Real Estate Turning Green

 

In my 2017 blog, I had mentioned a memory of a conference in 2011 in which I stated from dais that “What is not Green is not affordable”. I realise, it was too early to state. 13 years down now, we are all becoming aware and I am sure in next 5 years this will become way to go for real estate industry as well. Reason being – 

• a.       Not green? Higher difficulties in securing funds.
• b.      Not green? No access to green funds that are growing exponentially, globally.
• c.       Not green? Difficult to market products globally.
• d.      Not Green? Loose on brand value.

As it was quality management systems (QMS like ISO etc.) in around 2000, ESG Complaint is latest buzz word and barometer of organization, product and culture. It is not only Green building Certification, it is ESG – Environment, Social, and Governance that is being looked for. Although Triple Bottom Line parameter is in the audits since long but, the importance has geared up in last few years. At least for global business, it is very much essential.

 

Impact of the change

Urban infrastructure is one of the top three polluting segment with Power and Automobile. However I believe it is MOST difficult segment to bring in change because of three major reasons –

1.        Number of people involved in creating urban infrastructure
2.       Direct impact on informal sector involved in the segment
3.       Processes are in situ and not in a manufacturing area

The government will, general awareness in the customer and cost management are all needed.

 

Balancing the Capex and Opex

Due to significant risk in the business, capital heavy character of a project and, proportionate large profit margins make the ESG drive sensitive to Capex – Opex analysis. Although Defect Liability Period is increasing cost to developer, ultimately opex will burden end user. Hence, though early, I believe Maintenance Cost will become a project advantage/ disadvantage for marketing people.

The governance plays an important role post acquisition for the end user. It is not one person but, the whole group of end users who are responsible for actions needed for positively using the systems installed. This makes it more complicated for the architects and EPC team to design systems that are not only easy to adept but also financially benefitting.

Consumption and Disposals are primary issues to control in post occupancy phase. Not to forget – it is only 25 -30 years cycle for construction and demolition in a growing city. At best 40 years. Hence, when we talk about Circularity, we should care for Circularity of economy in the life cycle of a project.

This presents three point focus to be taken care of –

1. Creation including embodied and Stored Carbon
2. Design to support governance for Carbon reduction during use and,
3. Saving from Carbon at the time of demolition OR, recycle

 

Areas of Impact during project acquisition, design, construction, use and demolition (for redevelopment) –

1. Processes to acquire the project

2  Demolition or, cleaning up site for construction

3. Architecture

4. Engineering

5. Landscape and horticulture design

6. Contract management

7.  Process of handing over possession

8. Governance implementation during possession period and defect liability period

9. Systems integration in governance 

10. Behavioural adaptation in end users

 

Future Readiness  

May be I am writing this little early but, having experience of ISO system writing, implementation and auditing I feel it’s too late for unorganized segment of Real Estate and, time for organized segment of Real Estate to get in the groove.

It all begins with defining standard procedures on which an organization works. I am not sure how many organizations have documented standard procedures. This is actually most important to create a sustainable change. Implementation is next.

360 degree implementation is next tricky action. Bringing your suppliers, contractors and Project Management team in the gambit of the system is surely tricky. One has to be Future Ready. One will not be able to carry out all of this once a financially crucial project is about to begin. We certainly are facing scarcity for team of architects, engineers, suppliers and contractors that are ready for all the processes, products and mind-set.

Let us not forget Project Management Systems that too needs a makeover for saving all the carbon generation during the processes. One of the major risk to ESG begins with Communication Processes that have  loads of data management. We need to seriously work on doing away with redundant data management. Contract Management and Design management are next challenges. In a nutshell, being ESG compliant requires adjustments in most of the functional areas. It can be done, it has to be done and with coming funding and business conditions, it will be done. The question is, how many are ready.

One statement is very true – What is not Green, is not Affordable.