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Middle-income residential consumers in tier-I Indian cities are willing to pay a 5-10% premium for sustainable living while corporate houses are willing to pay more than a 15 per cent premium for green-certified buildings, according to a report from Xynteo, an advisory firm focussed on sustainability.
Of these, residents in Mumbai have the highest appetite for sustainability in home purchase decisions — they are 70 per cent more likely to select a building with sustainability features, such as access to greenery and clean indoor quality, than residents in Delhi, Ahmedabad, and Hyderabad.
However, despite good sustainability engagement, 88 per cent of the respondents have no knowledge about green buildings. This indicates a need for the real estate sector to do more to raise awareness about the benefits and availability of green buildings.
Among corporate occupiers, over 85 per cent already lease green office spaces, motivated by energy savings and sustainability targets. 74 per cent indicate a willingness to accept higher premiums for lower emissions buildings, from premiums of 15 per cent for near-zero emissions to 50 per cent for net zero. Energy efficiency and renewable energy emerge as the top motivators.
However, gaps exist between sustainability goals set at the board level and integration into real estate decisions. Clear internal communication and alignment of priorities is needed.
“The survey results debunk the perception that Indian consumers' demand for sustainable living is negligible or nascent. Today consumers care about access to greenery, clean air, reliable materials, and operational savings, which green buildings can offer. This is the perfect time for real estate/construction companies to seize the moment and offer green alternatives,” said Vipul Kumar, Senior Partner, Xynteo.
The survey was conducted on 1,100 residents from Ahmedabad, Bhubaneswar, Delhi, Noida, Gurugram, Hyderabad, and Mumbai, spanning lower-middle to middle-income groups, along with 26 corporations.
The report depicts that customer engagement is high for sustainability but misconceptions around green building costs, availability, and benefits hamper the demand. The report suggests real estate developers should invest more in sustainability features and credentials coupled with effectively communicating associated benefits like energy savings. Companies can ensure green building targets are integrated into real estate decision-making.
“Real estate is one of the largest contributors to total global emissions generated by manufacturing (steel and cement) and the rest is contributed by the energy used to power the buildings. There is a clear need to adopt green practices while building homes and offices; now strongly backed by consumer demands,” Kumar added.
At Shriram Properties, a considerable segment of its customers consists of environmentally conscious millennials who are willing to pay a premium for sustainable and green amenities. “This trend, along with rising economic prosperity, has spurred an increased demand for eco-friendly buildings. Consequently, prioritizing cutting-edge technologies related to water and power consumption, as well as other sustainability features, remains a key focus for us," said Murali Malayappan, chairman and managing director, Shriram Properties.
Nesara B S, chairman of Concorde Group concurs that as India progresses into a mid-income country, sustainability is becoming a key focus area for both home buyers and developers alike. “While customers may be willing to pay an extra premium for green features that are not part of standard offerings, developers on our part need to create more sustainable and integrated developments. Our recent property offering with SMART philosophy is a perfect example of innovative green solutions. We are currently working on a reliable digital meter solution for water management that will be implemented in our projects soon” he said.
Consumers today are becoming more aware of the financial benefits of implementing sustainability solutions, said Prasanna Venkatesh, Executive Vice President - Plumbing, Fire & Environment, Sobha. "With increasing concerns about environmental sustainability and climate change, consumers are actively seeking out products and services that minimize their ecological footprint."
