1、Sustainable real estateAn opportunity to 20232|Sustainable real estate|An opportunity to leverage 2023 KPMG Assurance and Consulting Services LLP,an Indian Limited Liability Partnership and a member firm of the KPMG global organization of independent member firms affiliated with KPMG International L

2、imited,a private English company limited by guarantee.All rights reserved.2|Sustainable real estate|An opportunity to leverage 2023 KPMG Assurance and Consulting Services LLP,an Indian Limited Liability Partnership and a member firm of the KPMG global organization of independent member firms affilia

3、ted with KPMG International Limited,a private English company limited by guarantee.All rights reserved.Sustainable real estate|An opportunity to leverage|3PrefaceThe real estate sector in India is poised to embrace a future defined by sustainable practices.As the nation undergoes rapid urbanisation

4、and economic growth,the imperative to balance development with environmental stewardship has never been more pressing.This report delves into the critical intersection of sustainability and real estate,examining the current state and promising avenues that lie ahead.Sustainability has become one of

5、the most critical real estate priorities,calling for focussed efforts from businesses,globally.Contributing to nearly 40 per cent of the global carbon emissions,real estate sector demands immediate action towards decarbonisationacross its entire value chain.India ranks 3rd in the global greenhouse g

6、as emissions and as a result,the country has been taking stringent measures to reduce its CO2 emissions,achieving a net zero target by 2070.The real estate sector heavily relies on fossil fuel energy,for both construction of newer buildings and the maintenance of older ones.It is therefore essential

7、 for real estate firms to look at operations from a climate lens and introduce alternative practices that commit to the sustainability objectives.The economic benefits of energy-efficient buildings,the resilience conferred by eco-conscious urban planning and the enhanced quality of life for occupier

8、s are few of the dividends reaped from this endeavor.From innovative designs to cutting-edge energy solutions,this requires collaborative efforts from experts,stakeholders and visionaries,to serve as a catalyst for policy formulation and strategic initiatives.Investors are also playing a pivotal rol

9、e in driving sustainability in real estate.They demand green certifications,evaluate properties based on ESG factors,participate in impact investing,invest in technologies such as energy-efficient lighting,heating,ventilation,and air-conditioned systems(HVAC),incentivise sustainability targets,promo

10、te reporting and transparency,among others.Todays conscious consumers have information and are ecologically aware.They yearn for buildings that resonate with their values around sustainability.Beyond monetary considerations,they weigh the societal and environmental impacts.Properties designed with e

11、nergy efficiency,water conservation and eco-friendly materials have lower environmental footprint and operational costs.They are also attuned to the fact that green buildings have improved air quality,ample natural light and promote physical and mental wellbeing.The emphasis on green building certif

12、ications has grown manifold over the last few years and witnessed a five-fold increase since 2010,in line with rising importance of green certifications amongst developers and occupiers.Currently,some of the metro cities in India such as Bengaluru and Delhi NCR dominate the number of green certified

13、 buildings in India,further defining the new era of sustainable urbanisation.The occupancy rate in sustainable certified buildings is observed to be higher than non-certified buildings.Global building footprint is expected to double by 2050,indicating a massive growth opportunity for companies falli

14、ng under the purview of green real estate.Buildings that cater to the net zero ambitions are most likely to command a green premium,with increased rentals and value among other benefits.It underscores the imperative for sustainability in construction.Mitigating the environmental impact of global bui

15、lding footprint needs to be a collective effort to showcase sustainable urban development,redefining the narrative of the built environment.By embracing sustainable building practices,real estate companies will lay the foundation for a resilient and resource-conscious future.2023 KPMG Assurance and

16、Consulting Services LLP,an Indian Limited Liability Partnership and a member firm of the KPMG global organization of independent member firms affiliated with KPMG International Limited,a private English company limited by guarantee.All rights reserved.Sustainable real estate|An opportunity to levera

17、ge|44|Sustainable real estate|An opportunity to leverage 2023 KPMG Assurance and Consulting Services LLP,an Indian Limited Liability Partnership and a member firm of the KPMG global organization of independent member firms affiliated with KPMG International Limited,a private English company limited

18、by guarantee.All rights reserved.Sustainable real estate|An opportunity to leverage|5Table of contents Executive summary6The rising focus on sustainability10Enhancing sustainability through green buildings16Green building standards and policies providing impetus22Occupiers taking a step towards sust

19、ainability28Indias current green footprint32How can developers and investors make a difference?38Way forward and recommendations44Sustainable real estate|An opportunity to leverage|5Executive summary6|Sustainable real estate|An opportunity to leverage 2023 KPMG Assurance and Consulting Services LLP,

20、an Indian Limited Liability Partnership and a member firm of the KPMG global organization of independent member firms affiliated with KPMG International Limited,a private English company limited by guarantee.All rights reserved.Sustainable real estate|An opportunity to leverage|750%of Indias total e

21、nergy USD560 billion35%reduction in emissions20%reduction in maintenance cost1.50C40%28%from operational emissions 11%from materials and constructionTop emitters of CO2emissions2.53.5%ofcompanies feel green buildings could see increased valuation*94%50%companies indicating sustainability as a high c

22、onsideration in their projects*Share of building and construction in CO2emissionsGreen buildings could lead toIndia ranks 3rdin global GHG emissions1.CO2 Emissions in 2022,IEA,March 20232.Cabinet approves Indias Updated Nationally Determined Contribution,PIB,03 August 20223.The Costs of Climate Chan

23、ge in India,Overseas Development Institute,8 June 20214.State of Climate Action 2021,Climate Action Tracker,10 March 20225.Renewable Energy in India,PIB,9 September 20226.Global energy efficiency progress is accelerating,signalling a potential turning point after years of slow improvement,IEA,2 Dece

24、mber 20227.ColliersNote:*Based on a survey done by Colliers-KPMG in India with a sample size of 32 36.8 GtIndias share in global CO2emissionsWorld CO2 emissions in 202217.3%45%3-10%cut in Indias carbon intensity targeted by 20302likely loss of Indias GDPdue to climate change by 21003 2023 KPMG Assur

25、ance and Consulting Services LLP,an Indian Limited Liability Partnership and a member firm of the KPMG global organization of independent member firms affiliated with KPMG International Limited,a private English company limited by guarantee.All rights reserved.Sustainable real estate|An opportunity

26、to leverage|782%of the grade A62%of the countrys total new office supply as of September 2023 is green certified7green office stock is present in the top 10 micro markets across top six cities in India as of September 2023761%penetration ofgreen stock in India,as of September 20237buildings need to

27、be retrofitted every year4needs would be from renewable energy by 20305spent on energy efficiency globally in 20226Global climate target to limit global warming8|Sustainable real estate|An opportunity to leverage 2023 KPMG Assurance and Consulting Services LLP,an Indian Limited Liability Partnership

28、 and a member firm of the KPMG global organization of independent member firms affiliated with KPMG International Limited,a private English company limited by guarantee.All rights reserved.Amid rising concerns around climate change,real estate as a sector warrants immediate action around green pract

29、ices and sustainable measures.While the government has set its net zero targets,it is imperative for companies across the real estate value chain to lay focus on energy efficiency within their operations.The demand for energy efficient buildings is increasing,as the global building floor area is pro

30、jected to double from 2020 to 2060.This will add 2.6 trillion ft2(240 billion m2)of new floor area to the existing building stock.Rising focus on sustainability is compelling developers to use recyclable materials in construction,optimise building operations through energy efficiency in HVAC(heating

31、,ventilation and air conditioning)systems,advanced glass technologies,lightning harvesting,with active monitoring.Green buildings are gaining prevalence,incorporating bioclimatic architecture,cool roofs,waste hauling and resource efficient structural systems.These command higher rental premium and c

32、reate more value for owners and investors.Increased demand for green certified buildings,with LEED,GRIHA,WELL accreditation,ensuring quality checks on various sustainability KPIs.Though costing higher than traditional ones,these buildings see high traction.The number of green-certified buildings hav

33、e seen a five-fold increase since 2010,with 61 per cent of Indias total Grade A office stock being green certified.Bengaluru,Chennai and Hyderabad hold the highest share of green-certified buildings.2023 KPMG Assurance and Consulting Services LLP,an Indian Limited Liability Partnership and a member

