Friday, July 12, 2024

India’s Real Estate Sector Embraces Sustainability with 82% of New Grade A Office Supply Green Certified

India’s real estate sector is undergoing a significant shift towards sustainability, as 82% of the new Grade A office supply as of September 2023 is green certified, according to a report by NAREDCO and KPMG. The sector is projected to experience a compounded annual growth rate (CAGR) of 18.7% from 2020 to 2030, with the market size expected to reach USD 1 trillion by 2030. This growth is driven by government initiatives, technological integration, sustainability measures, and increased investments.

Sustainability is influencing green construction practices and energy-efficient designs, while technology is transforming aspects such as smart homes and data-driven insights. Developers are leveraging these trends to create more efficient and cost-effective building designs, offering buyers a more immersive and interactive experience.

Affordable housing schemes and investor-friendly policies have fueled growth in the housing market, while flexible workspaces reflect the evolving needs of modern businesses. Challenges faced by the sector include attracting and retaining investors, securing adequate funding, developing robust infrastructure, and addressing the skill gap.

The real estate sector currently contributes 7.3% to India’s GDP and is projected to become a trillion-dollar market by 2030. Proptech startups have played a significant role in the sector’s growth, with total investments in proptech reaching USD 2.4 billion between January 2021 and March 2023.

The High-Powered Expert Committee (HPEC) projects an increase in investment in urban infrastructure from 0.7% of GDP in 2011-12 to 1.1% by 2031-32. Private equity (PE) investments in the sector are expected to reach USD 59.7 billion by 2047.

Tier II and III cities, such as Surat, Bhubaneshwar, Coimbatore, Vadodara, Indore, Chandigarh, Kochi, and Visakhapatnam, are emerging as significant contributors to the real estate sector. These cities offer attractive investment prospects, with abundant talent pools and affordability.

Areas like fractional ownership and flexible office space are expected to surge by 2025, with predicted values of USD 8.9 billion and about 80 million sq. ft. respectively. PE investments are anticipated to reach USD 59.7 billion by 2047.

Proptech startups in India are focusing on innovative solutions such as AI-driven analytics and blockchain-based transaction platforms. Bengaluru and Hyderabad have become hubs for proptech innovation, hosting a growing community of startups and technology firms.

The industry is adopting renewable energy sources, particularly solar power, aligning with India’s goals for a cleaner and more sustainable energy mix. Circular economy principles are integrated into construction and maintenance practices, promoting the reuse and recycling of materials. Government initiatives like the Green Rating for Integrated Habitat Assessment (GRIHA) and tax incentives further encourage sustainable design practices in the real estate sector.

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