Research has shown that green certified buildings perform well despite premium rental values and have lesser vacancies compared to conventional non-green buildings with standard rental values within the same micro-market.
Take India as an example, occupiers there are willing to pay a premium rent in an effort to reduce overall operation, maintenance and costs as this has far more benefits than paying lesser rent while incurring an overall higher expenditure. This proves to be a win-win situation for both developers and occupiers.
Table 1: Rental values and vacancy in Non-green buildings vs Leed green certified Buildings
Source: JLL REIS & Research Report
The concept of green buildings is popular in western countries and have become a feature in Asian countries like China, South Korea and recently in many cities across India. Although the construction of such buildings incur additional upfront costs, it is viewed as a profitable venture in the long-run for real estate developers as the concept itself is self-sustaining.
Buildings have continuously evolved in both complexity and design for decades. Progressively there has been a conscious effort to reduce operation, management and energy costs, however a comprehensive approach will expand the detail and scope of green buildings. It is easier to chart out the potential of this at the initial design stage where major changes can still be incorporated. Once the building is able to execute the proposed green guidelines, the tangible and intangible merits become conspicuous.
Below is a comprehensive cost-benefit analysis done by a few national green rating systems in India to illustrate the adoption of green buildings by real estate developers.
Source: http://grihaindia.org
Some building projects with a large footprint are heralded as pioneers of green buildings in India. This includes Suzlon-One Earth in Pune, and CII-Sobhraj Godrej Green Business Center and Infosys in Hyderabad.
These office buildings with their new designs have shown a greater improvement in performance and reduction in energy consumption compared to conventional building designs. Looking at all design parameters, it can be concluded that the results of energy simulations have contributed to an overall reduction in costs parameters.
Table 2: Improvement in energy performance
Source: www.griha.org
Currently the total registered green footprint of India is 4.5 billion sq.ft – this has doubled since 2013 and is expected to grow in the future. As mentioned earlier, the green building concept looks promising especially for developers who seek premium rental values while still managing to attract occupiers.
With green buildings making good business sense, state governments may be encouraged to push new policy incentives like additional Floor Space Index, faster clearance and lower development charges. There has been an increase in demand for green products across the country as stakeholders observe that operation and management costs are comparatively lower and this in turn will push the agenda for more green office building projects in the future.
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