World is getting smarter by the day owing to all the technological, economic and environmental advancements happening around us. In the era of Generation X (Born between 1965 to 1979) the focus was on economic development while era of Generation Y (Born between 1980 to 1994) was dominated by Technological and Economic development. But the era of Generation Z (Born between 1995 to 2015) has witnessed an age of balance where troika of Technology-Economics-Environment is being given equal importance. Now a days the fundamentals of the world in which we are living revolve around a healthy existence with customers embracing green infrastructure having low pollution footprint.
A report by World Economic Forum reveals that Real Estate uses more energy as compared to other industries and it is a major contributor to CO₂ emission. This sector is also a poor performer when it comes to addressing environment sustainability. Real Estate Industry product offering have an adverse effect on nature but this is now changing as in last few years there has been a wide demand for Green Real Estate. Consumers are now well aware of negative effects of construction industry on environment and have started shifting their preference to a more eco-friendly infrastructure. In developed economies 40% homes are ‘built green’ as compared to just 2% in 2005. Real Estate is now being driven by a major change in consumer behaviour where people want to embrace real estate that does not compromise with nature. Thoughtful Real estate companies are thriving owing to this as they are transforming their product offerings by launching residential and commercial projects that have minimal impact on surrounding environment and are highly energy efficient.
Indian market have also hailed this shift towards sustainable development of Real estate. Potential of green real estate in India is humongous and will drive substantial growth in coming years. A study says that “55% of real estate projects are likely to be “green” by the year 2021”. Sustainable real estate involves embracing the responsibility of minimizing environmental exploitation by going green and reducing negative environmental impacts. Green buildings provides energy efficiency, minimises water usage, generates less waste and conserves natural resources that eventually leads to healthier environment. Green homes are equipped with smart technologies, energy efficient apparatus (home and kitchen hardware) , LED lighting and solar panels on rooftops. Consumers are now investing in green real estate and several players like Eldeco and Shapoorji Pallonji have launched projects to cater to the ever growing demand for green homes.
Factors that are driving the demand of Greener Homes
- Energy Efficiency
Energy Costs are a major element of Total Cost of Ownership (TCO) of an asset. The concept of Green Homes can substantially reduce energy costs and the TCO of owing an asset. Green Buildings are conceptualized keeping in mind the life of a building before its establishment and the amount of energy it will consume during its lifespan. So there is a clear economic benefit for consumers as well as real estate players to invest in such product offerings.
- Community Acceptance
Sustainable infrastructure is gaining popularity among the consumers as it provides social and ecological benefits. It also brings good reputation for real estate businesses and is important from Brand Building perspective.
- Preferred for Lease
Consumers now prefer green spaces even at higher rents too.
Challenges for Green Real Estate
- Including green strategy in real estate projects comes with a higher upfront cost as compared to conventional projects.
- Green certification adds additional costs and most developers are not willing to invest time and money for the same.
- Demand in Indian market is still at a nascent stage
- Lack of resources and skills proves to be a major headwind to delivering real estate in India
Despite several challenges, the pace of Go Green is considerable in Indian market. While there are certain challenges but benefits outweigh the challenges and consumer behaviour is also tilting favorably. With several government policies for green infrastructure coming into play, the market is expected to boom in the near future. At the end of the day we all are aware of certain negative impacts of real estate on our environment and we all have a responsibility to gravitate towards green real estate in long term.