By Accommodation Times News Service
Green Homes in layman’s language or today understood is a healthier, more comfortable more durable and more energy efficient and have a much smaller environment footprint than conventional homes. Green homes have become more prevalent we have also seen the emergence of green affordable housing. The idea of modern revolution of green homes begun way back in 1970s when the country was facing the increased price of oil. Many different organizations sprung up in the 1990s in order to promote green buildings and some were also dedicated to improving the knowledge of consumers so that they could have more green homes. As the green building movement gains momentum so does the consumer demand for the greener properties. Today almost 2/3 of the buyers are paying attention to green homes and buildings where they recognize the link between the green properties, cost saving and healthy living.
This Green Home is now taking a tremendous significance because of the utmost importance of environment friendly development initiatives not only in the construction business but also in the housing development area alone. This has taken a concept of “Green Affordable Homes” where the governments of world are promoting various energy saving development initiatives.
A) Need of Green Buildings in India
Greening the building sector is the need of the hour as this sector is interdependent and interrelated to various other sectors. A need which turns into lot of benefits, greening of realty sector can prove lot beneficial. Energy efficient buildings reaps both monetary and non-momentary benefits also it improves energy security, net job, reduction in indoor air pollution, it helps in stimulation of higher skill levels in building professions and related trades. The other benefit includes saving fresh water withdrawals for energy supply that is later used in buildings (huge amount of water is required for cooling water for thermal power plants); energy use to produce water consumed later in buildings (due to reduced water demand in green buildings and settlements); optimal use of recycled water; improved sanitation; lesser stress on centralized storm management systems; better quality of life and a healthier community.
India being one of the fastest urbanizing nations with increased construction activities, it is imperative to meet the demands of this fast moving population. Greening of the building sector is therefore, a win-win situation for the nation apart from contributing to the global efforts of mitigating the climate-change impacts.
B) Concept of Green Buildings & Green Affordable Homes
|Green Buildings||Green Affordable Housing|
|There is no single definition of “Green Buildings” but it is recognized as the high performances building designed, built and operated in a resource efficient manner with an aim to minimize the overall mostly negative impact on the built environment, human health and the natural environment.||The term “Green Affordable Housing which is in the trend today generally refers to reasonably priced housing that incorporates sustainable features. In India the term is often used for “Sustainable Housing”.|
|‘Green Buildings’ in general or ‘Green Homes’ in particular, may be operationally defined as buildings and infrastructure that minimize the use of resources, reduce harmful effects on the environment and provide healthier environments for people.||Affordability is commonly defined as not spending more than 30 percent of household income on housing. Given the higher exposure of low-income households and the need for public assistance, the most salient features of green affordable housing are energy use, material use, durability and a
Healthy indoor environment.
|The concept of ‘Green Homes’ Potential benefits of green affordable housing include lower energy cost burden and improved health. In the context of building and home design, ‘Green’ commonly refers to practices that conserve natural resources in the short and long term, improve the quality and longevity of structures, and promote the health and well-being of occupants.||Terms interchangeably used in different contexts include ‘Affordable housing’, ‘Budget housing’, ‘Low-income housing’, ‘Attainable housing’, ‘Subsidized housing’ etc. Irrespective of the term used, they are used to describe single-family or multi-family dwellings having purchase prices or rental payments affordable to low-income to moderate-income individuals, usually with the help of subsidies.|
|The policy has given due respect to the concept of ‘Green buildings’ and seeks to promote development of ‘Green-field townships’ at a reasonable distance from existing cities and towns. Development of ‘Green Belts’ around the cities for ensuring ecological balance, promotion of ‘Green’ or ‘Intelligent’ buildings for enhanced energy-efficiency etc. are part and parcel of NUHHP-2007.