34、firm of the KPMG global organization of independent member firms affiliated with KPMG International Limited,a private English company limited by guarantee.All rights reserved.Sustainable real estate|An opportunity to leverage|9Developers have shifted focus towards quality assets,deploying low or zer

35、o carbon construction techniques to maximise efficiency and minimise waste.Retrofitting has also become a prominent trend.Modern strategies are getting adopted across residential and commercial assets,including insulating outer walls and floors,heat efficient glazing,green roofing and AI-driven smar

36、t systems for efficiency.Occupiers have a larger focus on wellbeing,exploring real estate options equipped with green areas,spa and meditation area,while also looking for art studios and yoga gardens,where they can rejuvenate.Investors are shifting focus to sustainable assets,setting broader decarbo

37、nisation target for existing portfolio,while ensuring due diligence and stress testing real estate portfolios for sustainability elements.In view of rising importance of sustainability across the sector,developers must ensure low carbon alternatives while also deploying green technologies and upskil

38、ling talent.Occupiers should also be mindful of the environmental impact when buying/leasing a property.Indian Green Building Council has collaborated with several central and state governments to promote sustainability.Securities and Exchange Board of India released Business Responsibility and Sust

39、ainability Report,which aims to create a Business Responsibility-Sustainability Index for companies.The rising focus on sustainability10|Sustainable real estate|An opportunity to leverage 2023 KPMG Assurance and Consulting Services LLP,an Indian Limited Liability Partnership and a member firm of the

40、 KPMG global organization of independent member firms affiliated with KPMG International Limited,a private English company limited by guarantee.All rights reserved.Sustainable real estate|An opportunity to leverage|11Sustainable development has been a prominent challenge in todays age.Taking cognisa

41、nceof the fact that the increased carbon footprint of nations has led to contemporary weather extremities such as the heat waves,the world is moving towards minimising the impact of climate change by adopting net zero commitments.Consequently,it becomes critical to address the climate change and con

42、tribute towards the development of climate resilient buildings.During the 27th Conference of Parties(COP27)1,198 countries committed to pursue the goal of keeping global warming below 1.5 degrees compared to pre-industrial levels,as stated in the Paris Agreement.At a juncture where countries have sp

43、ecific net zero goals,India has also set ambitious targets to combat climate change and reduce carbon emissions.In the recent G20 Summit held in India,theDecarbonising is critical as the real estate sector contributes to nearly 40 per cent of annual global emissionsSustainability is gaining traction

44、 in the real estate sector,with about 56 per cent of companies assigning high consideration to sustainability in their projects.Per capita GHG emissions 202121.93 tonnesCO2e*India14.86 tonnesCO2eUS12.10 tonnesCO2eRussia8.05 tonnesCO2eChinaIndias current stance in sustainable development India with t

45、he largest population3and fifth largest economy by nominal GDP,ranks third in the global greenhouse gas emissions.As a result,India is taking steps to reduce its CO2 emissions,with an aim to achieve its net zero target by 2070.Indias Long-Term Low Emission Development Strategy,which was submitted at

46、 COP27 in Egypt,estimated that India would require around INR85.6 trillion by 2030 for climate change adaptation.Making India a green hydrogen hub through National Hydrogen Mission 2021,increasing electrical energy share by three-fold in industrial energy by 2070,implementing policies to boost domes

47、tic manufacturing of electric vehicles and the use of carbon capture and storage to remove GHGs are some of the key strategies that were highlighted during the event.0020002005201020152020IndiaThe U.S.ChinaIndias per capita CO2 emissions have been on the rise and have doubled since 2000.A

48、lthough,carbon emissions in 2020 saw a reduction compared to the previous year4,this was mainly due to lockdowns and a slowdown in economic activities during the pandemic and not specifically through emission-cutting measures.Million tonnes of carbon per year(MtC/yr)51.Emissions gap report,UNEP,27 O

49、ctober 20222.India:CO2 Country Profile,Our World in Data,as accessed on 31 May 20233.Total Population by Country 2023,World Population Review(WPR),as accessed on 31 May 20234.Significant progress made by India in meeting its NDC,PIB,23 July 20215.National Carbon Emissions 2021,Integrated Carbon Obse

50、rvation System,March 2021Key takeawayssignificance of taking proactive measures to restrict temperature increase to 1.5 degrees Celsius over pre-industrial levels was addressed.Effective commitment and actions need to be undertaken to have a green development pact for a sustainable future,making eff

51、icient use of existing resources to build resilient infrastructure.Note:*CO2e implies CO2 emissions12|Sustainable real estate|An opportunity to leverage 2023 KPMG Assurance and Consulting Services LLP,an Indian Limited Liability Partnership and a member firm of the KPMG global organization of indepe

52、ndent member firms affiliated with KPMG International Limited,a private English company limited by guarantee.All rights reserved.Indias sustainability targetsTo achieve net zero greenhouse gas emissions by 2070Reduction in carbon dioxide emissions by one billion tonnes by 2030To lower its economys c

53、arbon intensity by 45 per cent by 2030,relative to 2005 levelsTo boost non-fossil fuel energy capacity to 500 gigawatts(GW)by 2030,up from approximately 157 GW currentlyTo obtain 50 per cent of total energy needs from renewable energy sources by 2030.6.Statista,accessed on 20 March 2023Top three emi

54、tters contribute to half of the total GHG emissions in the worldUSA and China are one of the top greenhouse gas(GHG)emitters in the world contributing to over 40 per cent of global GHG emissions.As of 2021,India contributes to around 7.3 per cent of the worlds GHG emissions owing to its humongous po

55、pulation base.6However,per capita emissions of the country still stand significantly lower than other developed economies.Intergovernmental Panel on Climate Change(IPCC)report states that the global CO2 emissions must be about 18 giga tonnes(Gt)by 2030 for the world to keep the temperature rise belo

56、w 2C.If India continues to emit CO2 at current rate,its carbon emissions would reach as high as 4.48 Gt by 2030.However,if India cuts down its CO2 emissions by 22 per cent,its total emissions will tone down to 3.48 giga tonnes by 2030.This could majorly contribute to cutting down overall global CO2

57、emissions.With this objective,it would be critical to drive sustainable measures and minimisecarbon emissions from manufacturing,cement and chemical production,transportation,construction and other heavy industries real estate being one of them.Source:Colliers,Climate change,Down to Earth.Indias CO2

58、 emissions(giga tonnes)2.884.483.4820212030Source:Government of India 2023 KPMG Assurance and Consulting Services LLP,an Indian Limited Liability Partnership and a member firm of the KPMG global organization of independent member firms affiliated with KPMG International Limited,a private English com

59、pany limited by guarantee.All rights reserved.Sustainable real estate|An opportunity to leverage|13Sustainability in real estateThe built environment contributes a substantial carbon footprint,accounting for around 40 per cent of annual global CO2 emissions.7By 2040,it is expected that roughly two-t

60、hird of the existing global building stock would continue to contribute to CO2 emissions,signifying challenges in meeting the Paris Agreements 1.5C target.Additionally,the global building floor area is estimated to grow twofold by 2060,necessitating an additional 2.6 trillion sq ft(240 billion sq m)

61、of new floor area to support urban expansion.8As a result,lowering greenhouse gas emissions from buildings and construction would be crucial to mitigate global warming and its effects.7.Embodied Carbon,World Green Building Council,as accessed on 1 June 2023 8.Why the built environment?,Architecture

62、2030,as accessed on 1 June 2023 9.2022 Global status report for buildings and construction,UNEP,09 November 2022Real estate building and construction sector contributed to 37 per cent of global energy and 40 per cent of process emissions in 2021.9Share of construction in global final energy and proc

63、ess emissions,per cent,20219The real estate sector currently contributes for about 28 per cent of the operational emissions and the remaining 11 per cent from materials and construction.7Note:The numbers in the chart are rounded values and should not be summed up to calculate total values The real e

64、state industry heavily relies on fossil fuel energy,not just for construction of new properties/buildings but also to maintain the performance of existing properties.It is therefore imperative for real estate firms to look at operations from the view of climate lens.Investors,developers and occupier

65、s need to identify aspects and create strategies around sustainability to especially lower carbon emissions.262237383740EnergyEmissionsReal estate building andconstruction industryOther industryTransportSustainable real estate|An opportunity to leverage|1314|Sustainable real estate|An opportunity to

