Esg Integration And The Ascendancy Of Green Buildings In India’s Commercial Real Estate Market

Posted On - 6 August, 2025 • By - Vartika

Introduction

India’s commercial real estate (CRE) market is undergoing a structural transformation, propelled by the growing adoption of Environmental, Social, and Governance (ESG) principles in corporate and investment strategies. Green-certified office buildings, once a niche segment, have become mainstream, commanding notable rental premiums and reshaping asset development, occupancy, and valuation. This shift is backed by strong financial and operational metrics, not just perception.

ESG as a Market Driver

Multinational corporations, institutional investors, and large domestic firms increasingly rely on ESG frameworks to guide real estate decisions. According to the 2025 CRE Sustainability Report by Altre, which analyzed over 3,000 buildings and 1 billion square feet across India’s top seven cities, green-certified properties are setting new performance and valuation benchmarks.

India certified 8.5 million gross square meters of green space in 2024 alone, making it one of the top three global leaders in sustainable construction. In key business districts like Bengaluru’s Outer Ring Road and Gurugram’s Cyber City, over 90% of Grade-A office stock is now green-certified, positioning them as future-ready commercial hubs.

Financial and Operational Gains

Green-certified buildings deliver measurable financial benefits:

  • Rental premiums of ~18%–22% for conventional offices and ~47%–50% for flexible workspaces.
  • ~20% lower maintenance costs.
  • Energy savings of ~30%–50%, offering insulation against utility cost volatility.

These metrics highlight a shift in focus—from just holding a certification to realizing operational efficiency, tenant well-being, and long-term financial performance. Value creation is now increasingly tied to sustainability and resilience.

Investor and Occupier Strategy

India’s green office stock exceeds 700 million sq. ft., with Bengaluru leading (~30%), followed by Mumbai (~15%), Hyderabad (~14%), and Pune (~12%). LEED certification dominates (~81% of certified space), offering a consistent benchmark for investors and occupiers.

For occupiers, green-certified offices enhance employee well-being and support talent attraction and retention. For investors, they represent low-risk, high-performance assets. Third-party certifications ensure superior design, operational efficiency, and climate resilience—key factors in attracting global capital. As a result, sovereign funds, private equity firms, and REITs now prioritize ESG-aligned investments, while non-certified assets face potential valuation and liquidity challenges.

Conclusion

India’s pivot toward green commercial real estate is a lasting, structural shift rather than a passing trend. The compelling performance indicators—rental premiums, cost efficiency, and investor demand—highlight a strong value proposition. As of Q1 2025, ~80% of office space leased was in certified green buildings, a share expected to rise amid tightening regulations. ESG integration is now central to real estate value and risk management in India’s evolving commercial property landscape.