Business News | Colliers: About 80-85% of Office Leasing is Expected in Green-certified Buildings; Green Office Inventory to Reach ~ 700 Million Sq Ft in Next 2-3 Years
by ANI · LatestLYPRNewswire
Ahmedabad (Gujarat) [India], April 18: India's real estate sector is undergoing a major transformation, with sustainability emerging as a key cornerstone and growth driver across asset classes. Real estate and construction accounts for nearly 40% of the global carbon emissions and thus built environment in India is increasingly stepping up decarbonization efforts to achieve sustainability goals. Rising environmental awareness, stricter regulations, and sustainability goals are accelerating the pace of green building adoption in the country. The role of real estate sector is particularly vital in embracing sustainability across the value chain and pave way for a carbon-neutral future. Overall, green building footprint across asset classes has nearly doubled over the last five years to reach 13 billion sq ft in 2024. As of 2024, more than 2 million residential dwelling units, 6,500 commercial projects and 750 industrial projects were green-certified and sustainability adoption is likely to pick pace across real estate segments in the coming years.
* Green building adoption accelerating across real estate segments, led by energy savings, rental premiums and emission reductions
* Green building footprint on the rise; certifications across real estate asset classes reach 13 billion sq ft in 2024 (IGBC)
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* Two-thirds of Grade A office stock already green-certified across the top six cities
* Green-certified office buildings have higher occupancy levels at 80-90%, commanding rental premium of up to 25%
* Investment potential of over INR 425 billion to emerge from retrofitting older office buildings
* Carbon footprint reduction gaining prominence in other asset classes like data centers, retail, hospitality, and healthcare
The CREDAI-Colliers' report "Sustainability in Real Estate: Towards a Greener Skyline" provides an overview of India's green real estate landscape at the macro-level and highlights increased sustainability adoption across asset classes. In the office segment, two-thirds of Grade A stock in the top six cities was green certified, at 503 million sq ft by the end of 2024. Additionally, with majority of the upcoming commercial developments expected to become sustainable from the outset, the green certified Grade A stock in the country can reach close to 700 million sq ft over the course of next 2-3 years. In the residential segment, heightened green building adoption was indicated by over 2 million green-certified homes and 60+ certified townships (2024). Sustainable houses typically offer tangible benefits in the form of lower utility bills, better air quality, and rental premiums of 5-10%. Green adoption is also gaining ground in industrial, healthcare, retail, hospitality and data center segments. Developers and occupiers are increasingly opting for sustainable, energy-efficient buildings to align with climate targets and net-zero commitments.
"The real estate sector continues to play a defining role in driving India's transition towards a sustainable, low-carbon future. With green-certified buildings now accounting for a significant share of new developments, it's evident that sustainability is becoming a core pillar of real estate strategy across asset classes. This report highlights
how developers, occupiers, and investors are increasingly aligning with India's climate goals through responsible construction and the impact of government incentives, regulations, and frameworks designed to encourage energy-efficient construction, renewable energy adoption, and sustainable building practices. We believe this is a pivotal moment to scale green adoption not just in commercial spaces but across residential, industrial, and emerging sectors like data centers. Our collective efforts today will shape the urban future of tomorrow, where environmental responsibility and economic growth reinforce each other," said Mr. Shekhar G Patel, President, CREDAI.
66% of Grade A office stock in India is green-certified
As of 2024, green-certified office stock in India stood at about 503 million sq ft, representing 66% of the total Grade A inventory across the top six cities. The ~40% rise in green office stock since the beginning of the ongoing decade reflects developers' commitment to evolving market scenario and the resultant occupier preferences. Notably, Bengaluru accounted for 31% of India's green-certified office stock, followed by Delhi NCR (19%) and Hyderabad (17%). In terms of green penetration which is indicated by the share of green-certified buildings in the total Grade A office stock in each city, Hyderabad led other major markets with a penetration rate of 75%, closely followed by Bengaluru with 73% in 2024.
On the supply front, over the last 5 years (2020-2024) about 80% of the new Grade A office supply has been green-certified. The surge in green building supply has been driven by a clear shift in occupier preferences, with ~75% of leases in 2024 being transacted in green-certified buildings. Overall, leasing volumes in green-certified buildings grew 20% annually to reach close to 50 million sq ft in 2024.
Data pertains to Grade A office buildings only
Leasing does not include lease renewals, pre-commitments and deals where only a letter of Intent has been signed
"Sustainability has become a strategic priority for India's real estate stakeholders. Developers, investors and end-users are increasingly aligning their decisions with environmentally responsible practices, recognizing the long-term benefits of energy efficiency, reduced operational costs, and improved quality of life. In particular, office leasing trends emphasize corporate advocacy of green-certified workspaces and long-term commitment towards adoption of sustainable practices within the built environment. Leasing in green-certified buildings surged annually by 20% in 2024. Looking ahead, the proportion of leasing in green-certified buildings is expected to rise from ~75% currently to about 80-85% in the next few years. This underscores the continued shift towards sustainable real estate development in the office market of the country," said Badal Yagnik, Chief Executive Officer, Colliers India.
Green-certified buildings consistently achieve higher occupancy rates and rental premiums
Green-certified buildings are not only a sustainable choice, but they also make a strong business case. As per our analysis, average occupancy levels in Grade A green office buildings were between 80-90%, compared to 65-85% in non-green-certified buildings. Furthermore, green-certified office spaces command significant rental premiums, led by Mumbai at 24% premium and followed by Chennai (16%) & Hyderabad (14%). This growing preference has transformed green certification from a differentiator to a baseline expectation in the Indian office market over time and is expected to become a "must have" in the coming period.
Data pertains to Grade A office buildings only. Rents refer to Weighted Average Quoted (WAQ) rents in INR per square feet per month for warm shell offices and do not include common area maintenance (CAM) or taxes
Over the next 3 years, a significant portion of the 170-200 mn sq ft of commercial developments which are in various stages of development will be green-certified. Meanwhile, there remains a major opportunity for retrofitting about 355-385 million sq ft of relatively older office buildings (>10 years), which can enhance the overall efficiency and sustainability quotient. This aging office stock represents an investment opportunity to the tune of INR 425 billion. Additionally, relatively newer buildings (
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