66、 leverage 2023 KPMG Assurance and Consulting Services LLP,an Indian Limited Liability Partnership and a member firm of the KPMG global organization of independent member firms affiliated with KPMG International Limited,a private English company limited by guarantee.All rights reserved.Sustainability

67、 is becoming a critical factor in real estate projectsIn the residential sector,open spaces and properties with efficient energy systems see more interest from homebuyers.Green office properties too would see an uptick in demand as occupiers,especially large global companies are setting ESG targets

68、that include sustainable offices across the world.Sustainability is gaining traction in the real estate sector,with about 56 per cent of companies assigning high consideration to sustainability in their projects.56%41%3%HighconsiderationMediumconsiderationLowconsiderationStakeholders considerations

69、around sustainability*3%3%29%3%10%27%58%67%Ongoing projectsPlanned projectsUp to 15%15-25%25-40%40-50%Share of sustainable elements in ongoing and planned projects*While majority of the companies have been using sustainable materials in about half of their ongoing projects,greater number of companie

70、s aim to have more focus on using sustainable materials and processes in their upcoming or planned projects.Note:*Based on a survey done by Colliers-KPMG in India with a sample size of 32.The survey was conducted during Sep-Nov 2022 for developers,occupiers and investors to understand their intent t

71、owards development of sustainable real estate in India.69 per cent of the total respondents were developers.2023 KPMG Assurance and Consulting Services LLP,an Indian Limited Liability Partnership and a member firm of the KPMG global organization of independent member firms affiliated with KPMG Inter

72、national Limited,a private English company limited by guarantee.All rights reserved.2023 KPMG Assurance and Consulting Services LLP,an Indian Limited Liability Partnership and a member firm of the KPMG global organization of independent member firms affiliated with KPMG International Limited,a priva

73、te English company limited by guarantee.All rights reserved.Sustainable real estate|An opportunity to leverage|15OperationsSustainability in building operations can be elevated through aspects such as optimisingenergy efficiency in HVAC systems,using air filter of Minimum Efficiency Reporting Values

74、(MERV)14.Advanced glass technologies are being used in buildings to save energy by adjusting the amount of sunlight that passes through a window.Also,lighting harvesting is being widely used in office spaces that increase buildings performance by minimising energy consumption.This can be achieved th

75、rough active monitoring,end to end management and adoption of new technologies.Sustainability is being incorporated across different phases of project lifecycleConstructionTransactionsDevelopers can use sustainable materials for construction which includes use of recyclable and renewable materials.S

76、uch materials can minimiseenergy consumption and reduce waste production.Some sustainable construction materials which can be used by developers include-alternates of bricks made of earthen materials like clay and mud,bamboos,structurally insulated panels,bio-composites,block and sustainable concret

77、e.These materials can reduce CO2 emissions by up to 50 per cent.10Occupancy decisions are now being influenced by building sustainability too,which can bring about benefits such as reduced carbon footprint,comparatively lower operational costs,elevated indoor environment and employee productivity.Te

78、nants are looking for more sustainable options while leasing properties and even willing to pay higher rentals for environment-friendly buildings,compared to conventional buildings.Tenants are applying for green certifications too to reach their sustainability goals.2023 KPMG Assurance and Consultin

79、g Services LLP,an Indian Limited Liability Partnership and a member firm of the KPMG global organization of independent member firms affiliated with KPMG International Limited,a private English company limited by guarantee.All rights reserved.Achieving net zero goals requires businesses to adopt sus

80、tainability through green buildings.Therefore,new developments should aim for carbon neutrality by using sustainable materials for construction,renewable resources for energy and green spaces for the environment.Sustainability in different phases of project cycle10.Heres how alternative construction

81、 materials can help India curb carbon emissions,Business today,28 March 2023Note:*Based on a survey done by Colliers-KPMG in India with a sample size of 32 Sustainable real estate|An opportunity to leverage|15Enhancing sustainability through green buildings16|Sustainable real estate|An opportunity t

82、o leverage 2023 KPMG Assurance and Consulting Services LLP,an Indian Limited Liability Partnership and a member firm of the KPMG global organization of independent member firms affiliated with KPMG International Limited,a private English company limited by guarantee.All rights reserved.Sustainable r

83、eal estate|An opportunity to leverage|17Green buildings offer benefits such as enhanced productivity,better health and increased asset valueGreen buildings command higher rentals and valuation and lower the overall operating costsDevelopers can look at optimiseddesigns,energy and water conservation

84、measures and green insulation to implement green buildings.Key takeawaysSustainable transitions in land,building,energy,transport and cities together are taking shape of far-reaching strategies that will aid the global carbon reduction goals.Green buildings can also reduce carbon emissions if they h

85、ave built in green spaces.Built in green spaces that are integrated into the design of green buildings provide a multitude of benefits,from improved indoor environment quality to temperature regulation.Green developments reduce the adverse impact on the environment by limiting energy,water,waste and

86、 at the same time can save long-term energy costs.According to the US Green Building Council(USGBC),maintenance cost for LEED certified buildings is about 20 per cent lower than for regular buildings.Even old buildings retrofitted with green amenities can cut down operation cost by 10 per cent in ju

87、st one year.11.Benefits of LEED,USGBC,as accessed on 1 June 2023 2.Making urban India sustainable through green buildings,MCHI,January 2022Benefits of green buildingsOccupiers perspectiveDevelopers perspectiveGreen buildingsLower operating costsImproved healthEnhanced productivityIncreased rentalsLo

88、wer carbon footprintIncreased asset valueLiving green walls,including vertical gardens or eco-walls improve air quality and serve as a natural acoustic filter improving overall wellbeing of the occupantsGreen buildings are known to have around 20 per cent reduced maintenance cost than ordinary build

89、ings1Green buildings can improve productivity and performance of employees through improved indoor environmentGreen buildings can reduce carbon emissions by 35 per cent and waste by 70 per cent2Green buildings command higher rental premium and such developments are likely to receive more traction fr

90、om tenantsGreen buildings create more value for owners and investors and can fetch higher returns on investments18|Sustainable real estate|An opportunity to leverage 2023 KPMG Assurance and Consulting Services LLP,an Indian Limited Liability Partnership and a member firm of the KPMG global organizat

91、ion of independent member firms affiliated with KPMG International Limited,a private English company limited by guarantee.All rights reserved.2.93.23.23.32.5Lack ofexpertiseHigh costsDifferentprioritiesLack ofregulationsUnsure oftangiblebenefits toorganisation2.32.11.6Energy Efficiency(renewable ene

92、rgy,water efficiency)Indoor environment(lighting systems,air quality,HVACsystems)Materialsustainability(constructionmethods)Stakeholders rating for incorporating sustainable features in their projects*(rating scale 1-3)Implementing sustainable real estate decisions*(rating scale 1-5)Note:*Based on a

93、 survey done by Colliers-KPMG in India with a sample size of 32.These are average ratings from the survey respondent group.A higher rating suggest more weightage to that particular aspect.2023 KPMG Assurance and Consulting Services LLP,an Indian Limited Liability Partnership and a member firm of the

94、 KPMG global organization of independent member firms affiliated with KPMG International Limited,a private English company limited by guarantee.All rights reserved.Sustainable real estate|An opportunity to leverage|19Prevalence of green practices across various asset classes3.Retrofitting office bui

95、ldings:Moving towards sustainability,Vestian,July 20224.How data centers can reduce their carbon footprint,Energy,June 2022 2023 KPMG Assurance and Consulting Services LLP,an Indian Limited Liability Partnership and a member firm of the KPMG global organization of independent member firms affiliated

96、 with KPMG International Limited,a private English company limited by guarantee.All rights reserved.Commercial(Offices)ResidentialData centresTo establish a green residential building,it is important to follow the standards set by green building codes such as the National Building Code,the Energy Co

97、nservation Building Code(ECBC)and the Leadership in Energy and Environmental Design-India(LEED-India).Furthermore,buildings can be made more sustainable by focusing on reduction of energy consumption through retrofitting,optimising efficiency of drinking and wastewater and reducing waste.Data centre

