The advent of asset classes, such as real estate investment trusts (REITs), has spurred investments in sustainable assets.
The global community is at a defining moment in its journey towards a sustainable future and the actions we take today will leave a profound and everlasting impact on our planet for generations to come. While climate change poses a significant challenge, it also presents an opportunity for us to innovate and create a better world. Delivering value to our stakeholders and being sustainable are not mutually exclusive. We can prioritise sustainability while still delivering value to our stakeholders, and this Earth Day, leaders from around the world are committing to this important cause. As the technology revolution continues, the real estate industry has the opportunity to lead the way towards sustainable development.
The Indian real estate market is growing at a rapid pace. It is expected to increase to $ 1 trillion in 2030 from $ 200 million in 2021, making it the third largest globally. Rapid urbanisation, incentivised industrialisation, digitalisation, a stable regulatory climate and a services boom will drive the demand for commercial real estate in the years to come.
The advent of asset classes, such as real estate investment trusts (REITs), has spurred investments in sustainable assets. These investments prioritise energy efficiency, water and waste reduction, and renewable energy solutions, both on-site and off-site. As a result, the real estate industry has undergone a significant transformation in recent years, with innovations driving the way buildings are designed and operated.
One such innovation is the integration of automation and artificial intelligence, enabling the development of smart designs, technologies, and buildings. These intuitive structures can now respond to the needs of tenants, improving their overall experience and satisfaction.
Sustainability-certified buildings in the Asia Pacific region command higher rental premiums, as 70 per cent of corporations are willing to pay more for them. Companies currently leasing green buildings pay a premium of 7-10 per cent, setting a benchmark for future green leasing trends. This trend highlights the importance of considering a project's impact on surrounding communities and presents a lucrative opportunity for real estate developers to reimagine green leasing.
Estimates suggest that about 70 per cent of India’s 2030 urban infrastructure is yet to be built. The built environment needs to walk the talk and demonstrate true sustainability leadership. We can actively contribute to our nation’s sustainability goals by:
• Set public targets to drive and inspire the industry
• Cut emissions via deep efficiency upgrades and retrofits
• Invest in renewables to reduce India's dependence on imported carbon-rich fuels
• Invest in the Indian sustainability ecosystem to benefit from local talent and technology
• Engage stakeholders including employees, occupants and industry bodies like CII/IGBC to ensure policies benefit all
The green real estate market has untapped demand for sustainable products and solutions, providing a significant opportunity for growth. Access to capital through green bonds, green banks and sustainability-focused REITs enhance this opportunity. To ensure growth over the next decade, collaboration with local players is essential. Strong leadership and greater collaboration among stakeholders along with a forward-looking ESG framework are keys to a future-ready economy.
(Alok Aggarwal is MD & CEO, Brookfield Properties in India.)