Delhi-NCR, Bengaluru Have Most 'Green' Office Buildings, Says CBRE

India has seen the stock of certified green office buildings nearly triple over the past decade led by the country's capital.

Delhi-NCR and Bengaluru are "ahead of the curve" and account for 54% of the total green-certified office stock in India, according to a report by the real estate investment firm CBRE Group. Mumbai and Pune have among the lowest number of green-certified office buildings.

Green building certification is given to real estate assets that use resources efficiently and are built more sustainably than conventional buildings. Aspects like whether it uses renewable energy, recycles water or has more natural cooling through ventilation play a role in the certification. Currently, the Leadership in Energy and Environmental Design is the most widely accepted rating.

CBRE analysed data from six Indian cities. As of September 2021, certified green office stock stands at 220 million square feet compared to 80 million square feet in 2011, the report said. Now, almost one in three office assets in India are certified.

NCR and Hyderabad lead when it comes to the share of a city's total office stock that is green-certified. Nearly half of the total office buildings in the two cities are certified. For Mumbai and Pune, it is less than one in five.

Bengaluru, Mumbai and NCR have a higher proportion of certified green real estate in areas outside special economic zones. For Chennai and Pune, most of their stock is in SEZs, it said.

The report said that unlike other countries, green office spaces in Indian cities are present on the peripheries. "In India, city centers are often historical sites dotted with old office stock and residential or retail spaces, which has caused Grade A office spaces to primarily be concentrated in the peripheral locations."

Not only are green-certified office buildings commanding a premium in rents, they are also witnessing lower vacancies than non-certified ones, CBRE said. "Today with ESG (environmental, social and governance norms) coming into play, green certification has also become an important metric for tenant decision-making."

The analysis also suggested that developers find constructing new green-certified buildings more efficient than refurbishing existing stock. It said that as regulatory requirements around ESG tighten, sustainability reporting for real estate assets will gather further steam.

"Markets with a proactive approach and a continuous focus on sustainability and climate risk mitigation strategies will be frontrunners as investment destinations," it said.