98、s are estimated to consume 400 terawatt-hours(TWh)of electricity,accounting for about 2 per cent of total global demand.4Switching to renewable energy power plants can offset much of the electricity that data centres use.Additionally,using building materials with lower embodied carbon and upgrading

99、energy systemswith AI-driven smart systems can significantly reduce carbon emissions and lead to energy optimisation.From a construction point of view,adding insulation to outer walls and floors,applying coatings and foams,using heat efficient glazing,insulating top floors,green roofing and ponding

100、can be some of the key aspects that developers can look at to make buildings more sustainable.Employing energy-efficient motors and appliances can be some other features.Moreover,HVAC use over 50 per cent of energy consumed in commercial buildings,thus,retrofitting measuressuch as chiller sequencing

101、,usage of low-approach cooling towers,installation of variable frequency drives and auto tube cooling systems can be used to reduce energy consumption.3Smart lighting&LED light fixtures can also be used to ensure energy efficiency in buildings.Sustainable real estate|An opportunity to leverage|1920|

102、Sustainable real estate|An opportunity to leverage 2023 KPMG Assurance and Consulting Services LLP,an Indian Limited Liability Partnership and a member firm of the KPMG global organization of independent member firms affiliated with KPMG International Limited,a private English company limited by gua

103、rantee.All rights reserved.Strategies around successful deployment of green buildings5.How green buildings help combat climate change,GlobalSpec,30 October 20236.Making urban India sustainable through green buildings,MCHI,January 20227.Solar Heat-Gain Coefficient Ratings for Windows,the Inter-nation

104、al Association of Certified Home Inspectors,as accessed on 1 June 2023According to the World Green Building Council(WorldGBC),decarbonisation can be achieved through a lifecycle approach to carbon reduction that considers all emissions generated by a building over its lifecycle.Hence,collaboration i

105、s needed to build deeper penetration of sustainable construction.Buildings with sustainable elements can reduce the energy used in heating the interiors by 5 per cent in winters and cooling them down by 33 per cent in summers.Due to dark surfaces,cities have higher temperatures than rural areas.A st

106、udy suggests that green rooftops on 7 per cent of buildings can cool down the city by up to 2C.5Sustainable site design Bioclimatic architecture can be used to optimise site potential Minimise consumption of non-renewable energy;optimiseoperational and maintenance practices.Energy and environment Us

107、e of optimised building design,materials and energy conservation measures Building performance should at least meet the minimum criteria of the International Energy Code compliance levels.Tracking water supply and solid waste management Monitoring water usage;waste hauling and disposal records Monit

108、oring water properties at office premises to ensure health and wellbeing of employees Installing smart fittings to ensure efficient use of water Materials recovery facility(MRF)can help separate garbage into biodegradable,recyclable and special or hazardous waste.Water conversation Designing the con

109、struction site in a way that natural water cycle is preserved Reducing inefficient use of potable water on the site and maximising recycling gray water and reuse of water through rainwater harvesting Installing rainwater harvesting systems.Materials and resources Maximise the use of recycled materia

110、ls,energy efficient engineered materials and eco-friendly materials along with resource efficient structural systems Adoption of materials,which do not release toxic chemicals in the environment through their lifecycle Using locally sourced materials to ensure low emissions during material procureme

111、nt Using low-carbon materials such as recycled asphalt fly ash,low carbon bricks,recycled metals,among others,to reduce the embodied carbon emissions.Facades and roofs Green insulation utilises old discarded materials and eliminates the need for high-end finishes made from non-renewable resources Co

112、ol roofs reflect heat away from the building to keep buildings at room temperature and reduce the need for air conditioning.Maintaining indoor air quality Indoor air quality can be maintained with relative humidity below 70 per cent to restrict growth of pathogens.6 Daylight-controlled lighting syst

113、ems can be used.Using low solar heat gaincoefficient(SHGC)glass allows less solar heat to pass through.Glass windows with SHGC rating of 0.30 only allows 30 per cent of solar heat to pass through.7 Utilisation of particulate matter sensors PM2.5 and PM5.0 to monitor and maintain indoor air quality.P

114、lanning/pre-development stageConstruction stageOperations stage 2023 KPMG Assurance and Consulting Services LLP,an Indian Limited Liability Partnership and a member firm of the KPMG global organization of independent member firms affiliated with KPMG International Limited,a private English company l

115、imited by guarantee.All rights reserved.Sustainable real estate|An opportunity to leverage|21While there are multiple sustainability elements and practices that can be incorporated in buildings at various stages of building lifecycle,understanding the overall performance of the building becomes crit

116、ical.Green certifications help occupiers assess a buildings performance with respect to different sustainability parameters through their rating systems.Hence,occupiers nowadays are increasingly preferring green certified buildings as they look to build green portfolios.Green building standards and

117、policies providing impetus22|Sustainable real estate|An opportunity to leverage 2023 KPMG Assurance and Consulting Services LLP,an Indian Limited Liability Partnership and a member firm of the KPMG global organization of independent member firms affiliated with KPMG International Limited,a private E

118、nglish company limited by guarantee.All rights reserved.Sustainable real estate|An opportunity to leverage|23LEED is the most widely used certification in India,it evaluates building performance to develop healthy and high-performance green buildingsGRIHA rating systems assess building performance t

119、o optimise energy efficiencyWELL certification focuses on occupants health and wellness using people-first approach.Key takeawaysLEED:Evaluates building performance standardsU.S.Green Building Council(USGBC)started issuing LEED certificates in 1998,with an aim to transform the conventional way of de

120、signing,constructing and operating buildings and communities by inducing environment,social responsibility and health factors.From 100 certified projects in 2004 to more than 100,000 projects participating today,LEED has reached v4.1(the next generation standards for green buildings)with more inclus

121、ive and data-driven building performance monitoring system.The Indian Green Building Council(IGBC)which was established in 2001,designs the IGBC LEED certification to entail energy,water and fresh air,based mandatory requirements that enable quality life for the occupants.Green building certificatio

122、n Inc.(GBCI),a sister organisation of USGBC,is an organisationthat provides third-party verification of services for LEED certification.The rating system is bifurcated into existing,new and under-construction projects across various infrastructure and real estate asset classes.Certifications are bas

123、ed on the credits earned on different parameters with a validity of three years.Green certificationsAn evolving platform to endorse green buildingsGreen certifications are a medium to validate a building as green.There are many green certification platforms that enable different levels of programmes

124、 for entities to highlight their sustainable measures,products,services and practices.The worlds first green building standard,Building Research Establishments Environmental Assessment Method(BREEAM),was introduced by the UK in 1990,to create a more systematic and informed standard.Over the years,se

125、veral standards have been introduced globally to set benchmarks and to assess whether a building is sustainable or not.Early 2000s saw the formation of Green Rating for Integrated Habitat Assessment(GRIHA)and Indian Green Building Council(IGBC).These councils verify whether the buildings satisfy the

126、 set standards in energy,water,health and wellness and waste at every step of its lifecycle.This section talks about different types of green certifications that are popular in India and analyses the green penetration of such buildings in Grade A office stock across top six cities in India.24|Sustai

127、nable real estate|An opportunity to leverage 2023 KPMG Assurance and Consulting Services LLP,an Indian Limited Liability Partnership and a member firm of the KPMG global organization of independent member firms affiliated with KPMG International Limited,a private English company limited by guarantee

128、.All rights reserved.LEED certification processSource:Colliers,LEED rating system,USGBC,2023Note:The percentage figure shows the share of each parameter in the total LEED credits GRIHA:Optimises energy efficiencyGreen Rating for Integrated Habitat Assessment(GRIHA)was formed by The Energy and Resour

129、ce Institute(TERI)in 2007.GRIHA rating system quantifies different parameters such as energy consumption,waste generation and renewable energy adoption,to decipher the condition of a buildings sustainability elements.GRIHA v2019 has incorporated lifecycle analysis,cost analysis and water performance

130、 index along with high weightage towards user experience and market feedback.The rating system is divided into 10 categories totaling 100 points and five points extra are provided to projects showcasing innovative sustainable strategies.Rating ranges from 1 star to 5 star,with 5 being the highest.On

