When structural engineer Jignesh Goyani started developing his affordable housing project, Kesar City, at Moriaya village in Sanand – the satellite town on the outskirts of Ahmedabad – three years ago, he decided to go all green. While the apartments are small – at 33 sq metres – with the cheapest costing as little as Rs 5.4 lakh, the project is equipped with the whole ‘sustainable’ shebang: lighting controls, form construction, sun-dried fly ash bricks, sewage treatment plant, optimal daylight use and solar for street and common lighting, low-flow faucets and fixtures, biogas from sewage and daily green waste, and green landscapes irrigated by porous pipes. Kesar is as kosher as any high-end green building.
Developed in collaboration with Ahmedabad-based firms Aroma Realty and Kesar Buildcon – all working in the affordable housing niche using low-cost green technologies – the first lot of 1,200 homes is now being handed over to their owners. And who are they? Popcorn sellers, tea vendors, restaurant waiters and money transfer kiosk operators, among others, most of whom earn between Rs 330 and Rs 1,000 a day. “Almost all our customers are from the unorganised market,” says Goyani.
Housing for this segment does not find it easy to get bank finance; hence the project developers had no option but to keep costs to the minimum – even for sustainable technologies. That meant doing without green building certification by the Indian Green Building Council’s (IGBC) rating standard, which would have ratcheted up the project cost by another Rs 25 lakh. “Anything that adds to the cost of these homes, including certification, is not for us,” says Goyani. He is certain that, had he applied, the project would have easily made the cut for IGBC’s silver certification, if not gold. “About 80 per cent of our design and technology solutions beat the parameters prescribed by any green rating standard,” he says.
Instead, Goyani is working with Excellence in Design for Greater Efficiencies (EDGE) software, a low-cost green building certification system developed for 100 emerging economies by the International Finance Corporation. Based on a mind-boggling database of local utility costs and climate in different cities, this free software suggests customised resource-efficient solutions right at the design stage to reduce operational expenses and environmental impact. In order to qualify for the EDGE certification, a building must achieve at least 20 per cent saving in energy, water and construction resources over conventional practices. Kesar City is also on the shortlist of pilot projects the National Housing Bank is assessing for technical assistance under the UK government’s Department of International Development (DFID) funding for innovative pilot projects.
Goyani’s project underscores how the once-elitist market for green buildings – those which make efficient use of energy, water and construction material – is percolating down to the very lowest. A green building movement is under way in the country. Until recently, it mostly meant designing high-end commercial and corporate office spaces, or building energy-efficient hospitals and hotels, in tier II towns at best. There were also the bespoke residences of select affluent and niche clientele.
Driven by cost savings for home owners, and responding to the incentives offered by state governments, an increasing number of developers are greening their residential portfolio. Features like rainwater harvesting, outdoor window shades, energy-efficient electrical fixtures and waste treatment plants are helping economise resource consumption. Even existing home owners are opting for retrofits as a smart investment option. “It is not enough to ascertain how structurally sound a building is; it is also important to see how well it will perform,” says Aalok Deshmukh, energy efficiency expert, Schneider Electric India.
Low-cost green housing projects need to be rolled out quickly in high volumes with minimal design typologies to be feasible. Residential developers such as Tata Housing Development Co and Value Budget Housing Corporation, whose raison d’être is large-scale housing, are thus developing a green template for all their standard offerings, which can be scaled up in little time. Other developers like Lotus Green and Biodiversity Conservation India Ltd (BCIL) – also known as the ZED Group for its zero-energy driven solutions – have got into realty to focus primarily on green development.
Importantly, with the real estate sector facing recessionary pressure and unsold inventories piling up in recent months, the business case for developing differentiated projects by building green is stronger than ever before. Developers have realised that green certification helps attract more customers and investors. Godrej Properties, Raheja Developers, the Hiranandani group, Ansal Properties, MARG group, SARE Homes, Emaar MGF and Gaursons India are only some of the prominent players building certified green homes in recent years.
“Over the last year or so, realtors have grown to understand the importance of sustainable development,” says Brotin Banerjee, Managing Director and CEO of Tata Housing Development Co. The company has 6.5 million square metres of housing in different stages of execution in all consumer segments, from value to luxury, all of which will be certified green. All the company’s housing projects have no less than IGBC’s gold certification. Value and Budget Housing Corporation (VBHC) is developing over 3,000 EDGE-certified homes across Bangalore, Chennai, Mumbai and Bhiwadi. Almost all its houses are in the affordable segment, predominantly comprising apartments priced between Rs 15 lakh and Rs 30 lakh. SARE Homes is developing six projects adding up to 5,000 homes across Amritsar, Ghaziabad, Gurgaon and Chennai.
“The green building movement is well entrenched and people are set to demand energy efficient buildings the same way they demand star-rated air-conditioners,” says P. Sahel, Vice Chairman, Lotus Greens. The company is developing four projects in Gurgaon and Noida over the next three years, all of which will have a Green Rating for Integrated Habitat Assessment (GRIHA) certification (an alternative to IGBC). BCIL, an early green builder with a presence in Bangalore, Mysore and Chennai – all of whose projects since 2003 have platinum certification – is currently building 2,000 green certified apartments and villas. Around 40 per cent of BCIL’s homes are priced under Rs 15 lakh and another 50 per cent in the Rs 30 lakh- 50 lakh segment. Only the remaining 10 per cent is priced between Rs 50 lakh and Rs 80 lakh.
All of Gaursons India’s residential projects over the last three years have been in the certified green category. The company is aiming for IGBC’s gold certification for three of its upcoming projects on Delhi’s outskirts – Gaurcity I, Gaurcity II and Gaur Yamuna City. Managing Director Manoj Gaur heads the Delhi-NCR chapter of the Confederation of Real Estate Developers Association of India (CREDAI). “More than half the 200-plus members of the Delhi-NCR chapter are now developing green projects,” he says.
