Sustainability is no longer a fringe concern in the Indian real estate market; it's a core economic driver, with tangible financial implications for developers, investors, and homebuyers alike. This article, authored by Mr. Khetsi Barot, Co-founder and Director of The Guardians Real Estate Advisory, delves into the financial and market implications of green building certifications like LEED and GRIHA. By examining the cost-benefit analysis, the impact on property values, and the increasing demand for sustainable spaces, Mr. Barot demonstrates how these standards are not just environmentally sound but also represent sound financial strategy in a market increasingly driven by ESG (Environmental, Social, and Governance) considerations.
Read the full article to gain deeper insights into how green certifications are reshaping the Indian real estate landscape.
Why Green Certifications Matter for the Indian Real Estate Market
The growing skyscrapers and rapid urbanisation in India are symbols of ambition, progress, and development in the country. These visual symbols also put India on the global stage as one of the fastest-growing economies. However, in an era where progress is measured not just by height but by harmony with nature, sustainable development has emerged as a true benchmark of success.
This shift in perspective has positioned sustainability at the centre of modern real estate development. The major challenge today is to construct urban areas without harming nature. Green buildings are one way to lead the way in energy-efficient and resource-efficient construction. India’s growth model is being redefined—from renewable energy like solar and wind to green technologies. The question is no longer, how high can we build? But how responsibly can we grow?
As the focus on sustainability intensifies, certifications such as LEED (Leadership in Energy and Environmental Design) and GRIHA (Green Rating for Integrated Habitat Assessment) are gaining major momentum in the Indian real estate market. These certifications not only enhance the reliability of properties but also amplify their market value by supporting energy-efficient and resource-efficient construction methods. While LEED is recognised internationally, GRIHA has been personalised to India’s unique climate, making it a key tool for local development.
According to reports, the green building market in India is poised for further growth, with a projected CAGR of 5% between 2023 and 2028. Last year, the market was valued at $30.24 billion, underscoring the increasing demand for sustainable real estate solutions. This shift towards green buildings marks a significant step in aligning urban development with environmental stewardship.
Decoding GRIHA and LEED Certifications
Before looking into the details of GRIHA and LEED, it is important to know that these certifications are crucial for the future of the real estate industry. These certifications will help to evaluate buildings in terms of their environmental and sustainability aspects.
GRIHA is internationally recognised by the United Nations Framework Convention on Climate Change as a tool that helps reduce carbon footprints and mitigate the climate change crisis. It is credited as a pioneering tool in this effort. The GRIHA rating system evaluates projects across 11 categories: Sustainable Site Planning, Construction Management, Energy Efficiency, Occupant Comfort, Water Management, Solid Waste Management, Sustainable Building Materials, Lifecycle Costing, Socio-Economic Strategies, Performance Metering and Monitoring, and Innovation. Each category has subcategories. After developers submit their documentation, the council thoroughly reviews and assigns points to each subcategory. These points are then totalled, and the building is rated based on the sum of the total points.
Similarly, the focus points of LEED certification are similar to GRIHA. Increasing productivity of living of the occupants and efficient use of resources are key. LEED certification is recognised by almost 165 countries, including India. Depending on the points the building scores, it is awarded basic, silver, gold, or platinum-level certifications.
Stakeholder Benefits and Buyer Traction in Property Markets
GRIHA and LEED-certified properties offer several benefits for homebuyers. Environmentally conscious buyers are increasingly choosing green-certified properties as part of their efforts to combat climate change. These also tend to have less maintenance cost due to the durable craftsmanship of the materials used. Green buildings give first priority to the well-being of their occupants by incorporating improved IAQ(Indoor Air Quality), natural lighting, temperature, and availability of greenery. These factors collectively draw homebuyers toward green buildings, making them more willing to pay a premium or higher rent, viewing it as an investment not just in property, but in a healthier, more sustainable future for themselves and the planet. Even investors consider green certifications an important factor while making decisions, because green certifications assure higher resale value.
Navigating the Challenges
India faces challenges in adopting sustainability due to limited awareness and high costs associated with green technologies and certifications. Developers and buyers are often hesitant because of the upfront expenses, despite potential long-term benefits. Infrastructure issues like poor waste management and water shortages add to the difficulty. Enforcing regulations and mainstreaming sustainable practices remain critical hurdles, as the shift towards eco-friendly solutions requires consistent education, investment, and government support to make a significant impact.
Conclusion
As India grows, it’s clear that we need to focus on building sustainable communities. This means not just building but designing spaces that are eco-friendly, healthy, and mindful of the environment. Certifications like GRIHA and LEED help guide this process by setting standards for greener buildings, but more work is needed. Policymakers should offer incentives and streamline regulations to make green buildings more available and affordable. Construction companies should embrace advanced technologies to transform construction methods. Education also plays a critical role in driving this shift by raising awareness about sustainable living. Together, these efforts can make a way for the future where India's urban growth is both prosperous and planet-friendly, creating a lasting legacy of responsible development.
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