131、ce the certification is given to a project,it is valid for five years.Source:Colliers,Green Rating for Integrated Habitat Assessment as accessed on 1 June 2023Certification levelsProject typeNew Construction Existing BuildingGreen SEZCertified(Best Practices)40 to 4950 to 5951 to 60Silver(Outstandin

132、g Performance)50 to 5960 to 6961 to 70Gold(National Excellence)60 to 7470 to 7971 to 80Platinum(Global Leadership)75 to 10080 to 10081 to 100Screened through Pre-requisites and creditsClimate ChangeDirectly Impact Human Health Water resources BiodiversityGreen EconomyImpact Community Impact Natural

133、resourcesCertification levels basis points earned by USGBCVerification and review process by GBCIPoints awardedPlatinum(80+points)Gold(60-79 points)Silver(50-59 points)Certified(40-49 points)Share of each parameter in the total LEED credits 35%20%15%10%10%5%5%Certification levels basis points earned

134、 by IGBCProject Project Eligibilitybuilt up area more than 2500 sq m(excluding parking,basement area,and typical buildings)YesEOI form filling and document submission in the GRIHA portalDiscussion on rating system and project specific queriesIIIValidate sustainable measures adopted during the constr

135、uction phaseValidate internal finishes,electrical,plumbing and mechanical components installed Due diligenceRating renewalPreliminary evaluationOnline registrationOrientation workshopAdditional due diligence Green awareness driveFinal due diligence and evaluationCertification levelsPoints earned1-st

136、ar25 to 402-star41 to 553-star56 to 704-star71 to 855-star86 and above 2023 KPMG Assurance and Consulting Services LLP,an Indian Limited Liability Partnership and a member firm of the KPMG global organization of independent member firms affiliated with KPMG International Limited,a private English co

137、mpany limited by guarantee.All rights reserved.Sustainable real estate|An opportunity to leverage|25WELL:Drives health and wellnessIn 2014,International WELL Building Institute(IWBI)launched WELL certification to transform health and wellbeing using a people-first approach.Spanning across start-ups

138、and Fortune 500 companies,WELL has enabled developers to prioritise health,wellness and safety of their occupiers.The rating system is aligned with design,policy and built environment and aligning the same with health and well-being.WELL certified projects earn points basis features,some of which re

139、volve around how natural elements like air and water can create psychological comfort for occupants.While the focus of LEED-certified buildings is on becoming energy efficient,WELL-certified buildings focus on healthy lifestyle and environment.WELL-certified office buildings have about 8-10 per cent

140、 improved employee productivity amidst enhanced indoor environment.Source:Colliers,WELL v2,IWBI,2020-2023Owner OccupiedWELL-CoreOwned or leased by the project owner,and regular occupants affiliated with project ownerAt least 75 per cent of the project area is occupied by one or more tenants and/or s

141、erves as common space10 concepts formulated to benefit health,wellbeing and performance of the peopleVerification by IWBIPoints awardedPolicy strategy DesignstrategyOperation strategyPoints earned based on performance outcomesCertification levels Project type(minimum points required per concept in e

142、ach category)Owner occupiedCoreTotal points required to achieve(maximum 100)Bronze0040Silver1050Gold2060Platinum3080Project Certification levels basis points earned26|Sustainable real estate|An opportunity to leverage 2023 KPMG Assurance and Consulting Services LLP,an Indian Limited Liability Partne

143、rship and a member firm of the KPMG global organization of independent member firms affiliated with KPMG International Limited,a private English company limited by guarantee.All rights reserved.Government regulations towards sustainability1The Bureau of Energy Efficiency(BEE)and the Ministry of Powe

144、r,Government of India have been working on various initiatives to plan and execute energy efficiency programmes.Additionally,Indian Green Building Council(IGBC)collaborated with several central and state government agencies to promote the green building movement in the country.Eco Niwas Samhita 2021

145、2The Bureau of Energy Efficiency(BEE)has developed Eco Niwas Samhita 2021.The code is developed to set the minimum benchmark to achieve energy efficiency in residential buildings.The part I of the code is focused to set minimum building envelope performance standards,which plays a significant role i

146、n limiting heat gains and loss while ensuring adequate daylighting and ventilation.Whereas the Part 2 provides energy efficiency standards for electro-mechanical systems of residential buildings in addition to the parameters prescribed in 2018.Energy Conservation Building Code(ECBC)Commercial3The EC

147、BC applies to commercial building complexes that have a connected load of atleast 100 kW or greater or 120 kVA or greater.In 2009,BEE launched ECBC for existing buildings as a voluntary policy measure to reduce the adverse impact of buildings on the environment.The programmerates buildings on a 1-5

148、scale,with 5 star labelled buildings being most efficient.1.Bureau of Energy Efficiency,Government of India,Ministry of Power2.Eco-Niwas Samhita 2021,Government of India,Ministry of Power3.Energy Conservation Building Code,2017 2023 KPMG Assurance and Consulting Services LLP,an Indian Limited Liabil

149、ity Partnership and a member firm of the KPMG global organization of independent member firms affiliated with KPMG International Limited,a private English company limited by guarantee.All rights reserved.Sustainable real estate|An opportunity to leverage|27How policy makers in India are encouraging

150、top companies to move towards sustainability?In May 2021,Securities and Exchange Board of India(SEBI)released Business Responsibility and Sustainability Report(BRSR),which is applicable to the top 1,000 listed entities based on market capitalisation.The entities are supposed to prepare a Business Re

151、sponsibility Report(BRR)which should include the ESG initiatives taken by the company.The step was taken to bring Indias sustainability reporting to global reporting standards.The reporting is on a mandatory basis from FY 2022-23,prior to which in FY 2021-22 companies could report on a voluntary bas

152、is.Companies other than the top 1,000 companies can also submit their BRR report on a voluntary basis.The information from BRSR filings will help to create a Business Responsibility-Sustainability Index for companies.For successful implementation of reporting,the guidelines of BRSR reporting can hav

153、e a well-defined plan of action by SEBI which would streamline the process for entities.2023 KPMG Assurance and Consulting Services LLP,an Indian Limited Liability Partnership and a member firm of the KPMG global organization of independent member firms affiliated with KPMG International Limited,a p

154、rivate English company limited by guarantee.All rights reserved.Green certifications and supportive government policies are helping developers and occupiers in building green portfolios by encouraging and incentivisingthem.Certifications are also helping occupiers in making informed occupancy decisi

155、ons as they advance their commitments towards net-zero transition.Occupiers taking a step towards sustainability28|Sustainable real estate|An opportunity to leverage 2023 KPMG Assurance and Consulting Services LLP,an Indian Limited Liability Partnership and a member firm of the KPMG global organizat

156、ion of independent member firms affiliated with KPMG International Limited,a private English company limited by guarantee.All rights reserved.Sustainable real estate|An opportunity to leverage|29Post-COVID-19 occupiers are prioritising health and wellness at the workspace There is an increased prefe

157、rence for quality office spaces with cutting edge amenities Occupiers are also embracing technology which can enhance operational efficiency at workspaceGreen leases are expected to gain momentum led by benefits such as reduction in overall energy consumption.Key takeawaysChanging priorities of occu

158、piers post COVID-19;focus on health and wellbeing Growing awareness towards climate change has resulted in office occupiers being concerned about the changing climate landscape and in turn has highlighted the importance of sustainable office workspaces.Occupiers have been increasingly prioritising h

159、ealth and wellness aspect in their workplace decisions,especially post pandemic.A rising preference is seen towards green,tech-enabled modern office spaces equipped with wellness related amenities and collaborative spaces.Increased preference towards wellnessEmbracing technology for greater efficien

160、cyUsing renewable energy and low-carbon materialsOccupiers are preferring good quality office spaces with cutting edge amenities and collaborative spaces providing an optimal work experience to their employeesOccupiers are exploring real estate options equipped with green area,spa,meditation area,fi

161、tness centre to name a few,as they encourage employees to practice personal wellness through workshops and wellness sessionsOccupiers are also going for options with art studios,hobby rooms and yoga gardens,where they can relax and rejuvenate.Occupiers are increasingly embracing technology to enhanc

162、e operational efficiency at workplaces Occupiers are incorporating modern technologies such as smart bulbs,smart windows,touchless faucets and intelligent curtain control systems,among others.Occupiers are powering building services such as lighting and HVAC by renewable energy resources to reduce c

