by Mr.
Rajat Malhotra, JLL India
The reasons for the
relatively slow growth of India's green real estate sector can be defined at
different levels.
At the policy level
(Centre and State)..
The scale of
policy-level incentives continues to be a constraint for manufacturers of green
technologies, products and equipment as also for developers and consumers of
green buildings. To be more precise, the incentives being offered are not
consistent across all states, and in states where they exist, the
implementation mechanism is not aligned to the expected throughput
While environmental
clearance norms have gained traction over the years, this has arguably had a
negative impact on growth because states have not evolved the adoption of
appropriate and adequate machinery to ensure that clearances are accorded
objectively and most importantly in time. This has created a backlog which has
further slowed the growth of green real estate.
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| Rajat Malhotra, JLL India |
As a result process
of providing environmental clearances, while being preferential for green
buildings, is inherently slow, resulting in reduced effectiveness of this
incentive. From the perspective of developers, there appear to be limited
incentives for enabling green initiatives, and current technologies are either
too expensive or do not address the requirements of such projects.
While proactive
efforts, such as providing extra FSI for projects that incorporate green
initiatives and property tax rebates for green developments, have been made by
some local bodies, they are not prevalent on a large scale.
Lack Of Consumer
Awareness..
From the consumers' perspective, there is a
need for creating higher awareness about the long-term benefits of patronizing
green developments. In terms of awareness, one of the most commonly lacking
aspects is a grasp of the short-term cost versus long-term benefits of
mainstreaming green initiatives. Awareness on green real estate needs to be
boosted by some compelling case studies.
Most of the case
studies that exist today are of developments outside India, so they do not tend
to inspire developers. Such case studies need to be presented to tenants and
landlords with metrics that makes them compelling for both developers and
consumers to opt for the Green Alternative. Such adaptation is not too much in
evidence today, with extremely limited and piecemeal efforts.
Measures That Can
Boost Growth..
Among the
interventions that would aid the growth of the green real estate sector in
India, consistency and effectiveness of both legislation and incentives is
probably paramount.
At the level of urban
local bodies, efforts need to be made to perform cost-benefit analyses of
mainstreaming green initiatives/technologies, and designing incentives that
will spur demand for green developments. These need to be viewed from the
perspective of city-level infrastructure (transport, roads and intelligent technologies)
and individual developments (residential, commercial office, retail and
industrial).
At the developer
level, platforms need to be created that allow for a higher level of
interaction between entrepreneurs who drive technological innovations and manufacture
products that promote green developments, and developers who may consider
adopting these technologies. These platforms could allow for customized
solutions for varying scales of projects, with a view to according benefits to
both stakeholders.
Additional awareness
drives need to be undertaken to enhance consumers' understanding of the Green
Prerogative and its holistic benefits. These awareness drives could be promoted
at the level of RWAs (Resident Welfare Associations) where interactive platforms
can be created with entrepreneurs who are manufacturing green technologies and
end users. Such drives could result in innovative solutions both at individual
household and neighbourhood/community levels. A proactive outreach to end
consumers with a view to making green real estate more attractive at a macro
level is, in fact, a key factor.
A cue can be taken
from the success of the energy star program for consumer appliances. With more
than 60% of future development likely to be residential, it makes a lot of
sense to ensure that green real estate rides on intensive awareness programs
and incentives, like
· Tax rebates for buyers of green
equipment
· Property tax breaks/holidays for green
property owners to offset initial capital expenditure
· Lucrative financing options for the
purchase of green equipment and green real estate.
Another concept that
earlier saw a significant amount of global discussions is ensuring that some
amount of direct, unobstructed sunlight is available to each unit for a minimum
number of fixed hours in a day. Making this mandatory through mechanisms, such
as byelaws for all new developments, would force building designs to be more
responsive to climatic conditions via geometrical alignments. We need a
widespread adoption and endorsement of the Energy Conservation Building Code
(ECBC)
This 'passive
response' measure would reduce energy consumption without any additional
expenditure, merely by design interventions. In addition, existing building
stock needs to be addressed through performance reporting and rewards. Also,
the cost of green power needs to be at par with or lower than traditional
power.
The baseline
objective behind such initiatives would be to boost consumer demand for green
real estate, which in turn would result in the augmentation of its supply. To
some extent, such incentives are already available in various parts of the
country.
In Greater Noida for
example, increased FSI has provided a fillip to the development of Green real
estate. However, it has not been extended to other states and municipalities.
Such provisions must become consistent to yield benefit that have market-significance.
More than 60% of our infrastructure is yet to be built, and it is obvious that
it will not be built only in the Northern states. The incentive of property tax
rebates is entangled in debate - implementation is lacking, and this is leading
to disillusionment amongst developers. Further, even this is not consistent
across the country. The instances of this rebate having been actually extended
to developments are few and far between.
Notable Examples Of
Existing Incentives
· The draft Development Plan (DP)
approved by Pune Municipal Corporation proposes ‘two additional FSI or a 50%
discount on the paid FSI to those properties which have solar and wind energy
equipment installed’. The property owner should use equipment approved by the
Bureau of Energy Efficiency (BEE). The civic body adopted the eco-housing
policy in 2008 to promote the environmental, economic, health and safety
benefits of green buildings.
The policy plans to
educate developers, architects as well as buyers to create awareness about
environment-friendly homes, and the civic body gives discounts in property tax
to those implementing these eco-friendly norms in their properties.
· NOIDA Municipality allows 5 % more
built-up space for Gold-rated buildings as compared with the normal floor area
ratio (FAR) or floor space index (FSI) allowed for conventional buildings. This
has worked, and IGBC also corroborates that this incentive has had a positive
impact on Green Development in NOIDA.
· The Greater Hyderabad Municipal
Corporation (GHMC) has given a 10 %. concession on property tax for using solar
water heating equipment, and an additional concession of 10 % for providing
water harvesting infrastructure. There has been a mixed response to this so
far, and there are gaps in implementation as well.
Meanwhile, the
National Housing Bank (NHB) is considering interest subvention on home loans
for green buildings. This makes eminent sense - as already stated, more than
60% of buildings that will be constructed in in India over the next 20 years
are going to be residential. India is unique when it comes to its profiling in
terms of energy consumption attributable to building.
More than 70 % of
energy consumption attributable to buildings in the country is actually accounted
for by residential. Therefore, the potential of Green real estate in
residential in terms of overall impact on the environment is huge. This has to
be taken note of, and is reason enough for special incentives. A cue should
also be taken from the success of the Energy Star Rating on consumer appliances
initiated and fostered by the BEE.
Proactive ‘Green’
Promotion In The US..
In the US, the Office
of Sustainability, in partnership with the Department of Code Enforcement, has
developed an incentive for property owners and developers to renovate and/or
construct buildings in a sustainable manner. The incentive, which qualifies
building projects to receive a up to 50% reduction on permit fees associated
with the project, also rewards building owners and developers for integrating
sustainable design techniques into building projects.
To give a more
specific example of city-level implementation in the US, the city of
Indianapolis requires projects to meet specific criteria that equate to
measurable benefits to building owners, occupants and citizens to qualify for
the rebate. The criteria, although principally based on LEED (Leadership in
Energy & Environmental Design, a rating system created by the U.S. Green
Building Council), do not require a building to be LEED-registered or
LEED-certified. However, a building project that is seeking LEED-certification
of any level will qualify for all or part of the rebate.
About the author..
Mr. Rajat Malhotra,
COO (West Asia) Integrated Facilities Management, JLL India
For Media Contact
Arun Chitnis
Head – Corporate
Communications & Media Relations
JLL India, Pune - 411
001.
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