|Affordable housing developments are incorporating green features like energy-saving appliances and straw bale insulation that reduce utility bills; air quality improvements that reduce health care expenses; and community and personal gardens that provide local, organic produce at little cost. In India to the concept is fast picking up. Of late the National Urban and Habitat Policy 2007 (NUHHP-2007) seek to ‘promote sustainable development of habitat in the country’ and it has adopted ‘Affordable Housing for All’ as its ultimate goal.|
C) Green Affordable Housing –Long term Sustainability
Development of Green Affordable Housing involves several green features such as waste minimization and recycling of materials during the construction phase, landscaping with native plants, extra building insulation, energy efficient appliances and fixtures. Green affordable housing presents an opportunity to reduce variable costs. Some of the common green features used in affordable housing projects include:
- Compact lighting
- Energy efficient appliances
- Low flow mixtures and dual flush toilets
- Environmentally preferable products
- Use of local source materials
- Recycling of construction materials
D) Key stakeholders engaged in Green Building Sector
The names given below are the key stake holders in promoting the building energy efficiency in India
- National Ministries- MoHUPA, MoUD, MoEF, MNRE, MoP, BEE, DST
- Other Federal Institutes- CIDC, NBO, BIS
- Sub-national ministries/ departments/PSUs- State governments and local authorities, CPWD, PWDs,RITES Ltd, HUDCO
- Building Sector Associations- NAREDCO, CREDAI,IGBC, GRIHA Council, IPA, Builders Association of India
- Private sector building/construction organizations- Developers, architects, consultants, facility managers
- Financial institutions –NHB, HFC, Banks, MFCs,FDI
- Research & Academia- IITs, IISc, Building Centres, TERI, Development Alternatives
E) Key Corporate Holders in Green Space
- Main Corporate holders in this sector are Wipro, Microsoft, Cognizant, ABN AMRO and TCS, along with other international and domestic corporate occupiers have either developed or developing energy efficient office space.
- Other Corporate are Infosys, Computer Associates, and Oracle are also planning to develop the green space to leverage the financial and environmental benefits that they provide.
- Other sectors such as manufacturing, education, hospitals, and hotels are also demanding green space.
- ITC has developed ITC Royal Gardenia which is a LEED Platinum rated building.
- Lavasa Hotels has developed many green buildings.
- Educational Institute such as Hyderabad Institute of Technology and Management in Hyderabad and Rane Institute for Employee Development in Chennai are operating on green building ratings.
- Many Hospitals in Mumbai are LEED rating buildings.
F) Major Developers in Green Space
In the small, but growing demand for green building space regional and national developers in India have responded with an array of new projects. Construction of new green spaces for office buildings residential units and retail malls is currently underway in cities throughout the country. The beginnings of the mindset shift can be observed with major players such as national developer like
- K Raheja Corp –K Raheja Corp C 30BKC
- K Raheja Universal Pvt Ltd-Raheja Solaris, Raheja Platinum, Raheja Iridium,Info City,
- Kalpataru Limited- Kalpataru Square, Bullow IT Park
- Mahindra Lifespace Developers Limited- Mahindra Chloris, Mahindra Splendour, Mahindra Royale
- Inorbit Malls Private limited- Makarpura Mall
G) Financing Institutions in Green Space
- Bank Lending – loans are the biggest finance support and capital in real estate sector. Since 2005, banks have shown enthusiasm in providing finance to real estate sector. Banks provide finance to the real estate sector in the following modes:
Direct finance: Finance provided to individuals or groups of individuals including cooperative societies
Indirect finance: Loans to housing finance institutions, developers, housing boards and
Other public housing agencies, Investment in bonds of National Housing Bank (NHB)/HUDCO.
- Private equity and fund houses
Private equity players have been very active in the real estate sector especially in housing from the past few years. The investment for the project is made through private equity real estate fund which pools capital from investors. This fund has a certain life span ranging from 5 to 10 years which includes the investment period when the properties are acquired, followed by a holding period during which active asset management is carried out. At the end of this period the investors makes an exit after the acquired properties are sold.
- Foreign direct investments (FDI) FDIs are investments made in home country by foreign companies. According to the Department of Industrial Policy & Promotion (DIPP), the Construction Development sector received a total Foreign Direct Investment (FDI) equity inflow of INR 1,052 bn (USD 22.8 bn) during April 2000 to September 2013. This amount to an 11.1% share of the total FDI equity inflow and is the second highest amongst all sectors 16. However, post the economic recession in 2008, the sector has been attracting lesser FDI equity with only 6% in 2012. To overcome the various issues, the new government at the Centre has notified in Dec, 2014, the foreign direct investment (FDI) policy in the construction sector to stimulate overseas investment in real estate. The revised policy simplifies rules to make it easier for investors to enter the market, sell assets or transfer their stakes, and repatriate proceeds before the completion of a project. The new rules include reducing the built-up area requirement for FDI in construction projects to 20,000 sq. m from 50,000 sq. m and the lowering the minimum capital requirement to $5 million from $10 million. The government permits 100% FDI in the construction development sector.
