By Latest News
Co-working spaces in India such as Urban Vault, Incuspaze, The Executive Centre, and Awfis are increasing their investments in ESG (environmental, social, and governance) practices as it offers higher rental yields with more corporates demanding ESG-compliant workplaces.
The increased ESG investments come in the backdrop of India’s target to achieve net-zero emissions by 2070.
Bengaluru-based Urban Vault reported a 41 per cent increase in rentals for ESG-certified properties during the third and fourth quarters of FY24. It also noted that most corporations are now basing their leasing decisions on the compliance of buildings with international ESG standards.
“Urban Vault has seen a significant rise in demand for ESG-certified properties. Almost all negotiations for office spaces now include sustainability as a key metric. With more GCCs (global capability centres) coming to India, ESG standardisation has become a norm. We are investing in ESG-compliant projects to meet the growing demand. Corporates are increasingly looking for office spaces that can contribute to their overall sustainability strategy and goals,” said Amal Mishra, CEO, Urban Vault.
Urban Vault plans to invest Rs 40 crore in various ESG initiatives in FY25, up from Rs 10 crore invested last financial year. “Given our robust plan to double our capacity in the next 24 months, leasing ESG-certified properties is one of our major priorities. Moreover, having ESG-certified properties gives us a competitive edge,” added Mishra.
Incuspaze, based in New Delhi, said there is an approximate 7-9 per cent difference in rental prices between ESG-compliant and non-compliant buildings. Moreover, the government offers various incentives such as rebates and additional Floor Area Ratio (FAR) to developers for constructing green buildings.
“Our key ESG practices include implementing energy-saving technologies such as LED lighting and energy-efficient HVAC systems, and conducting regular energy audits to identify areas for improvement. We prioritise sustainable design by using eco-friendly materials and construction practices, and by designing workspaces to maximise natural light and reduce reliance on artificial lighting,” said Sanjay Choudhary, founder and CEO, Incuspaze.
Incuspaze plans to invest Rs 75 crore in ESG initiatives, covering 500,000 sq. ft. for sustainable development. Additionally, the co-working firm has leased 2.20 lakh square feet of office space within an ESG-compliant building.
“Expansion plans for ESG buildings involve a strategic focus on acquiring LEED-certified properties. We aim to acquire an additional 1 million square feet of ESG-certified space by the end of this year,” added Choudhary.
Additionally, large corporations require necessary paperwork and certifications for green buildings before leasing office spaces, essential for their annual ESG report publication.
“The rise in demand for ESG-compliant buildings is evident as MNCs and GCCs become more stringent about their ESG goals, emphasising occupancy in green buildings across their global real estate portfolios. However, the availability of green buildings in India will take some time to match the global average. Addressing this gap is crucial for India to remain competitive in attracting and retaining global businesses committed to ESG standards,” said Manish Khedia, managing director, West India, South India, and Sri Lanka, TEC.
TEC plans to allocate between 5-8 per cent of its total investment towards ESG initiatives, up from 2.5 per cent last year, due to increased expansion in green buildings and demand from clients.
“The concept of a green workspace is poised to become the norm rather than the exception,” said Amit Ramani, chairman and managing director, Awfis Space Solutions.
To achieve this, “We have embraced key initiatives such as obtaining WELL certification, which focuses on employee health and well-being by emphasising indoor air quality, water quality, and lighting, ensuring that our workspaces are not only sustainable but also conducive to the health and productivity of our clients. We also pursue LEED ratings to reduce our carbon footprint and combat global warming,” added Ramani.
First Published: Jul 01 2024 | 4:51 PM IST