Demand for sustainable office spaces rising, its stock rises 36 pc since 2019: Report

New Delhi [India], September 27 : There has been a growing focus by both developers and occupiers on sustainable and green office spaces whose stock has increased by about 36 per cent in India since pre-Covid pandemic 2019, according to real estate consulting firm CBRE South Asia.
In these years, the green-compliant office stock, according to CBRE, has risen to about 342 mn. sq. ft. from 251 mln sq ft across the top six cities.
As per the CBRE’s mid-year review and outlook report released at the ‘CII Realty 2023’ conference, Bangalore tops all Indian cities with the highest green-compliant office stock, accounting for 30 per cent of all, followed by Delhi-NCR with 21 per cent and Mumbai with 17 per cent as of June 2023.
Hyderabad accounts for 15 per cent, Chennai 9 per cent, and Pune 8 per cent, the CBRE said.
Certified green office stock also increased substantially, growing at a CAGR of 7.1 per cent in the last five years, the report noted.
“As the economy gains momentum and the real estate sector thrives, there is a growing emphasis on ESG (Environmental, Social, and Governance) and its compliance. We anticipate accelerated demand in modern, tech-enabled, and green-compliant spaces in the upcoming quarter. Additionally, we also expect alternative segments such as data centres and flexible workspaces to play a pivotal role in bolstering real estate growth,” said Anshuman Magazine, Chairman & CEO - India, South-East Asia, Middle East and Africa, CBRE.
On the overall real estate sector, Magazine said India has demonstrated resilience in the first half of 2023, despite a global economic slowdown, primarily fuelled by robust domestic demand.
“In line with most major economies globally, the rate hike cycle in India seems to have come to a halt, with the RBI maintaining the status quo in the past two reviews,” he said.
RBI in its past three meetings – April, June, and August -- held the repo rate unchanged at 6.5 per cent. The repo rate is the rate of interest at which RBI lends to other banks.
Coming back to the CBRE report, office leasing activity was noted at about 26.4 mn. sq. ft. during January-June 2023, with Bangalore, Chennai and Delhi-NCR accounting for 60 per cent of the overall leasing.
Retail leasing grew by 24 per cent on a yearly basis to 2.9 mn. sq. ft. Retailers and prominent developers are expected to continue exploring emerging untapped markets including tier-II, III and IV cities.
Residential sales in the first half of 2023 exceeded 150,000 units, surpassing sales reported in both halves of 2022 by around 4 per cent and 6 per cent, respectively.
“Sustained momentum in demand led developers to launch over 150,000 new housing units in Jan-June 2023, marking an annual growth of 11%. Despite a lagged impact of monetary tightening, 2023 could well be the year with sales crossing the 300,000 units mark by the year-end,” the report noted.