Sustainability Emerges As A New Measure Of Real Estate Asset Quality: Grant Thornton Bharat

For years, the value of a property in India was largely judged by three things - location, size and the reputation of the developer. Sustainability is now emerging as another factor that could influence how a property performs over its lifetime.

Green-certified buildings are moving beyond being a niche segment, particularly in commercial real estate, with sustainability increasingly finding its way into decisions on leasing, investment and asset management. According to Grant Thornton Bharat’s report, Future-Proofing Real Estate: The Sustainability Imperative, green-certified buildings account for roughly two-thirds of India’s Grade A office stock. In Bengaluru and Hyderabad, the share is close to three-fourths.

The shift is particularly visible among multinational companies (MNCs), technology firms, financial-services companies and global capability centres (GCCs). These occupiers are looking beyond the physical specifications of an office and increasingly asking whether a building can provide reliable information on energy consumption, water use, waste management, and carbon performance.

For landlords, this means that having a green certification may no longer be enough. The bigger question is how the building actually performs.

Chetan Chichra, partner, risk optimisation and real estate industry expert, Grant Thornton Bharat, said: “For decades, India’s real estate story was shaped by three familiar markers: location, square footage and brand. A fourth dimension is now becoming equally important: the sustainability quotient.”

According to the report, certification remains an important starting point because ratings such as IGBC, GRIHA and LEED provide independent validation. However, occupiers and investors are increasingly looking at what happens after certification – whether energy and water consumption is actually falling, whether the building has reliable ESG data and whether it is prepared for stricter environmental requirements in the future.

This could also create a divide between newer, efficient buildings and older properties that require expensive upgrades. The report refers to the possibility of a “brown discount” for assets that are costly to retrofit, lack adequate environmental social and governance (ESG), data or fail to meet changing occupier expectations.

In commercial real estate, sustainability is increasingly becoming part of the leasing conversation. Global occupiers are under pressure to reduce their environmental footprint and provide credible sustainability information across their operations. As a result, green certification and actual operating performance are being factored into site selection and lease-renewal discussions.

Green leases could become an important part of this transition. Unlike conventional leases, these arrangements can spell out responsibilities around energy and water consumption, waste management, data sharing, efficient fit-outs, and periodic reviews. This is important because sustainability investments can otherwise create a mismatch: the landlord may pay for efficiency improvements while the tenant benefits from lower utility bills, or the tenant may need ESG data that the landlord does not routinely collect.

By making such responsibilities part of the lease, both sides have a clearer reason to track and improve performance.

The sustainability shift is also reaching premium housing, although the reasons are somewhat different. Homebuyers are less concerned about ESG reporting and more interested in features that affect everyday living – lower electricity and water bills, better ventilation, thermal comfort, air quality, rainwater harvesting, waste management and electric vehicle (EV) charging.

The report identifies features, such as efficient HVAC systems, solar integration, smart energy monitoring, water recycling, low-flow fixtures, air filtration, low-VOC materials and climate-responsive architecture as part of the emerging sustainable-luxury proposition.

For developers, these features can help differentiate premium projects. For buyers, the attraction is more tangible: a home that costs less to operate is more comfortable through changing weather conditions and is better prepared for future requirements.

The financial case for sustainability, however, is not simply about charging a higher rent or sale price. The report links the so-called green premium to a broader chain – better design can improve operating efficiency; better performance can improve occupier preference; and stronger demand can support occupancy, income and valuations.

For real estate investment trusts (Reits) and institutional investors, this becomes particularly relevant because occupancy and income stability directly affect returns. Investors are increasingly asking for evidence rather than broad sustainability claims, including changes in energy and water intensity, the nature of green lease commitments, and the credibility of a developer’s decarbonisation roadmap.

The next phase, therefore, may be less about putting a green label on a building and more about proving that the building works efficiently.

Grant Thornton Bharat expects green leases to become more common, retrofitting to become a significant opportunity for older buildings, and sustainability considerations to spread further across asset classes, such as data centres, retail, hospitality, healthcare, industrial, and logistics properties.

For the Indian real estate market, this marks a gradual change in how property quality itself is understood. A building may still need a good location, efficient design and a strong developer behind it. But increasingly, buyers, tenants and investors may also want to know how much it costs to run, how resilient it is and how well it can adapt to changing environmental and regulatory expectations.

In that sense, sustainability is moving from being an additional feature of real estate to becoming part of the assessment of whether an asset can remain relevant – and valuable – over the long term.