By Mr Ruchit Mehta, Partner, Mehta Realty
Once associated with opulence, grandeur, and branded fixtures-luxury residences now have a new and evolved definition. The truly significant features of a luxury home today are an amalgamation of sustainability, wellness, and long-term value.
The underlying reasons are multi-pronged and, put together, place India as a global leader in green buildings. Industry reports estimate that the Indian green building market will witness a CAGR of 10.59 percent during FY2025-FY2032, growing from USD 37.99 billion in FY2024 to USD 85.00 billion in FY2032. Much of this spike can be traced back to the post-pandemic emphasis on health and wellness, coupled with growing environmental concerns. Homebuyers are now placing increased focus on factors such as clean air, natural light, and lower utility costs – factors that were hitherto considered an afterthought when making property purchases.
A generational shift
Today, millennials comprise a major proportion of the homebuying market. It is estimated that, by 2030, they will comprise over 60 percent of the global workforce. A 2023 survey indicated that nearly 75 percent of these millennials are willing to pay a premium for sustainable value-adds. A Knight Frank report from the same year found that HNIs, UHNIs, and NRIs favor green-certified properties. But below the obvious environmental considerations, younger generations are waking up to the long-term cost benefits associated with green projects. As per data from the IGBC, green-certified homes afford buyers energy savings of 30–50 percent and water savings of up to 50 percent. Together, these ensure a significant reduction of occupancy costs over time.
Greener, smarter
Government incentives have further reduced the gap between higher upfront costs and breakeven periods – as per the CII Green Building Congress, the payback period for green investments has now shrunk to three–five years. The return on investment from green-certified properties is also observable in more direct ways – a JLL study has found that green commercial and residential structures in India’s top metropolitan cities receive 11 percent higher rents and 21 percent higher sales premiums. Buyers who view their property purchases through an investment lens have also found that green-certified projects enjoy higher asset appreciation. Green buildings command up to 10 percent higher rentals and 15 percent more investor interest, making them a forward-looking hedge against market volatility – a significant concern for potential buyers in light of ongoing geopolitical uncertainties. The lower vacancy rates and stronger tenant loyalty further enhance the appeal of green-certified structures.
Regulatory push
Favorable government policies are only accelerating India’s green building revolution. The Energy Conservation Building Code (ECBC), enforced by the Bureau of Energy Efficiency, establishes mandatory energy efficiency standards for commercial and residential buildings, which has resulted in up to a 40 percent reduction in energy consumption. In states such as Haryana, Rajasthan, and Tamil Nadu, lucrative incentives, including additional Floor Area Ratio (FAR) and tax rebates, as well as fast-track environmental clearances, for IGBC- or GRIHA-certified projects, make these an attractive proposition for buyers and developers alike. Sustainable Real Estate Investment Trusts (REITs) are rapidly gaining traction, with annual investments projected to exceed ₹8,000 crores by 2025.
The Real Estate Regulatory Authority (RERA) also has sustainability on its agenda. This mandates developers to highlight green features and environmentally-friendly aspects, along with transparency in project specifications. Initiatives such as the Smart Cities Mission, which integrates green building principles into urban planning from the Ministry of Housing and Urban Affairs, prove that green construction is far from a passing fad. This will soon be the new normal that prepares India for our Net Zero by 2070 commitment.
Whether for immediate wellness considerations, mid-term ROI concerns, or long-term asset appreciation, sustainable homes have been rewriting the narrative in India’s booming residential real estate landscape. Buyers are urged to check certifications and features, assess sustainable design considerations, and ask for comprehensive data pertaining to anticipated savings on energy and water spending before finalizing their purchase decisions.
