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ESG helps command better rentals

Abhishek Kiran Gupta, CEO and co-founder, CRE Matrix; Deepa Sathiaram, executive director, En3 Sustainability Solutions; Rajesh Pandit, MD, CBRE; Charu Thapar, executive director-property and asset management, Asia Pacific | head-strategy, emerging markets, JLL; and Anil Mugul, head of HVAC and Utilities, Reliance Corporate Park. Mint Premium
Abhishek Kiran Gupta, CEO and co-founder, CRE Matrix; Deepa Sathiaram, executive director, En3 Sustainability Solutions; Rajesh Pandit, MD, CBRE; Charu Thapar, executive director-property and asset management, Asia Pacific | head-strategy, emerging markets, JLL; and Anil Mugul, head of HVAC and Utilities, Reliance Corporate Park. Mint 

  • Global investors and occupiers are clearly favouring buildings that are more sustainable for their workforce, while homebuyers are now more discerning than ever about healthy buildings

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BENGALURU :  

In the last two years, as the real estate sector navigated challenges thrown by the covid-19 pandemic, property firms realized that buildings aligned to ESG norms may fetch better returns and command a premium. Developers have sharpened their focus on constructing buildings that are more environmentally sustainable. Global investors and occupiers are clearly favouring buildings that are more sustainable for their workforce, while homebuyers are now more discerning than ever about healthy buildings.

This was the crux of the panel discussion ‘From risk aversion to value creation—getting behind the ESG Paradigm Shift’, as part of Mint ‘ESG’s Next Frontier—India’s real estate leading the way to a sustainable future’ that was organized by Nucleus Office Parks.

Deepa Sathiaram, executive director, En3 Sustainability Solutions; Anil Mugul, head of HVAC and Utilities, Reliance Corporate Park; Rajesh Pandit, MD, CBRE; Charu Thapar, executive director, property and asset management, Asia Pacific|head-strategy, Platform, and Emerging Markets, JLL; and Abhishek Kiran Gupta, CEO and co-founder, CRE Matrix, spoke on how ESG-compliant buildings can fetch better returns and rental values, and how the real estate sector is adopting more sustainable solutions.

Sathiaram said that being ESG-compliant is imperative for the entire real estate sector.

“In the Indian real estate sector, we need to relook a few things about constructing buildings and need to do things a little differently from conventional ways. There’s also something we call dematerialization, the selection of materials to construct materials and the way buildings are constructed that also needs to change. If you eventually want to move to a zero-carbon economy, we need to look at dematerialization, the way we construct, the technologies we use for construction—we are going to see more modular construction systems," she said.

Sathiaram also said there will also be a focus on ongoing performance and improvement of buildings. A lot of focus has been on the design and performance of green buildings. “We have to think about these things when a project is being conceptualised, not just taking over conventional buildings and making them efficient," she added.

Mugul of Reliance Corporate Park said it is impossible to bring carbon emissions to zero in a built environment, though efforts are being made. There are direct and indirect emissions—developers and corporates can control the former during the construction phase.

On the journey of being more ESG-compliant to tackle high carbon emissions, CBRE’s Pandit said it all boils down to transparency, which at the end of the day helps build trust among homebuyers. But social and governance values are still lagging and that’s where work needs to be done, going forward, he said.

JLL’s Thapar said training and education, as well as empathy, are essential to achieving ESG goals, and are determined by the social ethos that companies have. “Our occupiers are driving what the social norms will be. After the pandemic, we know that flexibility and hybrid work cultures are here to stay, but how are the buildings constructed in response to that? The built environment is responsible for 40% of the greenhouse emissions, and we have to do something about it. But as property managers, our hands are tied, we do have certain constraints," Thapar added.

CRE Matrix’s Gupta highlighted that there are close to 2 lakh green buildings globally; in India, there are about 2500, but less than 5% of it is offices. “Green-certified, sustainable buildings, particularly if they are mixed-use in nature, will boost occupancy, command a premium in rent as well as help in increasing revenues," he said.

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