Circular economy in real estate

This concept presents an integrated approach that bolsters economic growth and champions sustainability

February 16, 2024 04:01 pm | Updated 04:01 pm IST

As the city skylines stretch upwards, India stands on the precipice of a transformative era in real estate. However, as construction booms, so does the waste associated with it. It is in this context that the concept of a circular economy in real estate emerges, promising a paradigm shift.

The circular economy concept presents an integrated approach that bolsters economic growth and champions sustainability. There are many incentives to develop a circular built environment.

Understanding the challenges

The real estate industry is India’s second-largest employer after agriculture. It is projected to reach a market size of $1 trillion by 2030, contributing around 18-20% to the country’s GDP. However, one concerning aspect is that this sector accounts for more than 22% of all national emissions.

According to the World Economic Forum, buildings within the real estate sector consume a significant amount of energy and raw materials globally. They consume approximately 40% of total global energy and raw materials annually, which amounts to an astonishing three billion tonnes. Furthermore, these buildings are responsible for about 20% of worldwide greenhouse gas emissions. According to a study by property consultants JLL, waste from office building operations adds up to 5% of a commercial building’s total carbon footprint. To achieve its long-term goal of becoming net zero by 2070, India must prioritise sustainability measures in the real estate industry.

Let’s understand the concerns and the challenges. The real estate sector generates significant amounts of waste. Waste is produced at every stage of project development, from pre-construction to post-construction, in both residential and commercial buildings. Even redevelopment projects contribute to excessive waste generation. The waste often ends up in landfills. Yet, the adoption of best practices is low.

How does circularity help?

The circular economy is a regenerative economic system that aims to keep resources in use for as long as possible, extract maximum value from them, and then recover and regenerate products and materials at the end of their life cycle. At its core, the circular economy in real estate focuses on three principles: reducing, reusing, and recycling. However, reducing waste starts with sustainable design practices, prioritising energy efficiency, minimal material consumption, and using renewable resources.

Creating jobs

Switching to a circular economy helps reduce the industry’s carbon footprint and overall environmental impact. Moreover, by embracing circular design and construction practices, companies can tap into a new set of investors and new markets for sustainable building materials, products, and services. This concept is already creating jobs for exports, thus leading to revenue increase and enhanced competitiveness in an evolving market. Also, measured against traditional construction methods, newer, innovative alternative materials and concepts have the potential to provide us with a greener and more resilient future.

What should be done?

On-site planning and resource management: A critical aspect of this method is sustainable procurement. The goal should be sustainable procurement by working collaboratively with supply chain partners and customers daily to deliver. Showcasing the transformative potential of the circular economy and providing inspiration for future developments, the ‘Circulair Bouwen’ initiative in the Netherlands aims to create a circular building sector by 2050. The project focuses on designing and constructing buildings with materials that can be reused or recycled at the end of their lifespan. By implementing circular design principles and collaborating with stakeholders across the value chain, the initiative has successfully created circular building prototypes and established a network of circular suppliers and contractors.

Moreover, the industry needs to adopt techniques under the ‘waste hierarchy’, which prioritises waste prevention, reuse, recycling, and energy recovery in that order. The approach ensures that waste is managed in the most environmentally friendly and resource-efficient manner. For example, instead of sending construction waste to landfills, stakeholders can separate and sort materials on-site for recycling or repurposing. A few leading organised developers in the country are already doing this.

Urban mining: The concept of ‘urban mining’ has gained traction in the circular economy. It involves extracting valuable resources from existing buildings and structures, contributing to resource conservation, and reducing the demand for virgin materials. This approach requires careful planning and coordination to identify and recover materials with high recycling potential.

Develop recycling infrastructure: Furthermore, the development of recycling infrastructure and the promotion of circular supply chains are crucial for effective waste management in real estate. By establishing partnerships between construction companies, waste management facilities, and recycling centres, stakeholders can ensure that materials are properly collected, processed, and reintroduced into the production cycle.

Use recyclable materials: Construction time and waste can be significantly reduced by standardising and reusing modular elements. Modular construction based on prefab or biobased materials, such as timber, bamboo, and natural fibres, can enable easier disassembly and reconfiguration, allowing buildings to be adapted to changing needs and extending their lifespan.

In this light, 3D printing technology is revolutionising the construction industry by enabling the efficient and precise production of complex building components. This technology allows greater design flexibility, enabling the creation of unique and customised structures.

Enhancing the awareness and understanding of circular economy principles should increase going forward. According to a JLL study, adopting an integrated approach to the design and construction process and implementing circular economy principles can offer increased value and mitigate reputational risks. The firm’s findings indicate that investors can benefit from sustainability-focused strategies that result in resilient real estate assets, achieved through the implementation of green strategies. Embracing this paradigm shift is an environmental imperative and a strategic opportunity for businesses and individuals to thrive in a rapidly changing world.

The writer is Managing Director, Starworth Infrastructure and Construction Ltd.

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