India had only around 1,850 sq metres of certified commercial green floor space in 2001, which rose to 22 million sq metres by 2008. The first residential green rating standard was launched in May that year. Seven years later, India has around 325 million sq metres of registered green floor space, both pre-certified and certified, across all categories – commercial, residential, hospitals, hotels and factories. Real estate consultancy Jones Lang LaSalle said in a report in July that projects registered with the IGBC have grown incrementally at a compound annual growth rate of over 50 per cent in the past 10 years – the highest year-on-year growth anywhere in the world. In July, the US Green Building Council ranked India third on its annual ranking of the Top 10 countries outside the US that are making significant strides in sustainable building design, construction and transformation – next only to Canada and China.
Deshmukh of Schneider India goes on to say, “The single largest certified green floor space outside the US would be in India.” Chandrashekar Hariharan, Chairman, BCIL, and co-author of IGBC’s residential green guidelines, agrees. “In a decade’s time, we are set to outstrip the US, currently the world’s largest green market,” he adds.
The potential is indeed enormous. Green floor space accounts for only 3-5 per cent of all construction in India so far. In developed markets like the UK, where green building began almost two decades ago, around 40 per cent of all buildings would fall in that category. “In the US, it would be around 30 per cent,” says Prashant Kapoor, IFC Green Buildings’ specialist and founder of EDGE. By 2030, green building penetration in India is expected to reach 10 per cent or around 1.5 billion sq metres.
Mandatory Compliance Awaited
Green building construction and certification is growing at a scorching pace, despite the fact that it has not yet been fully mandated by legislation. The Bureau of Energy Efficiency, an arm of the Ministry of Power, announced the Energy Conservation Building Code (ECBC) in May 2007. The Code mandates certain minimum energy performance standards for buildings and recommends many more. (For example, it prescribes that 20 per cent of all hot water requirement is to be met by solar energy.) But, it is still largely voluntary and applies only to commercial buildings, not residential ones.
The responsibility for enforcing it rests with state governments and local urban bodies, which do not have the wherewithal for implementation. “State governments also have the flexibility to modify the code to suit local or regional needs and notify it,” says Sanjay Seth, energy economist at the BEE. Once the notification for the mandatory adoption of the code is in place, the provisions have to be integrated into the municipal by-laws to enable enforcement.
Seven states and one union territory – Pondicherry – have notified the ECBC so far: Rajasthan, Odisha, Uttarakhand, Punjab, Andhra Pradesh, Telangana and Karnataka. Another 23 states and union territories are at various stages of implementing it, which will take mandatory compliance almost countrywide. “Most states are expected to come up with the statutory regulation by end-2015,” says Seth. The national implementation of ECBC is expected to transform the market through enforced demand.
But, in the meantime, some of the other states and urban development bodies have begun offering myriad incentives. Haryana, Punjab, West Bengal, Maharashtra and parts of Uttar Pradesh (the development authorities of Noida, Greater Noida and the Yamuna Expressway), allow an additional 5 per cent floor area ratio (FAR – a measure of the built-up area of a plot) for buildings certified green. The development authorities of Ghaziabad and Delhi have proposed the same. Kerala and Bhubaneswar city also allow some extra FAR in green buildings. West Bengal has even announced raising the FAR to 10 per cent. Gujarat, Andhra Pradesh, Telangana, Chhattisgarh and Jharkhand are considering providing a similar carrot.
Among other incentives are fast-tracked construction permits for green buildings being offered by Andhra Pradesh and Maharashtra. Maharashtra also has an energy efficiency financing programme, providing credit guarantee for half the green project cost. Buildings using solar or wind power are allowed to be built higher than their conventional counterparts in Pune. Punjab has mandated that every roof measuring more than 465 square metres should be used for solar energy generation. Gujarat, Tamil Nadu and Karnataka, too, are considering some stimulus for residential solar. The Department of Renewable Energy in Haryana bears 50 per cent of energy audit costs.
The Pimpri-Chinchwad Municipal Corporation in Maharashtra offers a rebate of up to 15 per cent on property tax for green buildings, and up to 50 per cent on premium for builders who get their projects GRIHA-certified. The urban local bodies of Nashik and Navi Mumbai in Maharashtra, and Noida in UP, have proposed property tax discounts based on the level of green certification achieved. Hyderabad has suggested monetary incentives for architects designing GRIHA-rated green buildings. Punjab is developing a draft adaptation of ECBC even for large residential buildings.
Buildings guzzle more than a third of the country’s energy resources at present. Savings on green buildings can be a staggering 25-30 per cent from day one. As Schneider India’s Deshmukh says, “When done right, or when incorporated at the design stage, there is no additional cost of building green.” In fact, a green building pays for itself through the savings accruing from energy efficiency, and premium developers can charge on such construction. Given that floor space will triple by 2030, the case for driving resource efficiency couldn’t be more compelling. According to one estimate, mandatory ECBC implementation across the country could lead to an annual energy saving of about 1.7 billion kWh. At the very least, this means an annual saving of Rs 600 crore in energy cost. A McKinsey India report has projected that by 2030, India could save an estimated Rs 90,000 crore ($14 billion) per year by investing in energy efficiency.
Building activity is relatively low in developed markets where most of the infrastructure is already in place. India has seen only one-third of its built space come up yet. According to global think tank Global Buildings Performance Network, the energy demand from building in India will grow by 70 per cent by 2050, for which an estimated 900 new power stations fired by fossil fuels will be required. Going green couldn’t have been a bigger and more pressing opportunity.