Green Is The New Growth Engine For India’s Real Estate

Nearly 80–85 per cent of new office leasing in India is now happening in green-certified buildings - a decisive shift from just a few years ago. This is no longer a niche; it is the market baseline. In many projects, they are quietly becoming the math that determines asset pricing, leasing velocity and even institutional interest.

That shift is far more visible in commercial real estate, where occupiers are increasingly treating sustainability compliance as a business requirement rather than a branding exercise. According to Colliers, green-certified office assets now account for the bulk of leasing across India’s top six cities, driven largely by global occupiers, GCCs and institutional investors aligning portfolios with ESG mandates. Rental premiums have followed, reaching nearly 24 per cent in Mumbai, 13 per cent in Delhi-NCR, and 9 per cent in Bengaluru, across select Grade-A assets.

For residential developers, the challenge is balancing sustainability ambitions with affordability pressures, especially as construction costs remain elevated. This is where design decisions are becoming more deliberate. Smaller heat-retaining facades, local materials, rainwater harvesting, waste segregation systems, shaded landscapes and smarter orientation planning often do more work than expensive headline technologies.

Shekhar G Patel, President, CREDAI, says, “Sustainability in real estate is no longer an option - it is becoming a core driver of how the sector evolves. The industry is steadily moving towards integrating sustainability at the planning stage itself, with developers evaluating land, design, materials, and operations through the lens of long-term efficiency, resource optimisation, and lifecycle value. The real estate sector continues to play a defining role in India’s transition towards a low-carbon future. As adoption of green building practices and energy-efficient technologies accelerates, we are seeing sustainability emerge as a key pillar across asset classes  - driven not just by environmental responsibility, but also by tangible benefits such as cost efficiencies, asset resilience, and enhanced occupier experience.”

The broader shift is visible in the numbers as well. India’s real estate sector currently contributes around 6-8 per cent to GDP and is projected to expand sharply over the next two decades, with Colliers and CREDAI estimating that the sector could touch USD 5-10 trillion by 2047. Sustainability has now moved from being a sub-theme within that growth story to becoming one of its structural drivers.

Patel adds, “At CREDAI, we are supporting this shift by enabling our members to adopt greener practices across the development cycle - from responsible sourcing and waste management to renewable energy integration - while ensuring projects remain commercially viable through policy advocacy and knowledge-sharing. This transition is also strengthening investor confidence, with institutional capital increasingly favouring future-ready, sustainable assets. As India’s urbanisation accelerates, the focus must remain on building ecosystems that deliver both economic growth and environmental balance, ensuring that urban expansion is not just rapid, but responsible and resilient”

Today, energy-efficiency benchmarks, water recycling systems, indoor air quality metrics and renewable integration frequently enter the first round itself.

Sandeep Chhillar, Founder & Chairman, Landmark Group, says, “We view sustainability through the lens of practical liveability. Homebuyers as well as commercial space occupiers are far more aware of recurring maintenance costs and environmental quality than they were a few years ago. Features such as efficient water systems, improved natural lighting, better air circulation and reduced energy dependency are now influencing purchase decisions. The objective is not to create projects that merely carry certifications, but to build developments that remain efficient and relevant over long holding periods."

There is also a more practical urban argument here. Cities like Mumbai, Bengaluru and NCR are already dealing with infrastructure stress, water shortages and rising heat exposure. Buildings that consume less energy and place lower pressure on civic systems are no longer just environmentally preferable; they are economically rational.

Mitul Jain, Managing Director, SPJ Group, says, “The architecture has to be climate-responsive from day one. That means layout planning that reduces heat gain, smart metering embedded into each tower, and waste segregation designed into the floor plate, not added later. Solar is becoming baseline. The question now is how fast we can retrofit existing stock, because new supply is already moving. Institutional capital, too, is becoming increasingly selective, and assets that demonstrate operational efficiency tend to inspire stronger confidence. Buyers and investors are also evaluating spaces differently now; they want healthier environments and predictable operational costs. This is gradually reshaping how projects are designed from the ground up."

Developers, meanwhile, are finding that sustainable buildings simply perform better over time. Lower operating costs, stronger tenant retention and higher investor confidence have made green buildings difficult to ignore, particularly in cities competing for global capital.

B.K. Malagi, Vice Chairman, Experion Developers, says, “At Experion, sustainability is now integrated much earlier in the project cycle, from master planning to construction execution. We are seeing stronger buyer interest in wellness-led communities where environmental efficiency directly improves everyday living. Whether through water conservation, smart energy systems or climate-responsive architecture, these features are increasingly shaping long-term buyer confidence. The premium attached to such developments may exist today, but over time it may simply become the baseline expectation.”

And that may be where the market is quietly heading, toward a future in which green buildings are no longer described as premium because cities may not be able to afford anything less.