Green buildings, a growing opportunity for developers

Thanks to a growing awareness of the green building concept in the country, about 110 million sq ft of green space is expected to be developed over the next few years, says Greenomics a research report from Jones Lang LaSalle Meghraj (JLLM). Both developers and occupiers have a great opportunity to promote green buildings with the sector expected to develop about 200 million sq ft of commercial space and 45 million sq ft of retail space in the next three-four years.

The green building movement across the globe has catalysed the emergence of various green rating systems such as the Leadership in Environment and Energy Design (LEED). Though developers and occupiers are aware of the benefits of the concept, the extra investment that needs to be made for such developments is holding them back, especially in an unstable real estate market scenario. Besides, there are difficulties in sourcing green building material and sustainability consultants too, says Mr Anuj Puri, Chairman and Country Head, JLLM.

Mr Sunil Mantri, Chairman, Sunil Mantri Realty Ltd, points out that not many customers would want to incur additional expenses, as the cost of developing LEED-rated buildings is substantially higher than that of a conventional building. “For example, a silver-rated building would cost at least Rs 100 per sq ft more, while it is about Rs 200 per sq ft for Gold-rated ones, and about Rs 300 per sq ft for the Platinum rating,” he says.
Cost-benefit analysis

One of the major findings of the report that focuses on cost-benefit analysis, is that a green building aiming for LEED – GOLD certification can recover its additional costs in a payback period of two-three years.

The report also says that sustainable development has a triple impact on bottom-line results: benefits accrue from operational cost savings, reduced carbon emission credits and high rentals or capital values. “Striking a balance between the environmental, social and economic performance is the key to achieving sustainable outcomes,” says Mr Kumar Ramaiah, Head of Energy and Sustainability Services, JLLM.

Those championing the cause of sustainability like Mr Chandrashekar Hariharan, CEO, Biodiversity Conservation (India) Ltd (BCIL), a company engaged in alternate technologies that also develops eco-friendly homes, feels that an increase in any area of the cost of these buildings will only be for features that are added “because it either gives you comfort or luxury or the additional investment reduces the running cost of the building over the long-term, with a defined payback, with such savings as will emerge from installations.”

For example, Rs 30,000 invested on a solar heating system would help save as much as Rs 6,000 a year. “Once the payback is achieved in five years, the savings on energy bills is forever. How to buy the right product, with efficiency and reliability, is knowledge that a builder or individual can learn only from professionals,” he adds.

In fact, BCIL recently launched the Green Idea Lab, to provide design and consulting services to individuals, corporates, builders and SME industries to develop sustainable communities or achieve energy efficiencies.

Growing awareness on the benefits of green buildings among international and domestic occupiers is decisively driving the demand for green buildings, the report says. Between early May this year and now, over 90 million sq ft of residential projects have put in their applications for green certification with the CII India Green Business Council (IGBC). As for commercial spaces, over the last four years, builders have applied for green certification of up to 240 million sq ft.

The sharp rise in interest is driven by three factors — a conviction in industry that it is do-able, scalability; the substantial saving that a green building can achieve in terms of the lower running cost of the building; and the brand advantage that a green building offers for a customer in a fiercely competitive marketplace.