meet these standards are likely to retain their value and desirability.
For instance, a residential project that has adopted advanced surface rainwater harvesting techniques may be able to ensure that the concerned property does not have to rely on external agencies for the supply of water. In addition, as mentioned earlier, well-designed basements can avoid exhaust fans that consume large amounts of energy, thereby reducing costs.
Further, in keeping with the increasing demand for EV vehicles, residential properties are providing increased EV charging points in the common parking lots. Spacious and well-lit units with plenty of natural light and open and green spaces where residents may enjoy themselves and have a relaxing time are attractive qualities that one looks for. Therefore, when a property has certain inbuilt advantages that set it apart, it may invite higher rental income and resale value.
Favourable regulatory landscape
The Indian government has recognised the importance of sustainable real estate and has taken steps to incentivize green building practices. The Leadership in Energy and Environmental Design (LEED), Indian Green Building Council (IGBC) and Green Rating for Integrated Habitat Assessment (GRIHA) are three prominent green building certification systems in India.
These certifications not only promote sustainable practices but also offer various incentives, including tax benefits and expedited approvals. In addition to certifications, the government has introduced policies that encourage renewable energy adoption in real estate projects.
The Solar Rooftop Photovoltaic (PV) System Initiative is a notable example. Under this initiative, developers are encouraged to install solar PV systems on rooftops, reducing energy costs and carbon emissions.
Future prospects
India has come a long way in achieving an enviable balance between economic growth and environmental sustainability. Sustainable real estate developments often incorporate community-centric features such as parks, recreational areas, and other amenities such as daycare and even coworking spaces.
These can contribute to building stronger communities, which in turn positively impact property values and the area's overall desirability. Finally, sustainable real estate investments contribute to reducing India’s carbon footprint, with green buildings consuming less energy and producing less greenhouse gas emissions, which not only benefits the environment but also aligns with India’s climate change mitigation goals.
(Prasanna Venkatesh G is EVP and Head, Plumbing, Fire and Environment, SOBHA Ltd.)