India Eyes Rs 45,000 Crore Office Retrofit Market to Meet Modern Rental Demands

The office space in India's leading seven cities provides an opportunity of Rs 45,000 crore (about $5.3 billion) of retrofit (enhancing the existing building form and engineering, incorporating new technology, and enriching user experience and incorporating climate-adaptive features and abilities) and building upgrading, as per a report on Friday.

 

Around 62 percent of India's Grade A office space in top seven cities, amounting to 530.8 million square feet (sq ft), needs upgrades – ranging from light to moderate to deep interventions.

 

India's Silicon Valley tops office retrofitting potential with the biggest opportunity among leading Indian cities, with 155.9 million sq ft of Grade A space, needing an estimated Rs 14,410 crore worth of upgrade spends.

 

This provides both a test and an historic chance for players across the business, according to the JLL report.

 

At the center of this opportunity for change is principally headlined by four markets - Bengaluru, Delhi NCR, Mumbai, and Hyderabad - which represent roughly 81 per cent of overall capex outlay.

 

These four markets also account for roughly 75 per cent of occupier activity in the nation and, therefore, require urgent developer and investor inputs to make office assets 'relevant'.

 

"Approximately 32 per cent of India's office stock was constructed prior to or during the first decade of the new millennium". Even properties constructed subsequently but before 2020 would have to consider upgradation in light of what tenants require today, considering the evolving dynamics surrounding the necessity for offices to turn 'experiential', meeting the dual aim of being contemporary (agile, tech-enabled, amenity-laden) and low-carbon/sustainable", said Dr Samantak Das, Chief Economist and Head of Research and REIS, India, JLL.

 

Post-retrofit rental premiums provide real returns, and higher occupancy rates and longer lease terms add to the per-square-foot asset value.

 

"By making these retrofits, property owners can anticipate rental premiums of 15-30 per cent, with some top locations experiencing increases of as much as 50 percent", added Das.

 

In certain top locations, including Mumbai's SBD-BKC and western suburbs, these premiums would be even higher, at a whopping 40-50 percent.

 

"Modernisation is not the only thing about upgrading older buildings; it's a strategic necessity in the competitive real estate environment of today", stated Aditya Desai, COO-Project and Development Services and Head-Investor Solutions.