- External commercial borrowing External Commercial Borrowings (ECB) is a mechanism used in India to assist the Indian corporations and PSUs (Public Sector Undertakings) in accessing foreign money. It include commercial bank loans, buyers’ credit, suppliers’ credit, securitized instruments such as Floating Rate Notes and Fixed Rate Bonds, credit from official export credit agencies and commercial borrowings from the private sector window of Multilateral Financial Institutions such as International Finance Corporation (Washington), Asian Development Bank (ADB), and Australian Foundation Investment Company (AFIC), ECBs cannot be used for investment in stock market or speculation in real estate. For infrastructure and Greenfield projects, funding up to 50% (through ECB) is allowed.54 Since January 2009, ECB route has been opened for the development of integrated townships.
- Housing finance in the organized sector there are two main sources of housing finance- commercial banks (in the public and private sector) and the housing finance companies (HFCs). The commercial banks are regulated by the Reserve Bank of India (RBI) and the HFCs are regulated by the National Housing Bank (NHB). Under the Reserve Bank of India Act, the Banking Regulation Act and the Foreign Exchange Management Act, RBI has been given 16 Cushman & Wakefiled, 2014. Housing: The game changer Green Growth and Buildings Sector in India 22 power to license banks and other non-bank finance companies.
Under the National Housing Bank Act, 1987 and the housing finance companies’ directions, NHB can license all housing finance companies. Following is a list of all the sources of long term finance for housing:
- Scheduled commercial banks
- Scheduled cooperative banks
- Regional rural banks
- Agriculture and rural development banks
- Housing finance companies and
- State level apex cooperative housing finance societies
H) Problems & Challenges in Green Affordable Homes
In spite of the vital significance of green houses and the various benefits that they provide, like, reduction in operating cost in long-run, there are a few challenges associated with such initiatives. The main challenge to green building cited by most affordable housing developers is the higher initial capital (upfront). However, a report by New Ecology Inc. shows that total development costs for green projects reviewed for the report ranged from 18 percent below to 9 percent above the costs for comparable conventional affordable housing. On average, the 16 case studies in the report show a small “green premium” of 2.42 percent in total development costs. These incremental costs are largely due to increased construction, as opposed to design, costs. One criticism of green building is that innovative technologies such as solar water heaters often cost more to purchase and install than standard systems. The higher costs add up to a “green premium” that can make green construction more expensive up-front than conventional construction. As the New Ecology study notes, the green premium can be a barrier to affordable housing development, since affordable housing funders prefer to allocate dollars to the projects that have the lowest initial costs. The study reveals that, on average, the 16 projects cost 2.4 percent more to build than conventional affordable housing. However, on average, the developers and owners would see per-unit savings of USD 2725 in operation and replacement costs over the life of the property. For the majority of the 16 projects, the long-term savings would equal or outweigh the green premium. Thus, green building can be a cost-effective way for the developers of affordable housing units, who may target low or moderate income families.
Other challenges related to affordable green building include the following:
• Capacity challenges and the learning curve: Many affordable housing providers lack the organizational capacity to undertake the additional planning. It requires additional training for affordable housing developers, and resources for training are limited.
• Perceived risk: Affordable housing developers are often risk-adverse because they have little margin for project failure. Any cost increases directly affect developer fees, which are used to sustain the organization and fund future development.
• Multiple funding sources: Affordable housing developers use many funding sources, each with its own criteria and regulations. It can often be difficult to fit new technologies and ideas into the existing funding criteria.
• Lack of documented success: To date, energy efficiency has been the only real measure used to show long-term affordability of green building. Lack of research makes it difficult for affordable housing developers to overcome the ‘high upfront cost’ prejudice of funders.
• Lack of public transportation and land use planning: Public transportation is not readily available in all areas. In some states (many within our district) only a handful of cities have public transportation systems in place. Therefore, residents must consider fuel costs when deciding where to purchase a home and how much they can afford.
• Ability to sustain homebuyer educational programs: Resources to sustain homebuyer awareness on how to keep their property green must be taken from existing sources
I) Indian Government Policies to Safeguard its Green Space
Some Noteworthy steps have been taken by central and state government in India to support the environment and help minimize the impact real estate industry.
- The Bureau of Indian Standards has developed the Energy Conservation Building Code which along with many other policies will support energy efficiency.
