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In India, Costs & Lending Climate Seen Inhibiting Growth of Green Building Sector

India - Taj Mahal

A new report aims to provide a multi-stakeholder perspective on the challenges, gaps, and key drivers for the future growth of the green building sector in India. The “Survey of Green Real Estate Sector 2014” was issued by India’s Minister of State for Human Resources Development at TERI’s Delhi Sustainable Development Summit earlier this month. Also sponsored by India’s Yes Bank, the report concludes that nearly 75 percent of India’s real estate development community believes that cost is a “major impediment” to the construction of green buildings nationally.

The report – which does not appear to be available for download online – also offers a broad range of insights and conclusions about current green building attitudes in India. For example, 63 percent of the respondents who were interviewed for the study identified a lack of mandatory policies, programs, and enforcement by India’s local and central governments as affecting the growth of the country’s green building sector. Respondents also identified a “low motivation of consumers to pay premium for green buildings” as a “major barrier in the growth” of India’s green building market.

Financial matters are also plaguing the Indian green building climate. “Close to 58 percent of the [study’s] respondents felt that the financial institutions today are not aware of the innovative credit lines available in the market for financing energy-efficient building projects, while 51 percent believe that lack of preferential lending rates to green building projects also leads to discouragement,” the report noted. Another contributing factor to the market shunning green building investment is the report’s conclusion that Indian green buildings are not properly valued – further disincentivizing real estate developers from investing.

But in a sliver of good news the report did identify “enhanced brand value and reputation of the company, financial incentives from regulators, municipal bodies and growing international trends to invest and reside in green buildings” as factors that could eventually spur future investment in the sector. “There is an urgent need for all stakeholders like developers, financial institutions, fund managers, architecture firms, construction material manufacturers and large pro-sustainability conglomerates to come together to build and increase awareness on the tangible and intangible benefits of green buildings,” it concluded.

The “Survey of Green Real Estate Sector 2014” report polled 150 real estate development professionals across India’s green real estate value chain in order to reach its conclusions. We will let you know if we are successful in getting our hands on the report.

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