1. Evaluation of GREEN BUILDING PROJECTS FOR FUNDING
New Delhi 2015
Presented By -
Ajay Sharma MRICS
DGM, HDFC Realty Ltd

2. Raw Materials Availability?
QUESTIONS : AECs & OWNERS
Financial Sector
Casual Bystander
Active Participant
2000’s
Today
Achieved Goals?
Experience on steep learning curve
Buildings producing 20-30% energy savings
Gains also in site planning, resource conservation, environment quality.
Raw Materials Availability?
Increased availability of green products
Almost 90-95% of a green project done with green products
Costs Comparisons?
Demand character changing from push to pull
Proved results that costs at just 2-5% premium of convention buildings
Viable Investment Opportunities
Quantifiable advantages over conventional buildings
Better asset quality
Alignment with sustainable development movement
Availability of various government & local body incentives

3. ASSET TYPE- QUESTIONS Do Green Buildings Enable the Following?
Commercial
Maximizing profit.
Enhance occupant performance
Faster Leasing
Residential
Higher price premium
Faster sales
Institutional
Better habitable environs
Enhancing performance
Retail
Better operation management
Better sales per sq.ft
Industrial
Increased efficiency
Better worker productivity
Are Green Buildings…..
Valuable & profitable
Easily leasable/sold
Reduced liability risk
Enhancing brand
Increase efficiency & retention
Healthier
Investors seek answers for above for funding.

4. BENEFITS – PERCEIVED OR REAL?
Greenfield Projects
27% owners say building value increases 6 -10%.
14% owners said it increased more than 10%
Existing Projects
35% owners said operating costs decreased in green retrofit buildings
30% owners say retrofit building value increased 6-10%
Project Stakeholders/Owners Response
Source: McGraw Hlil Construction 2013
All the above results , considering nearly 40% of owners don’t track quantifiable results

5. BARRIERS & MOTIVATION Owners/Developers Point To………
Receiving Tax incentives
Financial Incentives
Operation cost savings
Left behind by sustainable movement
Higher market value
Reduce lawsuits & liabilities
No cost differentiation
Owners/Developers Point To………
First cost justification
Significant addition to capital expenditure
Unwilling market on premium
Complicated paperwork & approvals
Adaptation of technology is difficult
Source: BD+C Survey, Reed Business Information

6. Top 10 Reasons for No Adoption
INDIA PERSPECTIVE
Yes Bank & TERI BCSD jointly conducted a survey in 2014 “Green Real Estate Sector 2014”.
Top 10 Reasons for No Adoption
Green Building Practices
First Cost
Lack of Awareness
Low Motivation for End Consumer
Lack of Mandatory Policy
No clear business benefits
Green RE not strategic priority
Lack of financial instruments
No peer pressure
Inefficient supply chain
Lack of top management support
Financial Barriers
FI lack awareness of innovative credit lines
Lack of Preferential Lending Rates
Low valuation of green buildings
High up front fees
Lack of access to finance options
Low resale value
High loan processing fees

7. INDIA PERSPECTIVE : DRIVERS
Key Initiatives Required
Strict enforcement of regulations
Innovative financial incentives
Incentives like FAR
Ensuring real energy
Disincentives for failing to follow green codes
Energy Saving Contracting Agencies be employed
Source: Yes Bank & TERI BCSD 2014
Financing Initiatives
Setting up of ECBC (Energy Conservation Building Code) and establishing Bureau for Energy Efficiency
Environment Clearance Requirements
National Action Plan on Climate
Change emphasizing inclusion of ECBC guidelines for development by-laws

8. FINANCE SECTOR – GREEN MOVEMENT
Occupiers
Better ROI in self occupied space
Better Returns
Price Premiums
Alignment with Trends
Owner
Least Unique Role
Enabler
Investor
Critical Role
Lenders
Insurers
New Opportunity
Passive
Lesser Liability Risk & Lower Redundancy
Corporate Commitment
Lesser Default Risks
Branding/PR

9. SOURCES OF FUNDING
PE FUNDS dedicated to green & sustainable development.
Ex: Hines & CalPERS
INSTITUTIONAL FUNDS
INVESTORS looking for Economic Value than just market value
REITs/REMFs
CARBON MARKETS
Internationally…..
Federal Government Aid
State/Local Government Aid
Crowd Source Funding
Grants from Private Companies
Green property bonds
Multilateral institutions like World Bank & IFC
In India…..
Funds from HUDCO, IREDA
MNRE Green Building Scheme
Green bonds by Private sector banks like Yes Bank
Green Home Loan program by NHB & KfW, SBI and others

10. FUNDING REQUIREMENT Business Case Development Program
Detailed Cost Analysis
Structured Leasing/Sale Program
Financial Saving through sustainability
Impact analysis of increased retention
Economic Value Added
Site development, project planning, recycling of construction waste, raw materials, labor and intended certification
First costs including premiums for going green.
Positioning of project, target segment of clients, marketing & PR plan
Cost benefit analysis, long term savings, value creation through life of building, transfer of benefits
Tenant employee retention, health, work efficiency and other tangible costs for occupants
How both investors and occupants in the project create value

11. References
Building Design + Construction: Green Buildings and the Bottom Line
Green Building Incentives That Work, NAIOP
Green Buildings and Finance Sector, UNEP
Promoting Sustainable and Inclusive Growth in Emerging Economies, Economic Policy Forum
Yes Bank + teri BCSD Green Real Estate Sector 2014
World Green Building Trends, McGraw Hill + United Technologies
Thank You