- The Prime Minister of India has released the NAPCC (National Action Plan on Climate Change) which reinforces the objectives of sustainable development and will shape India future development policy.
- India Ministry of Environment and Forestry has undertaken 24 initiatives related to climate change
- The government of India has proposed to develop all of its news buildings as energy efficient spaces.
- The state government Andhra Pradesh, Maharashtra, and Karnataka are planning to develop their own green building bylaws.
- Integrated Energy Policy provides a broad, overarching framework for guiding the policies governing the production and use of different forms of energy from various sources. The energy policy in India focuses on ‘energy for all’ and intends to build an environmentally-friendly sustainable energy supply policy. Since India’s conventional energy reserves are limited, the Integrated Energy Policy stresses energy efficiency and conservation, particularly electricity generation efficiency, transmission, distribution and end-use.
- Environmental Impact Assessment Notification (EIA) issued by the Ministry of Environment and Forests Environmental Impact Assessment (EIA) is an important management tool for ensuring the optimal use of natural resources for sustainable development.
Type of Building Built up area
Building and construction projects <20,000sqm
>1, 50,000sqm of built up area
Townships and large area development projects built up area >1, 50,000sqm
- The Energy Conservation Act, 2001 considering the vast potential of energy savings and benefits of energy efficiency, the Government of India enacted the Energy Conservation Act, 2001. The Act provides for the legal framework, institutional arrangement and a regulatory mechanism at the Central and State level to embark upon energy efficiency drive in the country. Five major provisions of EC Act relate to Designated Consumers (DC), standard and labeling of appliances, Energy Conservation Building Codes, Creation of Institutional set up (BEE) and establishment of Energy Conservation Fund. The EC Act was amended in 2010 and one of the amendments of the Act was to include Commercial buildings having a connected load of 100 kW or contract demand of 120 kVA and above under the purview of ECBC under EC Act.20
- Ministry of New and Renewable Energy Scheme on “Energy Efficient Solar/ Green Buildings” which promotes the Energy Efficient Green Buildings in the country with the promotional incentives. This programme has a provision for annual awards to Urban Local Bodies (ULBs), green buildings having maximum renewable energy installations and to architects and design consultants.
- GRIHA mandatory for central government projects According to an official circular released by the Ministry of New and Renewable Energy on 17th September 2009, all new buildings of central government / public sector undertakings shall comply with the mandatory guidelines and benchmarks of at least a GRIHA (National Rating System endorsed by the Ministry of New and Renewable) 3 star rating. In view of this, Ministry of New and Renewable Energy along with The Energy and Resources Institute, Central Public Works Department and other organizations are arranging various awareness generation and capacity building programmes for of architects, engineers, urban planners and other professionals of the building industry.
- GRIHA Incentives/mandates various development authorities, state governments and municipal corporations have introduced financial/non-financial incentives to promote green buildings (adoption of GRIHA rating system). Some of these are:
- Government of Sikkim has adopted GRIHA for all the Government and semi Government structures, including those belonging to autonomous bodies like Boards, Corporation, Companies and Public Sector Undertaking (PSU).
- Jaipur Development Authority has notified that the buildings constructed on plot area more than 5,000 m2 will be eligible for an additional 5% floor area ratio (FAR) free of charge if they get 4 or 5 star rating from GRIHA.
- NOIDA and Greater NOIDA have incentivized GRIHA projects (on a plot of more than 5000 sq m and above) with free of cost 5% additional FAR for projects for complying with 4 or 5 Star GRIHA Rating.
- The developers in Pimpri Chinchwad Municipal Corporation get discounts on the premium amount of building permission charges, as per the level of rating awarded by GRIHA. A Discount of 10% in property tax for home owners is also offered.
- The Department of Housing and Urban Development, Government of Punjab has notified that an additional 5% floor area ratio free of charges shall be permissible to buildings that provide relevant certificates from the Bureau of Energy Efficiency or from GRIHA (Green Rating for Integrated Habitat Assessment).
- Ministry of Urban Development issues a notification for local authorities to incentivize and provide 1% to 5% extra ground coverage and FAR for projects of more than 3000 sqm plot size on basis of GRIHA evaluation.
- Interventions on rainwater harvesting (storage and recharge), storm water management through sustainable urban drainage systems (SUDS), integration of biodiversity with built-up area, integration of renewable at building scale (thermal heating and electricity generation)