Green Certified Office Buildings Command Premium Rentals: Vestian

New Delhi, Jul 19 (PTI) Office buildings that are green certified command a 12-14 per cent premium in rental values over normal properties, as demand for environment-friendly workspace is high from multi-national companies (MNCs), according to Vestian.

In its latest report 'India Office Market-Sustaining the Sustainability', real estate consultant Vestian has mentioned that green-certified projects command premium in rental values.

"Green-certified buildings command 12-14 per cent premium on average over non-green buildings. This shows that developers benefit from investing more in sustainable development, as they can charge a premium for the same. These buildings are the first choice for large MNCs due to their global agenda to become carbon neutral," the report said.

The consultant noted that these buildings provide sustainable amenities, improved air quality, eco-friendly design and materials, and lower energy consumption.

Bengaluru leads the pack with a premium of 23-25 per cent in rental values of green-certified buildings, with Chennai and Hyderabad following at 12-14 per cent and 13-15 per cent, respectively.

Developers in Mumbai and Pune charge 8-12 per cent premium in rentals for green-certified buildings compared to non-certified areas.

In Delhi-NCR, the green-certified buildings command a 6-8 per cent premium while the number is 3-4 per cent in Kolkata.

"This suggests a strong focus on sustainability in these tech hubs, where companies are willing to pay a premium to promote environmental responsibility and enhance employee well-being," the consultant said.

Out of the total 888.5 million square feet of Grade-A office space stock across seven major cities in the country, Vestian highlighted that 577.7 million square feet or 65 per cent of Grade-A office space is green-certified.

As India's office market attracts global occupiers, developers are increasingly prioritising international certifications.

This trend is reflected in the dominance of LEED certification, which accounts for a remarkable 74 per cent share as of the June 2024 quarter.

Moreover, Gold is the most prominent certification in the Indian office market as 49 per cent of buildings are certified gold under LEED and 51 per cent are accredited gold under IGBC.

"Accessing any real estate company's performance based on ESG becomes crucial as real estate is the 2nd largest employer in India and it accounts for 39 per cent of the carbon emissions," Vestian said.

The government's constant push to achieve net zero emissions by 2070 is likely to play a pivotal role in shaping the real estate market in India, it added.