[ecis2016.org] A shift towards sustainability becomes pertinent today, as eco-consciousness becomes more pronounced, vis-à-vis buyer sentiments
As India pledges to become a low-carbon economy, the real estate industry has a critical role to play in climate transition and accelerating decarbonising efforts. This includes regularly measuring and minimising the environmental footprint of its operations. A shift towards sustainability also becomes pertinent today, as eco-consciousness becomes more pronounced in the buyer sentiment.
The need for eco-centric development
Amid the compounding effects of climate change on communities and natural ecosystems, businesses need to reevaluate their operating models. The real estate sector, which is one of the largest energy consumers in the globe, accounting for approximately 40% consumption, should be at the forefront of this change.
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Developers also need to consider that adopting eco-centricity comes with economic benefits. As weather patterns become erratic over the coming years, it is imperative to build structures that will be resilient to these transitions. This will help minimise the risk of devaluation of properties in the future, due to climatic factors.
A recent pan-India survey by JLL revealed that 87% of tenants in commercial real estate, assess an asset’s carbon footprint before making a lease decision. They are keen to pay a higher lease for green buildings. This trend is gaining prominence within residential realty, as well. Being an eco-responsible asset class is essential, for realty players to ensure sustenance in the long-run.
Government incentives for green buildings
The government has also taken several steps to incentivise and encourage sustainable business practices within real estate. For example, in Andhra Pradesh, buildings which have obtained a green rating from the Indian Green Buildings Council (IGBC) receive 25% subsidy on fixed total capital investment from the Industries and Commerce Department. The Local-Self Government Department of Kerala offers up to 20% reduction in property tax and up to 1% reduction in stamp duty for IGBC-certified properties. In Maharashtra, green buildings can avail of an additional FAR (floor area ratio) of up to 7%. Furthermore, the central government has allocated Rs 19,500 crores in the Union Budget 2022 to boost the manufacturing of solar modules under its flagship production-linked investment (PLI) scheme.
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Innovations in green buildings, to minimise carbon footprint
It is indisputable that the climactic transition will impact how people live and work. Hence, the renewed commitment of developers toward sustainability, can only be effective if it is aligned with the customers’ evolving needs. The heightened focus on health and wellness, especially in the last two years, have resulted in a significant shift in homebuyers’ priorities. A sustainable lifestyle is no longer a peripheral item on the wish-list but a necessity. Hence, real estate players need to align with this new mindset and render eco-centric offerings to thrive in the market.
It is encouraging to note that creating green asset classes is not just desirable but also plausible. Several innovations are already in place that have helped developers to make significant gains in terms of sustainable measures – from the usage of Building Information Modelling (BIM) during construction to employment of energy-efficient HVAC (heating, ventilation and air-conditioning) and using heat-resistant materials to keep the building cool. However, it is important to ensure large-scale adoption of these measures to minimise the carbon footprint of the real estate industry significantly.
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In conclusion, the need of the hour is to take charge of the decarbonising agenda, rather than opting for short-term responsive actions. The decisions taken by the real estate sector today, will greatly influence the future of smart, scalable, and sustainable living tomorrow. While construction of green buildings might entail higher upfront costs, it must not deter real estate players from the long-term environmental and economic benefits that come with it.
(The writer is managing director, Puravankara Ltd)
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