163、arbon emissionsOccupiers are increasingly chasing green certified buildings to ensure that the workplace has met environmental,energy and health standards in its design,construction and performance.30|Sustainable real estate|An opportunity to leverage 2023 KPMG Assurance and Consulting Services LLP,

164、an Indian Limited Liability Partnership and a member firm of the KPMG global organization of independent member firms affiliated with KPMG International Limited,a private English company limited by guarantee.All rights reserved.Occupiers inclination towards green leasesA green lease is a lease agree

165、ment that incorporates smart,energy aligned clauses,shared objectives and operational procedures between tenant and occupier to collaboratively advance buildings into high performance,carbon neutral and sustainable ones.The green clauses in leasing can range from Light Green to Dark Green.Light Gree

166、n clauses imply that the parties seek to,but do not ensure specific actions,while Dark Green clauses involve stringent targets,monitoring and penalties.11.Green Leasing a Win Win for Tenant and Landlord,Sustainabilitynext,November 20172.Top 3 trends from the 2022 Green Lease Leaders,Institute for Ma

167、rket Transformation,May 2022Key priorities to be considered in a green leaseSecuring environmental performance commitmentsSecuring environmental performance commitmentsSharing verifiable technical dataAllocating financial investments and incentivesA green lease helps reduce the overall consumption o

168、f energy in a building,leading to savings.Green leases are expected to gradually gain momentum as more corporates have been prioritising social and governance clauses in their agreements.Green leases to gain momentum in the coming futureCompanies applying for green recognition have increased signifi

169、cantly after the pandemic.The growth reflects the climate change awareness recognisedby the government and corporate tenants.Green leases are gradually becoming a necessary tool to meet the developments and changes in demand of real estate.It has been reported that most gold-certified Green Lease Le

170、aders have integrated green leases into 80 to 100 per cent2 of their portfolio.2023 KPMG Assurance and Consulting Services LLP,an Indian Limited Liability Partnership and a member firm of the KPMG global organization of independent member firms affiliated with KPMG International Limited,a private En

171、glish company limited by guarantee.All rights reserved.Sustainable real estate|An opportunity to leverage|31What is the effective cost for an occupier if one opts for a green/high performance building?Most green buildings have an added cost of 5 to 15 per cent3as compared to a conventional building

172、with the payback period of 3-5 years.With rising occupier preference for green buildings and green leases,Indias green footprint is on the rise.Over the last few years,especially post-Covid-19,there has been a rise in green certified stock for Grade A office buildings.Majority of the new supply acro

173、ss the top six cities of the country in the last 3-4 years is green.At the same time,developers are also focussing on retrofitting to benchmark existing buildings with the sustainability criteria.3.Cost of green building in India,InHabit,August 2021However,the cost of green buildings in India might

174、vary between INR150 250 thousand per KW capacity for renewable energy.3Factors such as design time,building materials,building envelope,operation and maintenance,among others,can result in slightly higher cost.Indias current green footprint32|Sustainable real estate|An opportunity to leverage 2023 K

175、PMG Assurance and Consulting Services LLP,an Indian Limited Liability Partnership and a member firm of the KPMG global organization of independent member firms affiliated with KPMG International Limited,a private English company limited by guarantee.All rights reserved.Sustainable real estate|An opp

176、ortunity to leverage|33About 421 mn sq ft of Grade A office stock has at least one green certification61 per cent of Grade A office stock in the top cities is green as of Q3 2023Bengaluru accounts for the highest share of green buildings followed by Delhi NCRCities like Mumbai and Delhi NCR hold the

177、 highest opportunity to upgrade existing Grade A office assets.Key takeawaysIndia has a total Grade A office stock of about 691 mn sq feet as of Q3 2023,as per Colliers,of which 61 per cent have obtained at least one green certification.The number of green-certified buildings has witnessed over five

178、-fold increase since 2010,in line with rising importance of green certifications amongst developers and occupiers.As of Q3 2023,Bengaluru,Hyderabad and Chennai hold higher proportion of green-certified buildings with almost three in every five assets green certified.Pan India green certified office

179、stock*as of Q3 2023421mn sq feet61%Penetration of green stock Pan India as of Q3 2023of the Grade A new office supply in Q3 2023 is green certified 82%005006007008002016Q3 2023Stock in msfGreen stock(msf)Non-Green Stock(msf)Per cent share of green stock in overall Grade A office stockQuan

180、tum of green stock rose by 83 per cent in Q3 2023 from 201655%61%Source:ColliersNote:*Top 6 cities includes Bengaluru,Chennai,Delhi-NCR,Hyderabad,Mumbai,Pune34|Sustainable real estate|An opportunity to leverage 2023 KPMG Assurance and Consulting Services LLP,an Indian Limited Liability Partnership a

181、nd a member firm of the KPMG global organization of independent member firms affiliated with KPMG International Limited,a private English company limited by guarantee.All rights reserved.Source:Office data as of Q3 2023,Colliers33%18%17%12%11%9%BengaluruDelhi-NCRHyderabadMumbaiChennaiPune32%of Delhi

182、s total green stock has come in since 2020,led by increased focus on health and wellnessLEED certification most prevalent in green building rating systemLEED certification is the most popular certification in India,with more than 89 per cent of the existing green-certified buildings holding the same

183、.About 38 per cent of these green buildings have received platinum certifications the highest level of certification with 80+points.This testifies developers conscious efforts toward creating sustainable commercial real estate.Others8%Of the total LEED certifications are Platinum 38%Platinum38%Gold5

184、2%Source:ColliersSilver1%Multiple levels1%Share of certified Green Grade A office stock in Pan-India(per cent)Green penetration in Grade A office stock of 6 top cities in India 60%57%41%72%71%60%HyderabadChennaiMumbaiBengaluruPuneDelhi-NCR89%7.7%2%1%0.3%LEEDMultiple certificationsWELLOthersGRIHANote

185、:Data as of September 2023 2023 KPMG Assurance and Consulting Services LLP,an Indian Limited Liability Partnership and a member firm of the KPMG global organization of independent member firms affiliated with KPMG International Limited,a private English company limited by guarantee.All rights reserv

186、ed.Sustainable real estate|An opportunity to leverage|35WELL certification picking up post pandemic:With occupiers getting more cautious about employee health and wellbeing post pandemic,WELL certifications witnessed a rise in registrations since 2014.According to Colliers,WELL-certified office stoc

187、k witnessed a two-fold rise since 2014.As of Q3 2023,WELL-certified stock stands at 8.3 million sq ft across top six cities.Investing in employees physical and mental wellbeing is leading to happy employees,thereby,leading to improved productivity for businesses.Currently,Mumbai city holds maximum W

188、ELL-certified office stock.456789107%Percentage changeSource:ColliersTop 10 micro markets accounting for a majority of the green stock62 per cent of the countrys total green stock is present in the top 10 micro markets across top six cities in India.These top micro markets are largely a part of subu

189、rban and peripheral areas that consist of newer developments.Lowest penetration of green stock is observed in Central Business Districts(CBDs)of top six cities,as they are characterised by old office stock.According to Colliers,CBDs of the top six cities in total consist of only 3 per cent of the to

190、tal green footprint of India.WELL Certified stock in msf86%of Bengalurus total green stock is in Outer Ring Road(ORR),Whitefield and SBD30%of Mumbais total green stock is located in Navi Mumbai60%of Delhi NCRs total green stock is located in GurugramSource:Colliers20162019Q3 2023Note:Data as of Sept

191、ember 202336|Sustainable real estate|An opportunity to leverage 2023 KPMG Assurance and Consulting Services LLP,an Indian Limited Liability Partnership and a member firm of the KPMG global organization of independent member firms affiliated with KPMG International Limited,a private English company l

192、imited by guarantee.All rights reserved.Top 10 micro markets with high green penetrationMarket definitions-Bengaluru Outer Ring Road(ORR)-from Silk Board to HebbalSecondary Business District(SBD):Indiranagar,Koramangala,CV Raman Nagar,Jayanagar,JP Nagar,Rajaji NagarChennai Old Mahabalipuram Road Zon

