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About 80-85% of office leasing is expected in green-certified buildings
About 80-85% of office leasing is expected in green-certified buildings

April 23, 2025

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Green building adoption accelerating across real estate segments, led by energy savings, rental premiums and emission reductions. Green-certified office buildings have higher occupancy levels at 80-90%, commanding rental premium of up to 25%.


India’s real estate sector is undergoing a major transformation, with sustainability emerging as a key cornerstone and growth driver across asset classes. Real estate and construction accounts for nearly 40% of the global carbon emissions and thus built environment in India is increasingly stepping up decarbonization efforts to achieve sustainability goals. Rising environmental awareness, stricter regulations, and sustainability goals are accelerating the pace of green building adoption in the country. The role of real estate sector is particularly vital in embracing sustainability across the value chain and pave way for a carbon-neutral future. Overall, green building footprint across asset classes has nearly doubled over the last five years to reach 13 billion sq ft in 2024. As of 2024, more than 2 million residential dwelling units, 6,500 commercial projects and 750 industrial projects were green-certified and sustainability adoption is likely to pick pace across real estate segments in the coming years.

The CREDAI-Colliers’ report “Sustainability in Real Estate: Towards a Greener Skyline” provides an overview of India's green real estate landscape at the macro-level and highlights increased sustainability adoption across asset classes. In the office segment, two-thirds of Grade A stock in the top six cities was green certified, at 503 million sq ft by the end of 2024. Additionally, with majority of the upcoming commercial developments expected to become sustainable from the outset, the green certified Grade A stock in the country can reach close to 700 million sq ft over the course of next 2-3 years. In the residential segment, heightened green building adoption was indicated by over 2 million green-certified homes and 60+ certified townships (2024). Sustainable houses typically offer tangible benefits in the form of lower utility bills, better air quality, and rental premiums of 5–10%. Green adoption is also gaining ground in industrial, healthcare, retail, hospitality and data center segments. Developers and occupiers are increasingly opting for sustainable, energy-efficient buildings to align with climate targets and net-zero commitments.

66% of Grade A office stock in India is green-certified
As of 2024, green-certified office stock in India stood at about 503 million sq ft, representing 66% of the total Grade A inventory across the top six cities. The ~40% rise in green office stock since the beginning of the ongoing decade reflects developers’ commitment to evolving market scenario and the resultant occupier preferences. Notably, Bengaluru accounted for 31% of India’s green-certified office stock, followed by Delhi NCR (19%) and Hyderabad (17%). In terms of green penetration which is indicated by the share of green-certified buildings in the total Grade A office stock in each city, Hyderabad led other major markets with a penetration rate of 75%, closely followed by Bengaluru with 73% in 2024.  

On the supply front, over the last 5 years (2020-2024) about 80% of the new Grade A office supply has been green-certified. The surge in green building supply has been driven by a clear shift in occupier preferences, with ~75% of leases in 2024 being transacted in green-certified buildings. Overall, leasing volumes in green-certified buildings grew 20% annually to reach close to 50 million sq ft in 2024.  

 

Office market: City-wise Grade A stock and leasing in green-certified buildings (2024)


Green-certified buildings consistently achieve higher occupancy rates and rental premiums
Green-certified buildings are not only a sustainable choice, but they also make a strong business case. As per our analysis, average occupancy levels in Grade A green office buildings were between 80–90%, compared to 65–85% in non-green-certified buildings. Furthermore, green-certified office spaces command significant rental premiums, led by Mumbai at 24% premium and followed by Chennai (16%) & Hyderabad (14%). This growing preference has transformed green certification from a differentiator to a baseline expectation in the Indian office market over time and is expected to become a “must have” in the coming period.

 

City wise rental premium and occupancy levels in green-certified office buildings (2024)

Over the next 3 years, a significant portion of the 170-200 mn sq ft of commercial developments which are in various stages of development will be green-certified. Meanwhile, there remains a major opportunity for retrofitting about 355–385 million sq ft of relatively older office buildings (>10 years), which can enhance the overall efficiency and sustainability quotient. This aging office stock represents an investment opportunity to the tune of INR 425 billion. Additionally, relatively newer buildings (≤10 years) of about 80-110 million sq ft Grade A office space hold potential for environmental upgrade with minimal capex requirement. This presents an INR 22-23 billion investment opportunity that can potentially result in 3-4X net cashflow benefit for developers over the remaining asset life.

Going green becoming an imperative across all the asset classes
Going ahead, further acceleration of green building adoption in Indian real estate will require a multi-pronged approach involving streamlining of environmental clearances, tax incentives for renewable energy usage, and stringent ESG compliance. Interestingly, the growing proportion of green-certified assets in REIT listings signal green building affinity amongst end users, developers and investors alike. This changing narrative backed by supportive policy and regulatory frameworks can significantly steer capital towards a sustainable built environment in the country. In fact, the net-zero transition is realizable only through heightened adoption of green buildings across asset classes, supportive government initiatives, real estate stakeholder participation and streamlining of green certifications.

 


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Colliers India
Sukanya Dasgupta, Head Marketing and Communications - sukanya.dasgupta@colliers.com

Colliers (NASDAQ, TSX: CIGI) is a leading diversified professional services and investment management company. With operations in 66 countries, our 18,000 enterprising professionals work collaboratively to provide expert real estate and investment advice to clients. For more than 28 years, our experienced leadership with significant inside ownership has delivered compound annual investment returns of approximately 20% for shareholders. With annual revenues of $4.5 billion and $98 billion of assets under management, Colliers maximizes the potential of property and real assets to accelerate the success of our clients, our investors, and our people. Learn more at corporate.colliers.com, Twitter @Colliers or LinkedIn.

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