The Influence of Financiers Who Favor Sustainable Real Estate Development

By Consultants Review Team Wednesday, 18 October 2023

Real estate has emerged as a major participant in the battle against climate change as the world grapples with rising temperatures, catastrophic weather events, and the urgent need to decrease carbon emissions. Currently, just 10% of all buildings in India are certified green. In a world where the real estate and construction sector consumes 36% of total global energy and accounts for approximately 40% of greenhouse gas emissions, this is a wake-up call to an industry that is a critical part of the solution.

In comparison to typical Indian buildings, those certified by the Indian Green Building Council (IGBC) save approximately 20-30% and 40-50% on water and energy, respectively. Green buildings provide a ray of hope in the fight against climate change since every drop of water and unit of energy saved moves us closer to a sustainable future.

In the real estate business, sustainable development encompasses a variety of practises aimed at decreasing the environmental impact of construction and operation. This involves using energy-efficient building designs, renewable materials, and green technology for heating, cooling, and waste management.

Sewage treatment plants, rainwater harvesting, high-reflective index, solar photovoltaic technology, double glazing units and regenerative lifts with ReGen are all key components of a sustainable project. These factors, taken together, represent a transformative path in Indian real estate development, benefiting both the environment and society at large.

Why Do Investors Prefer Sustainable Real Estate Development?

A variety of causes are driving India's shift towards sustainable real estate development. Most crucially, lending institutions like as banks and non-banking financial corporations (NBFCs) are increasingly supporting such initiatives for a variety of reasons:

Compliance with Regulations

Environmental restrictions are becoming increasingly stringent around the world, and India is no different. Sustainable initiatives are more likely to comply with both present and future legal requirements. This alignment minimizes the risk of regulatory penalties and project delays dramatically. Both developers and lenders understand that compliance is more than just avoiding fines; it is also about future-proofing investments.

Demand in the Market

Consumer tastes are changing, and there is a strong demand for environmentally friendly and energy-efficient houses. These structures are not only responsible, but also extremely marketable. The attractiveness translates into higher rental yields and resale values, offering investors a competitive advantage in major cities such as Delhi, Mumbai, and Bengaluru, as well as potential markets such as Rajasthan and Goa. This shift in market mood highlights the foresight of financiers who recognise sustainability as a driving force in real estate investments.

Cost Savings in the Long Run

Green buildings are well-known for their long-term cost-effectiveness. Lower operational expenses frequently pay for the original investment in sustainable features. Reduced energy use, better waste management, and low maintenance costs all lead to higher returns on investment during the property's life. Forward-thinking financiers recognise that sustainability is about more than simply ethics; it is also about smart financial sense.

The Way Forward

The tides in the Indian real estate market are undoubtedly moving, with stakeholders increasingly choosing sustainable property development. By 2030, the Indian Green Building market is anticipated to be worth between $30 and $40 billion. This expansion corresponds to global movements towards environmental consciousness and responsible investing. It is a chance for India to not only construct more environmentally friendly and resilient cities, but also to attract stakeholders that value sustainability.


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