193、e 1:Thoraipakkam to Sholinganallur;Semmencherry to SiruseriMPR:Mount-Poonamallee High RoadHyderabad Suburban Business District(SBD):Madhapur,HITEC City,Kondapur and Rai DurgOff SBD:Gachibowli,Nanakramguda,Kokapet and ManikondaSource:ColliersGreen certified offices witness higher occupancy levels in

194、most locations*Source:ColliersGreen certifications are being prioritised in occupiers real estate decisions for credibility,enhanced value and brand reputation.In most of the top micro markets,vacancy in green buildings is lower than that of non-certified buildings.Corporates are increasingly linkin

195、g their carbon targets to global climate and are prioritising their commitments toward ESG goals.Sustainability is being factored into occupiers occupancy decisions as they look to green-proof their real estate portfolios.Occupiers are also increasingly expressing their willingness to spend on envir

196、onmental improvements,digital solutions and data capabilities,including smart buildings and energy monitoring,for their ESG commitments.Note:*High vacancy in Chennais green buildings in MPR micro-market is largely due to surge in new green supply in the last few years0%5%10%15%20%25%30%35%ORRWhitefi

197、eldSBDOMR Zone 1MPRNoidaExpresswaySBDOff SBDNaviMumbaiKharadiBengaluruChennaiDelhi NCRHyderabadMumbaiPune%Vacancy in Green buildings%Vacancy overall as of Q3 2023Note:Data as of September 2023 2023 KPMG Assurance and Consulting Services LLP,an Indian Limited Liability Partnership and a member firm o

198、f the KPMG global organization of independent member firms affiliated with KPMG International Limited,a private English company limited by guarantee.All rights reserved.Sustainable real estate|An opportunity to leverage|37Retrofitting ageing office stock-a step towards sustainability Post COVID-19,d

199、riven by a global economic and health crisis,developers and occupiers have intensified their efforts toward sustainability aspects.Retrofitting and upgradation of existing buildings presents a massive opportunity for landlords and developers to benchmark the current building performance against sust

200、ainability criteria by improving building performance.As office buildings get outdated,developers are looking to upgrade and retrofit them.While newer buildings are designed to be sustainably efficient,they usually come at a heavy environmental cost during the construction phase.Retrofitting not onl

201、y promotes economic prosperity but also ecological restoration.Therefore,implementation of retrofitting is equally necessary for increasing the number of green buildings available and facilitate the decarbonisation of real estate.City-wise share of old stock with respect to total office stock Source

202、:ColliersWhile the penetration of green office stock has been on the rise in the country,developers and investors have also set short term and long term goals to further decarbonise their portfolios.They feel a green portfolio would not only benefit them with better valuations for their properties b

203、ut would holistically benefit occupiers,employees and the environment.REITs too have taken steps to align their goals with best global practices which would lead to sustainable growth.Note:*Based on a survey done by Colliers-KPMG in India with a sample size of 32 Stakeholders preference for implemen

204、ting green retrofitting in their existing projects*26%39%13%19%3%0%StronglypreferPreferUnsureNeutralSlightlypreferDo notprefer65 per cent of the stakeholders prefer(or strongly prefer)implementing green retrofitting led by the number of benefits green buildings can offer such as rental appreciation

205、and increase in longevity of buildingsKey benefits of retrofitting More attractive to occupiersRental appreciationIncreases longevity of buildingsImproves building performanceMore E and S compliant16%21%25%26%21%24%84%79%75%74%79%76%BengaluruChennaiDelhi NCRHyderabadMumbaiPune%share of stock older t

206、han 15 years%share of remaining stockHow can developers and investors make a difference?38|Sustainable real estate|An opportunity to leverage 2023 KPMG Assurance and Consulting Services LLP,an Indian Limited Liability Partnership and a member firm of the KPMG global organization of independent membe

207、r firms affiliated with KPMG International Limited,a private English company limited by guarantee.All rights reserved.Sustainable real estate|An opportunity to leverage|39Developers are choosing low carbon construction techniques and aim for green certifications in early stages of construction Inves

208、tors targets are aligned with net zero targets to reduce carbon emissions across their portfolios REITs have also taken steps to align their goals with best global practices for sustainable growth.Key takeawaysDevelopers focused shift towards sustainability Developers have shifted their focus toward

209、s developing high performing assets,as more occupiers scout for sustainable workspaces.With added benefits such as higher rental premium and increased valuation of green buildings,prioritising sustainable practices and developing high performing efficient buildings has further gained momentum.Yes94%

210、No6%21%52%17%7%3%Up to 5%5-10%10-20%Above 20%NAAre green buildings expected to see an increase in rents/valuation?*Incremental value green buildings command*Typically,green buildings are expected to command higher capital and rental values,led by their efficient features and environmental and social

211、 long-term benefits.94 per cent of stakeholders feel that green buildings are expected to see increased rents/valuation.A majority of them also believe that green buildings lead to 5-10 per cent higher valuation as compared to non-green buildings.Note:*Based on a survey done by Colliers-KPMG in Indi

212、a with a sample size of 32 40|Sustainable real estate|An opportunity to leverage 2023 KPMG Assurance and Consulting Services LLP,an Indian Limited Liability Partnership and a member firm of the KPMG global organization of independent member firms affiliated with KPMG International Limited,a private

213、English company limited by guarantee.All rights reserved.How can developers build green portfolios?Designing for efficiency is the key to reduce buildings carbon emissions.Effective building design can ensure optimum space usage,adequate natural light and ventilationChoosing low or zero carbon const

214、ruction techniques can ensure maximum efficiency and minimise waste on site Aiming for green certifications in early stages of construction will create a systematic approach towards building high performing assetsDeploying renewable energy resources such as solar panels shall significantly minimiset

215、he carbon emissionsand offset residual emissions of the buildingsDevelopers can use local,recyclable and low carbon materialsfor construction and use clean transportation for procurement of materials.This shall help reduce carbon footprint of the buildings during construction 2023 KPMG Assurance and

216、 Consulting Services LLP,an Indian Limited Liability Partnership and a member firm of the KPMG global organization of independent member firms affiliated with KPMG International Limited,a private English company limited by guarantee.All rights reserved.Sustainable real estate|An opportunity to lever

217、age|41ESG targets for global private equity funds and asset managers Globally,investors are increasingly investing into high-performing green assets.Investing in such assets is not just nice to have anymore but has now become the norm in developed markets.Top global investors are playing vital role

218、in decarbonising the industry,as they are prioritising decarbonisation of their huge real estate portfolios,committing towards achieving their net zero targets by 2050.Decarbonisationoffers significant benefits to investors,in terms of enhanced returns,value creation,brand recognition,reduced operat

219、ional costs and increased market share.Investors are increasingly engaging with developers and occupiers to communicate and align with their sustainability commitments.Over the years,leading global investors have become more cautious about climate risks and are proactively monitoring their environme

220、ntal impact and targeting a reduction of emissions across their portfolio companies.Most funds have set interim targets to reduce their carbon emissions,which are aligned to their long-term ESG targets.These include short term strategies such as reducing carbon emissions across all owned and managed

221、 assets,installing and utilising renewable capacities across their assets,investing in green assets,issuing green bonds and sustainability linked debts.Some of the leading global investors have also announced their global emissions reduction programmes with a goal of reducing carbon emissions at sca

222、le across their real estate portfolios.Investors are also assessing physical climate risks within due diligence and asset management activities aiming long term resilience and growth of their businesses.They are also actively partnering with their subsidiaries to help put them on a lower-carbon traj

223、ectory.Investors leveraging sustainability at scaleNote:*Based on a survey done by Colliers-KPMG in India with a sample size of 32 7%47%23%17%7%Up to 5%5-10%more10-15%more15-25%Above25%Enabling sustainable construction strategy is expensive as these upgradations demand more capital.About half of the

224、 companies foresee 5-10 per cent incremental investments for developing green buildingsHow much incremental investments do you foresee for developing green buildings*42|Sustainable real estate|An opportunity to leverage 2023 KPMG Assurance and Consulting Services LLP,an Indian Limited Liability Part

225、nership and a member firm of the KPMG global organization of independent member firms affiliated with KPMG International Limited,a private English company limited by guarantee.All rights reserved.42How are Indian REITs targeting to achieve sustainability?Similar to global investors,the Real Estate I

226、nvestment Trusts(REITs)in India have also defined their ESG goals and targets,including their short-term goals and a net zero target for 2050.Global Real Estate Sustainability Benchmark(GRESB)The organisation provides peer benchmarks for investors which can help investors to evaluate and achieve the

227、ir ESG targets and improve business intelligence.The entity provides a score,based on ESG performance and strategies of the company.The score helps companies analyse where their company stands at the global level.During Q4 2022,all the three REITs in India got a 5-star rating from GRESB for their ES

228、G performance and scoring which was above the global average1What is being done at the portfolio level?How can adoption of ESG be made mandatory?Setting benchmarksSetting broader decarbonisation target for existing portfolioInnovations at the portfolio level-interventions in energy,water and waste d

229、ecarbonisingDue diligence and stress testing real estate portfolios for sustainability elementsEnforcing sustainable clauses in green leases by encouraging clients to use environment friendly featuresA legal contract with an external property manager that specifies actions to improve ESG performance

230、,such as setting targets for reducing energy consumptionSetting goals for sustainable investments and giving higher weightage to green financingBenchmarking against peers and industry standardsHow are fund managers approaching sustainability?1.2022 Real Estate Assessment Results,GRESB,December 2022

231、2023 KPMG Assurance and Consulting Services LLP,an Indian Limited Liability Partnership and a member firm of the KPMG global organization of independent member firms affiliated with KPMG International Limited,a private English company limited by guarantee.All rights reserved.Sustainable real estate|

232、An opportunity to leverage|4343Green financing in IndiaGreen financing refers to financial arrangements made specifically for initiatives that are environmental friendly.The real estate business benefits from it since it offers financial support and accelerates the shift to a greener economy.In 2020

233、,green finance investment decreased to INR309 thousand crore(USD44 billion)from INR316 thousand crore(USD54 billion)in 2019,amounting to a fourth of the countrys requirements.2While fund flows to the energy efficiency sector increased by 26 per cent between FY2019 and FY2020,funding for green buildi

234、ngs decreased by 81 per cent.2Green building sector witnessed a fall in its investment numbers,and this may be attributed not only to the completion of buildings but also to the delay in the issuance of certificates.2.Indian Green Building Council,CIIWay forward and recommend-ations44|Sustainable re

235、al estate|An opportunity to leverage 2023 KPMG Assurance and Consulting Services LLP,an Indian Limited Liability Partnership and a member firm of the KPMG global organization of independent member firms affiliated with KPMG International Limited,a private English company limited by guarantee.All rig

236、hts reserved.Sustainable real estate|An opportunity to leverage|4545According to WorldGBC,global building footprint is expected to double by 2050.This indicates a massive growth in construction and infrastructure development,which will also increase emissions.The built environment sector has a key r

237、ole in addressing the climate emergency and reducing upfront carbon emissions.1The upcoming buildings are anticipated to be future-ready as they will have a long-lasting impact on the environment and climate for the next 50 years.Future buildings will have to address the challenges of embodied2as we

238、ll as operational carbon upfront.All the stakeholders,including developers,investors and end-users need to collaborate and contribute towards making the construction industry net zero.Current sustainable practices in India are mostly voluntary,largely focusing upon improving energy efficiency as wel

239、l as indoor environment.However,a circular approach is required that aims at efficient and sustainable usage,reuse and recycling of natural resources.Subsequently,sustainability reporting should not be limited to just top listed companies,but,should also penetrate the entire value chain.All stakehol

240、ders should contribute toward net zero transition.Towards faster adoption of sustainability in real estate innovative collaborations,green financing and dynamic policy making become an imperative from public as well as private sector.Note 1.Upfront carbon-Carbon emissions released before the built a

241、sset is used2.Embodied carbon-Embodied carbon is carbon emissions of a building created by its materials Developers/investorsSourcing of low carbon construction materialsSupply chain constraints such as low prevalence of clean transportLack of technical expertise to execute the projectsHigh cost of

242、low-carbon materialsNo system for waste disposal and recyclingLack of incentives from government for green retrofittingOccupiersLack of awareness and acceptabilityLack of incentives from government for embracing sustainabilityGovernmentLack of research and developmentCurrent building codes are in si

243、losNo strict policies for sustainabilityNo systems for benchmarking sustainabilityDevelopers/investorsReplacing high carbon construction materials with available low carbon construction materialsEncouraging purchase of materials nearer to site to reduce travel time and fuel consumptionUpskilling the

244、 workforce involved in construction processesPractising efficient sustainability management and reportingDesign optimisation through value engineering and value designingEnsuring waste minimisation and disposal Focusing on reducing upfront carbon as well as embodied carbonOccupiersProliferation of t

245、echnical knowledge through training and awarenessEntering into green leases with developersSetting strong ESG targets Mandating occupiers to establish ESG disclosures GovernmentProvisioning better funding for sustainability research and developmentSetting up of standard building codes and specificat

246、ions for developing green buildingsEnforcing stricter policies for implementation of sustainable practicesMandating climate impact disclosuresImposition of green taxes by governmentConsidering dynamic incentives such as green cash grants as well and subsidiesIncentivising green retrofittingChallenge

247、s faced by stakeholders in enabling sustainable strategy Recommendations and way forward 2023 KPMG Assurance and Consulting Services LLP,an Indian Limited Liability Partnership and a member firm of the KPMG global organization of independent member firms affiliated with KPMG International Limited,a

248、private English company limited by guarantee.All rights reserved.Sustainable real estate|An opportunity to leverage|46AcknowledgementsKPMG Research teamReshma PaiLead-ResearchAanchal BehlAssistant ManagerJyotsna JoshiAssistant ManagerRohit JainAssistant ManagerAnukriti SahConsultantRohan Barua Consu

249、ltantDamini ShardaAssociate ConsultantShubham PatilAssociate ConsultantWe are sincerely grateful to the following people from the ecosystem who have helped in the preparation of this report.Compliance and DesignShveta PednekarManagerPooja PatelAssistant ManagerHrishu SandhuSenior ExecutiveColliers R

250、esearch teamVimal NadarSenior Director&Head Research India Shreeda GoelDeputy Manager,Research IndiaPallavi KukdolkarDeputy Manager,Research IndiaShreya BhusnurAssociate,Research India 2023 KPMG Assurance and Consulting Services LLP,an Indian Limited Liability Partnership and a member firm of the KP

251、MG global organization of independent member firms affiliated with KPMG International Limited,a private English company limited by guarantee.All rights reserved.46|Sustainable real estate|An opportunity to leverageColliers MarketingSukanya DasguptaSenior Director&HeadMarketing&Communications India 2

252、023 KPMG Assurance and Consulting Services LLP,an Indian Limited Liability Partnership and a member firm of the KPMG global organization of independent member firms affiliated with KPMG International Limited,a private English company limited by guarantee.All rights reserved.Sustainable real estate|A

253、n opportunity to leverage|47Questions to consider:?How can the NRC support in designing a roadmap for ensuring pay disparities are lowered in the coming years?What are considerations for the NRC to understand the market drivers for talent attraction?KPMG in India contacts: The information contained

254、herein is of a general nature and is not intended to address the circumstances of any particular individual or entity.Although we endeavor to provide accurate and timely information,there can be no guarantee that such information is accurate as of the date it is received or that it will continue to

255、be accurate in the future.No one should act on such information without appropriate professional advice after a thorough examination of the particular situation.KPMG Assurance and Consulting Services LLP,Lodha Excelus,Apollo Mills Compound,NM Joshi Marg,Mahalaxmi,Mumbai-400 011 Phone:+91 22 3989 600

256、0,Fax:+91 22 3983 6000.2023 KPMG Assurance and Consulting Services LLP,an Indian Limited Liability Partnership and a member firm of the KPMG global organisation of independent member firms affiliated with KPMG International Limited,a private English company limited by guarantee.All rights reserved.T

257、he KPMG name and logo are trademarks used under license by the independent member firms of the KPMG global organisation.This document is for e-communication only.(012_THL_0823_SP) Neeraj BansalPartner Risk AdvisoryCo-Head and COO India GlobalE:Namrata RanaNational Head ESGE:Chintan PatelHead Building,Construction and Real Estate SectorE:Colliers contacts:Badal YagnikChief Executive Officer IndiaE:Argenio AntaoChief Operating Officer IndiaE:Follow us on